Biggest Online Lenders Don't Always Check Key Borrower Data
- Lenders say they may not check applicants’ income, employment
- Internet lending has greater fraud potential, bond grader says
Two of the biggest online consumer lenders don’t always check whether borrowers are lying to them, and if they find errors in an application, they may still approve the loan.
Prosper Marketplace Inc. doesn’t verify key information like income and employment for around a quarter of the loans it makes, according to documents tied to bonds that Prosper sold last month. LendingClub Corp. said it only verified income about a third of the time for one of the most popular loans it made in 2016, according to company data seen by Bloomberg. If either lender finds mistakes in a borrower’s application, such as overstated income, they may still go ahead with the loan, according to disclosures linked to bond sales from the companies, including documents for securities that LendingClub is offering now.