Lending Club’s Collections Practices

Peer-to-Peer lending company, Lending Club, recently outlined its collections practices during an online meeting with several hundreds of its investors.

During the interview, the company stated that the majority of its borrowers that go delinquent because they change banks or switch accounts and do not get their information updated. According to Lending Club, the “vast majority” of delinquencies are taken care of during a 30 day grace period and consumers get their information updated and are successfully billed.

Lending Club also outlined the different stages of delinquency, outlining what types of actions that they take for borrowers in each phase of delinquency. Specifically, Lending Club uses a combination of phone calls, emails and skip tracing to contact its borrowers and remind them of their obligations. Skip tracing is the process of tracking down an individual and finding alternative phone numbers to contact the borrower.

Investors at Lending Club’s largest competitor, Prosper.com have been critical of Prosper for failing to providing any meaningful collections practices in order to minimize the number of borrowers that go into a charge-off status.

Below is an info-graphic that Lending Club provided outlining its collections practices during its recent online meeting with its investors.