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Lending Club Discussion => Investors - LC => Topic started by: Fred93 on March 18, 2017, 11:00:00 PM

Title: The identiy fraud repayment promise
Post by: Fred93 on March 18, 2017, 11:00:00 PM
Lending Club promises to buy back loans (notes) "where the loan was obtained as a result of identity theft or fraud".

From the LC investor agreement...
https://www.lendingclub.com/info/lender-agreement.action
Quote
Title: The identiy fraud repayment promise
Post by: BritishJim on March 19, 2017, 11:00:00 PM
I currently have over 70,000 active notes and easily have double that amount purchased since Lending Club opened their doors. I've never looked to see if I was ever reimbursed for an identity thef loan but I think I keep a pretty good eye on my account and would have noticed that. Excellent question and one as a group of investors would be worth getting an answer to.
Title: The identiy fraud repayment promise
Post by: rawraw on March 19, 2017, 11:00:00 PM
The one time I saw it happen, there was no notification. Just a notation in the collection log of a previously defaulted note

Sent from my SAMSUNG-SM-G935A using Tapatalk

Title: The identiy fraud repayment promise
Post by: TravelingPennies on March 19, 2017, 11:00:00 PM
from: rawraw on March 20, 2017, 07:52:52 AM
Title: The identiy fraud repayment promise
Post by: TravelingPennies on March 19, 2017, 11:00:00 PM
Yes I received the principal. I don't remember what the language was. Now that your asking, I'm questioning if I imagined it! Lol

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Title: The identiy fraud repayment promise
Post by: TravelingPennies on March 19, 2017, 11:00:00 PM
I'm wondering how these loans show up on the web site, on my statements, in the notes file, etc.

I'm thinkin' maybe they DON'T show up most of these places.  Maybe they are made invisible, like non-persons.  (Ie are dropped from my notes file.)

There would have to be a transaction, ie cash moving to my account, but the way the LC web site works these days, transactions are incredibly difficult to look for.  They are hidden in daily sums, and the pop up windows which expand the daily sums don't let you do anything useful. 

Seems like a transaction would have to appear on my statement, but unless I know the words they use to describe such a transaction on a statement, I won't know what to search for. 
Title: The identiy fraud repayment promise
Post by: jheizer on March 19, 2017, 11:00:00 PM
I tried skimming my statements in the recovery type section and didn't see anything.  Be nice if it was a loan status.
Title: The identiy fraud repayment promise
Post by: AnilG on March 19, 2017, 11:00:00 PM
I also remember in the past we discussed such "identity fraud" loans on the forum. IIRC, Lending Club made investors whole when loans were discovered to be "fraud". Also at one time few years ago there was a big news (may be just forum discussion or disclosure by Lending Club) with few fraudulent Loan IDs being disclosed. Sorry, don't remember more specific details.
Title: The identiy fraud repayment promise
Post by: TravelingPennies on March 20, 2017, 11:00:00 PM
from: AnilG on March 20, 2017, 08:15:44 PM
Title: The identiy fraud repayment promise
Post by: TravelingPennies on March 20, 2017, 11:00:00 PM
I got a response from LC.  I take this as an initial response, not necessarily the whole story...

They say that there is presently no notification.  They say they're working on a uniform process to communicate these events.  They say these loans show up as "full payment" on the loan status page.

These answers raise many more questions, for which I have no answers.

I have asked them to tell me all the loans for which this has occurred.  This may seem like a bold request, but I pointed out that notification was and is an explicit formal requirement of the lender agreement.  In other words, they were supposed to tell us, and they didn't tell us, so the very least they can do now is to tell us now, after the fact.  Doesn't make up for their omission, but it would at least show good faith.
Title: The identiy fraud repayment promise
Post by: TravelingPennies on March 20, 2017, 11:00:00 PM
2nd response from LC, clarifying ... They say such loans will definitely show up as prepayments.  The loans are not deleted. 
Title: The identiy fraud repayment promise
Post by: TravelingPennies on March 20, 2017, 11:00:00 PM
3rd response from LC, clarifying...  They say they are preparing a list showing which of MY loans (not everybody's loans) were repurchased due to identity theft.

I intend to share info when it arrives.

Title: The identiy fraud repayment promise
Post by: TravelingPennies on March 21, 2017, 11:00:00 PM
How did you contact Lending Club? I wouldn't mind getting a list for my loans.
Title: The identiy fraud repayment promise
Post by: Peter on March 21, 2017, 11:00:00 PM
Yes, who doesn't want to see these notes annotated to reflect their true state(s)?

LC attacking this on a case-by-case or user-by-user basis - especially when they have a clear, legal obligation to notify when such is the case - strikes me as someone thinking small and trying to save workload, when, in fact, they ought to just update their database to properly reflect all loans which have been bought back due to the ID theft guarantee.  This may also have some positive implication vis a vis the prepayment rates (which all investors monitor, closely - or should) and would likely reduce that number (and thereby some of the concerns which arise around the prepayment rate, if the ID-thefy reimbursements show up merely as "fully paid", in the data, shortly after origination) - not mentioning some other benefits which may accrue, regarding backtesting for investors and credibility for the platform.

There's no good reason not to do it for the entire dataset.  If they're going to do it, they may as well do it right.

Good catch, Fred.  I had the same thoughts when I watched Scott's keynote (which otherwise I liked) --- my mind instantly went to the opposite of what he said re: "we have a strong incentive to catch ID theft since we're on the hook" (paraphrased), to which my mind immediately translated "no, you have a perverse/reverse incentive not to monitor for ID theft, since otherwise you're on the hook".

Transparency solves for most of that.  Let's see it.  Thanks.
Title: The identiy fraud repayment promise
Post by: Rob L on March 21, 2017, 11:00:00 PM
from: nonattender on March 22, 2017, 08:01:27 AM
Title: The identiy fraud repayment promise
Post by: jheizer on March 21, 2017, 11:00:00 PM
I'm kind of curious if once you get the list if it is as easy as filtering your fully paid loans and finding ones where the PaymentsReceivedToDate = Note amount, or just INTEREST_RECEIVED = 0.  I wouldn't think they'd pay us any interest unless they were trying to hide these.  All mine had interest paid.
Title: The identiy fraud repayment promise
Post by: bluto on March 21, 2017, 11:00:00 PM
I had a late loan get credited by lendingclub a few years ago.  It was classified as "Adjustments/Credits" on the cash details page and shown under miscellaneous under the transaction log with the description "credit for ineligible loanID 26048338".  After the transaction it doesn't show up in my notes (as a prepaid loan) it's gone as though I sold it. I can't seem to find any other records for it. 
Title: The identiy fraud repayment promise
Post by: anabio on March 21, 2017, 11:00:00 PM
Quote"> from: Rob L on March 22, 2017, 09:31:36 AM
Title: The identiy fraud repayment promise
Post by: arcee49 on March 21, 2017, 11:00:00 PM
from: jheizer on March 22, 2017, 09:38:06 AM
Title: The identiy fraud repayment promise
Post by: RT45 on March 21, 2017, 11:00:00 PM
Agreed, would be helpful knowing how you contacted LC to get a list of which loans were fraudulent for my accounts.
Title: The identiy fraud repayment promise
Post by: Fred93 on March 21, 2017, 11:00:00 PM
Quote"> from: BritishJim on March 22, 2017, 01:46:46 AM
Title: The identiy fraud repayment promise
Post by: TravelingPennies on March 21, 2017, 11:00:00 PM
from: bluto on March 22, 2017, 10:26:57 AM
Title: The identiy fraud repayment promise
Post by: TravelingPennies on March 26, 2017, 11:00:00 PM
I heard back from Lendingclub today.  They say that they have determined that I have had ZERO loans affected by identity theft in my 9 years and 8399 loans worth of investing at LC.
Title: The identiy fraud repayment promise
Post by: Rob L on March 26, 2017, 11:00:00 PM
Now there's a real surprise!
Title: The identiy fraud repayment promise
Post by: TravelingPennies on March 27, 2017, 11:00:00 PM
Quote"> from: BritishJim on March 20, 2017, 12:38:43 AM
Title: The identiy fraud repayment promise
Post by: .Ryan. on March 28, 2017, 11:00:00 PM
from: Fred93 on March 27, 2017, 03:00:20 PM
Title: The identiy fraud repayment promise
Post by: TravelingPennies on March 28, 2017, 11:00:00 PM
REQUEST FOR YOUR ACTION

I hope many of you have some interest in this identify-fraud issue.  For many years, LC has promised that they will repurchase notes from loans where the borrower was an identity-fraudster.  Its explicit right in the lender agreement.

For many years we've discussed whether they might actually be doing this or not. 

Recently they admitted that they had not been notifying lenders, as required by the agreement, and that the repurchased notes would show up as prepays.  They agreed to identify which of the notes I have purchased over the past 9 years were repurchased due to identity-theft.  Answer came back a few days later: NONE.

That might be right.  Could be none out of nearly 10,000 loans.  I have no evidence one way or the other, except that 0 out of 10,000 would be a very very low rate of identity-theft. 

I urge you to make the same request of LC for your own account.  Call them or send them email, and ask them to identify which of your loans were repurchased by LC due to identity-theft.

If we can establish that some loans have been repurchased from some lenders, that will help us understand and believe what is going on.
Title: The identiy fraud repayment promise
Post by: TravelingPennies on March 28, 2017, 11:00:00 PM
I have submitted a request with my notes.

AnilG - any way you could email your users to notify them about requesting LendingClub to disclose if they've had any fraudulent loans that could be up for reimbursement? Might make Peercube pay for itself instantly. :)
Title: The identiy fraud repayment promise
Post by: Lovinglifestyle on March 29, 2017, 11:00:00 PM
I was informed today that I have 0 (out of 12,117) notes that were issued as a result of identity fraud.
Title: The identiy fraud repayment promise
Post by: au88 on March 31, 2017, 11:00:00 PM
Long time reader, first time poster. I have had ~21000 notes in my account over its 8 year history. I've reached out to LC and will let you know what they say.
Title: The identiy fraud repayment promise
Post by: RT45 on March 31, 2017, 11:00:00 PM
Still waiting to hear back for a response from my end.
Title: The identiy fraud repayment promise
Post by: rawraw on April 01, 2017, 11:00:00 PM
I'm no stats quant, but I'm starting to think the probability of something being fishy is high if their identity theft rate is near 1%.
Title: The identiy fraud repayment promise
Post by: Edward Reid on April 01, 2017, 11:00:00 PM
Interesting, though I don't have enough notes to be worth contacting LC ... I'll wait to hear more here. I found this article stating that 4.4% of identity theft involves loan fraud. (The article lists references, but I did not follow them to find out where they got this number.)

OTOH ... I wonder. LC only provides the loan proceeds as a direct transfer to a bank account. This means a loan fraudster not only has to impersonate the victim to LC, they also have to either gain access to the victim's bank account or set up an account in the victim's name. (LC probably does at least some rudimentary name match checks on the accounts they send money to.) If they have access to the victim's account, it's probably easier for them just to drain the account and not worry about refilling it. And perhaps this complication -- the need to break in twice rather than just one -- is enough of a hassle and delay to make the thieves look elsewhere. "I don't have to outrun the bear, I just have to outrun you."

I'll certainly be interested in the results, given that what LC has already told those who have requested the info is that their identify fraud rate is essentially zero.

Edward
Title: The identiy fraud repayment promise
Post by: au88 on April 03, 2017, 11:00:00 PM
The results are in. LC says I've had 3 notes (out of ~20000). They gave me the 3 loan ID numbers.
Title: The identiy fraud repayment promise
Post by: Fred93 on April 03, 2017, 11:00:00 PM
from: Edward Reid on April 02, 2017, 12:34:58 PM
Title: The identiy fraud repayment promise
Post by: TravelingPennies on April 03, 2017, 11:00:00 PM
from: Fred93 on April 04, 2017, 03:11:51 PM
Title: The identiy fraud repayment promise
Post by: Peter on April 04, 2017, 11:00:00 PM
from: Fred93 on April 04, 2017, 03:11:51 PM