Prosper.com recently sent out emails to everyone in the state of South Dakota and informed them that they would no longer be accepting citizens from South Dakota as lenders on their website. They claim there are complicated lending practices which make it excessively difficulty to operate in the state, which is odd, since many major credit card offering banks have headquarters in South Dakota because of their favorable lending laws.

Here’s the email:

Dear Matthew,

We are writing to inform you that Prosper is discontinuing lender activity in South Dakota for the time being. South Dakota lenders will no longer be able to bid on listings or transfer money into their Prosper account.

South Dakota is the only state where, due to state lending restrictions, its residents are unable to borrow through the Prosper marketplace. We felt that the cost and effort involved in maintaining the complicated compliance requirements for lender activity alone in that state was impractical at this point.

Prosper will continue to act as loan servicer (i.e., collections and disbursements to lenders) for any existing loans you own, and you can withdraw any funds you have in your Prosper account at any time, as usual.

We hope to bring person-to-person lending (for lenders and borrowers) to residents of South Dakota in the future. Please be assured we will keep you fully apprised and we thank you for being a member of the Prosper community. If you have any questions, you can contact Lender Services at 877-646-5922.

Regards,
Prosper

This entry was posted on Friday, August 22nd, 2008 at 8:04 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.