As I was browsing through some articles, I found one that struck me about social lending. Zopa is an online market place where people lend and borrow money. It has 105,000 members currently in the United Kingdom. When people need money others will gather together their funds and lend that person at a certain interest rate. Ones credit score is incorporated in to determine ones risk rate, and based on that risk rate the person bids for the loan on their terms. What makes Zopa and other websites similar to it interesting, is that you are able to post your story about why you need the money. The article described one woman who wrote about how she needed a boob job. She was able to receive funds even when every other bank turned her down. Many who use this resource agreed that big banks aim to put customers in debt. Sixty one percent said that the main aim of banks was to make money for themselves.
How ethical is this type of online lending and borrowing? People are allowed to post their stories about why they need the money, but who is to say that they always express the whole truth to the online community. Personally to me this seems to cause more of a dangerous situation. Anything on the internet in this aspect involves a higher amount of risk. Corrupt individuals would not succeed in fooling a bank, but the internet can provide somewhat of a cover for fraud.
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That's very interesting. It's like a more frivolous version of micro-credit loans. I think it will take a while for us to see its effectiveness- whether or not people are honest. Like Wikipedia- it could very easily have become somewhere people put whatever they want, but it stays alive because people take pride in it and build a community. Also, the site will probably eventually find a better method for weeding out the liars.
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