Sorry, both businesses get a thumbs down. First of all, these are by no means microfinance companies or the eBay's of microfinance. EBay provides a benue for 2 parties to come together for a transaction. There is a mechanism (although somewhat flawed) for ensuring the transaction is executed according to buyer expectations. When there is a problem there are several remedies that in most cases leads to a resolution (although ebay has been known to not pursue fraudulant sellers). In the case of these businesses presented, there is a level of due diligence needed on the part of the lender. As well, what are the mechanisms of collateral and how can one be sure everything is legit? In essence, what these companies provide are avenues for fraud and abuse. I am confident that there will be many who are taken. At best, these businesses are ways to donate money to people. I have not checked out Kiva's site yet, but Prosper's site shows that they actually use a credit score to assess credit ranking. Sorry, but the credit reporting system is very flawed, in many cases inaccurate and not predictive in many cases of the ability or intent to repay debt. When consumer finance companies issue loans, they go through a somewhat rigorous process to asses repayment risk and they secure collateral (or in the case of credit card loans, you are held now by law to repay all debt). In conclusion, both individuals are attempting to profit by removing the alrewady lax controls of the consumer finance industry. These busineses are very dangerous for people, except if you are the one seeking money.
Bambi, good call matching Kiva and Prosper. But you've left out that the focus of kiva is making loans to the developing world. You will not obtain monetary profits from your loans, but you can receive journal updates from the businesses you've supported. It's really a great service.
Keep up the great work.