Lending Club opens referral program while Prosper shuts their program down

For a little more than a year, Prosper managed a referral program which rewarded new lenders with a $25 bonus and the referring party with bonuses as high as $50. Over time the program experienced many changes but remained a valuable means to drive new business to Prosper. Last week Prosper entered a quiet period and yesterday they sent the following message to members of their affiliate program:

We are writing to inform you that the Prosper Referral Program has been shut down and is no longer in effect. Our lender activity is limited. Click here to learn more.

As a result we request you take down any reference to Prosper immediately.

Thank you for your immediate attention in this matter.

It is uncertain what "any reference to Propser" includes. Presumable it only refers to advertisements. While we have typically used referral links when linking to Prosper we have not served Prosper ads for quite some time.

Websites which rely on referral income can now turn to Lending Club. Lending Club started a referral program with Commission Junction earlier this month. Here are the details of the program:

Description: Lending Club is a social lending network where members lend and borrow money from each other at better rates, bypassing the banks.

We have already issued more than $20,000,000 in loans at better rates than banks' and we are looking to spread the word of this great alternative.

We will reward publishers for every user they refer that fill out the loan application form, independent of the loan issuing or not.

Lending Club accepts only US-based credit worthy borrowers with 640+ FICO score and no current delinquencies.

Here are some answers you may be looking for before you advertise for us:

What will you pay for?
We will reward publishers for sending us qualified traffic:
$35 for first 10 applications/month
$40 for each additional loan application

What is your conversion rate?
Our current conversion rates are very high (upwards of 60%) if the user is looking for a loan and has good credit.

Do you have a dedicated affiliate manager?
Yes. We have asked CJ to manage the program initially, and in addition, we have a dedicated SEM resource on board.

What is your average order amount?
Typical order amount is between $80-$150(fees charged once a loan is issued). We don't charge a fee for application, and about 80% of the applications actually become loans.

Is your website attractive and easy to navigate?
Very much. We won the Webby award 2008 as best banking and payments site as well as a 2008 WebAward for Outstanding financial services site.

How does your commission structure compare with other advertisers in your category?
We feel we are very competitive and in most cases, we pay higher than other advertisers.

If a publisher consistently performs, will you increase their commission?
YES. We are willing to discuss better pay-offs based on performance, quality of borrowers and volume.

Based on my own experience with various referral programs I'm optimistic towards Lending Club's new referral program. With Prosper, hundreds of new members have joined Prosper after clicking on links from this site but very few have become borrowers or lenders. Prosper did not pay a referral bonus until the borrower made their first payment so, even if the borrower converted, it was still several months until a payment occurred.

Lending Club pays immediately after a person fills out a loan application, so their referral program is much more likely to result in referral bonuses and much more likely to result in payments. Hopefully Lending Club will expand their program to lenders as well as borrowers in the near future.

Here is an example of one of Lending Club's new ads available through Commission Junction. Click through for the improved landing page.

RME gives $750 to our readers

Six weeks ago I wrote about Revolution Money Exchange (RME), a new PayPal competitor. It is well funded (over $50 million in venture capital) and they don't mind spending the money in order to rapidly grow their user base. Their $25 sign-up bonus promotion, which was set to expire today, has been extended for another 30 days.

Over the last six weeks 30 of our readers have signed up for RME and received $750 in sign up bonuses. When you refer someone else you get an additional $10. One reader commented, "Set my account up-no prob this morning. Set one up for my wife too-$25.00 for me--$25.00 for her and I got a $10 refer fee. Easiest $60.00 I ever made."

We will use the $300 RME bonus we have received to attend the FINOVATE conference in San Francisco and bring you news from more financial start-ups including the new peer to peer lender Loanio.

If you want more information see our previous posts about RME or sign up now.

• PayPal competitor Revolution Money Exchange offers $25 sign up bonus
• Why does Revolution Money require my social security number?
• Revolution Money Exchange improves referral program

Revolution Money Exchange improves referral program

Many exciting new companies are launching at the intersection of finance and technology. Mostly I write about peer to peer lending, but last month I wrote about Revolution Money Exchange - a PayPal competitor.

Much to my surprise, the article is now the most popular article on this site. A follow up article, Why does Revolution Money Exchange require my social security number?, is the third most popular. Lately, more people are coming here looking for information on Revolution Money than P2P lending.

Like Prosper and Lending Club, Revolution Money offers a $25 sign-up bonus. Last week they improved the referral program making it easier to promote on websites.



Previously you could only refer friends by emailing them. Now there is an ad that you can place on your website. After you sign up with the $25 bonus you can refer friends and earn a $10 bonus. Here's their ad:



And, yes, it does work:


When you click on the ad, you are directed to the following sign up page:


In my opinion, this is far better than Lending Club or Prosper's landing page. Compare all three if you want:

All three offer a $25 sign up bonus. When people click on an ad offering $25 they expect to learn how to get the $25. Revolution does that and keeps it simple. In my opinion, Prosper tries to present too much information on their Landing Page. Lending Club, on the other hand, makes no mention of the $25 bonus on their landing page. In addition, Lending Club might do better if they just request an email on the initial landing page instead of security questions and a consent form. Keep it simple.

Many people have signed up for Prosper and Lending Club via this website but a very small percentage of those become eligible for the $25 bonus. With Prosper you have to make a loan of $50 and with Lending Club you have to verify your bank account and transfer funds to your account. Revolution Money is much easier - they transfer the $25 in your account immediately. Then, if you want to pull it out you have to verify your bank account.

I think some people signing up for Prosper or Lending Club through a $25 referral button become confused at the requirements to get the $25 and do not follow through. Revolution Money has a much higher conversion rate.

So, I'm quite pleased with Revolution Money's improvements to their referral program and I challenge Prosper and Lending Club to continue to improve their programs.

Instant 5% bonus becomes nearly 12% for one Lending Club lender

Odnal has been a lender on Prosper for awhile and recently started lending with Lending Club when they offered 5% bonus for lenders who invested more than $5,000 by February 3rd. Most of his loans have finally funded and he is very happy with the results. He provides a report on his blog:

"...I managed to get the minimum $5,000 invested in a portfolio, as well as an extra $375 from loans that had expired and I resubmitted. The bonus was based on how much you submitted, regardless of whether or not the loans got fully funded and approved or not. That means, the bonus was based off of my portfolios totaling $5,375 for a bonus amount of $268.75.

...When all is said and done, I will have $2950 in loans with a bonus of $268.75. That means, instead of just a 5% bonus, mine ended up at 9.11% of the loans that got funded. If I count my $75 in referral fees ($25 for signing up, $25 for referring my wife, and $25 in her account), I’ve already earned 11.65% on the money I have lent.

So far I like Lending Club."

I seriously considered lending $5,000 but let the time run out. I regret not taking advantage of the 5% bonus offer now. Lending Club - please bring it back!

PayPal competitor Revolution Money Exchange offers $25 sign-up bonus

Peer to peer money exchange site, Revolution Money Exchange launched nearly four months ago. At the time, chairman Ted Leonsis said, "We want to become for social networks what PayPal is for EBay." Former AOL chairman Steve Case is behind Revolution Money and hopes that merchants use it to circumvent the traditional fees of 1.9 percent that credit card networks charge.

Revolution Money Exchange is aggressively courting new members with a $25 sign-up bonus. They advertise that it takes 24 hours for the $25 to be credited to your account but it took me less than a minute to sign up and a minute later the bonus was immediately available in my account.

Revolution Money doesn't charge many fees. It's free to register, add money, send money, receive money, request money and withdraw electronically to a bank account. There are fees to withdraw money by check or to receive a paper statement.

I'm sold. I'll be using Revolution Money Exchange instead of PayPal. Even if you don't use PayPal it's worth a couple minutes for the sign-up bonus.

Of course, if you haven't signed up for Prosper or Lending Club yet you can also get a $25 referral bonus there too. Some quick math - If you signed up for all three of these services and then referred your spouse you would make a quick $160. Of the three, only Prosper requires that you actually use their service by lending at least $50 to a borrower.

Update (3/26): Revolution Money Exchange has made it easier to get the $25 bonus. Here's the link. After you sign up you can refer others and receive a $10 referral bonus.




Update (2/25): Why does Revolution Money require my social security number?

Lending Club offers $5 referral bonus

Update (Oct 2008): Lending Club changed their referral program again.

Update (Jan 2008): Lending Club has improved their referral program. Sign up for Lending Club by following this link and get $25 or read more about it here.

Almost three weeks ago Lending Club quietly launched a referral program inside of Facebook. When logged into your account, there is “invite friends” text and a small cash graphic in the upper right corner on most pages. Clicking on this link sends you to a referral page which explains, “We will deposit $5 in your Lending Club account for each friend you invite who signs up for a basic Lending Club membership (basic memberships are free and there are no obligations).” You must be a Facebook member to join Lending Club and the referral form only permits you to invite your Facebook friends. To prevent spamming you are limited to inviting 10 friends per day. When you select one of your friends to invite they will be sent the following message from you through Facebook, “I found a site I thought would interest you. Lending Club is a p2p lending service: you can be a lender or a borrower, bypass the banks and get better rates.”


About a week after launching the referral program, Lending Club CEO Renaud Laplanche told me, “It seems to be working nicely: daily registered members increased 20% since then, although it’s not obvious how much should be attributed to the referral program.” Nearly 12,000 people have installed the Lending Club application in Facebook.

Lending Club and Prosper both have referral programs, but they are very different. Under the Prosper referral program, which ends August 31st, a borrower must receive a loan and a lender must fund a loan in order for the $25 referral bonus to be paid. This can be a long process and many potential borrowers or lenders will not complete the process even after creating an account. Only a small fraction of the 330,000 registered Prosper members are lenders or borrowers. Lending Club’s bonus, while only $5 instead of $25, is much easier to receive since the new member does not need to actually become a borrower or lender. Although you do not have to immediately commit to becoming an active borrower or lender, the referral program will be very beneficial to Lending Club because all referrals are from people that know each other as Facebook friends.

Of course, the Lending Club referral program would create even more growth if they expand outside of the Facebook social circles. I look forward to adding a referral link on this site, for example. Another way they could significantly increase sign-ups is by paying the person who just signed up. It would be nice if the referral emails said something like, “If you sign up now you will receive a free $5 in your Lending Club account since you were referred by [name].” Having the $5 in their Lending Club account would also provide an incentive for new lenders and borrowers to set up their bank account. PayPal can trace its explosive growth to a $5 referral program where each party received $5 when they signed up. These types of programs are especially popular on college campuses which seem to be the demographic which Lending Club is targeting.

To test drive the referral program, I had one of my Facebook friends sign up for Lending Club. He signed up three days ago. Unlike Prosper, there is no confirmation email that lets you know your friend signed up and they payment is not immediate. I will let you know how long the referral payment takes once I am paid.

Wiseclerk has some good information about referral programs for other peer to peer lending sites including Zopa, Smava and Boober.

Update (Jan 2008): Lending Club has improved their referral program. Sign up for Lending Club by following this link and get $25 or read more about it here.

Update (Oct 2008): Lending Club changed their referral program again.

Prosper referral deadline nears

Update (2/2008): Prosper continues to extend the deadline of the referral program and it appears that it will be an ongoing program. Lending Club also offers a $25 sign up bonus.

Last month Prosper announced a great referral program. New lenders receive a free $25 when they sign up. If you sign up and then sign up your spouse (as Matt described in an earlier post) you effectively make an immediate $75 on a $100 investment. The referral program ends on August 31. Here's a referral link if you want to sign up now.

If you are interested, here is some more information about the Prosper referral program in their own words:

What is the referral program?

Prosper's referral program was established to encourage our most ardent supporters (our members) to bring their friends and family to Prosper. In return for bringing active borrowers and lenders, Prosper pays cash awards to referrers.

Here's how it works:

1. You add a special link to Prosper on your web site, blog, discussion forum, MySpace page, Facebook page, in your email signature, and so forth. Create a referral link now.
2. A friend clicks on your Prosper link.
3. Your friend joins Prosper within 30 days of clicking on your link.
4. Within 90 days of joining Prosper, your friend gets a funded loan (as a borrower) or funds a loan (as a lender).
5. As soon as your friend's first monthly payment clears (as a borrower), or first loan originates (as a lender), you get cash in your Prosper account.

What are the requirements for earning referral awards?

To qualify for referral awards, you have to meet the following conditions:

1. The invitee must have clicked on a link with a referral code.
2. The invitee must come to Prosper directly from a link outside of Prosper.com or any other Prosper-owned domains.
3. You can direct invitees to any part of the Prosper web site, excluding the Prosper discussion forums or the /prm directory.
4. The invitee's Web browser must accept cookies.
5. The invitee must be a new member, and must join Prosper within 30 days of clicking on your link.
6. The invitee must take an action (borrow money or make a loan) within 90 days of joining Prosper.
7. If the invitee is a borrower, he or she must make the first monthly payment successfully.
   You can only earn one borrower award and one lender award per new referred member.

How will I know if one of my friends registered? Is there any way to test this system?

When a friend you have referred joins Prosper, you will receive an email notifying you that your friend has joined. Keep in mind that you won't receive any awards until your friend has taken a loan and made a payment (as a borrower) or funded a loan (as a lender).

Once your referred friend borrows or lends, you'll receive another email notifying you that the referral award has been paid.

In my experience, when I refer someone there is immediate feedback when they signup. I received the following email.

Thank you for referring a new member to Prosper. [name deleted] just joined Prosper, and if he or she becomes an active participant in the marketplace within the next 90 days, you will receive one of these awards:

• Borrower: 0.50% of the loan amount when his or her first monthly payment clears.
• Lender: $25.00 when his or her first loan is funded.

Although the referrer gets immediate feedback, the new lender will not know he or she has signed up under the referral program until they complete the requirements and actually fund a loan. This has confused some new lenders. For example, after clicking on the link http://www.prosper.com/?referrer=Spider5 the user is redirected to http://www.prosper.com/Default.aspx. I had a friend call me back when he was trying to sign up saying he didn't think it was working. Don't worry. The referral will still go through. Prosper has been good about paying people promptly after the requirements have been met. If you are still on the fence about signing up for Prosper, you should at least start the process now in order to take advantage of the $25 referral bonus. You still have 90 days to fund a loan. Here's a referral link if you need one:

Although borrowers do not receive a bonus when they sign up under the referral program, it is still advantageous for them to do so. If I have a borrower that signed up as my referral, for example, I would be interested in helping them get funded. I might help promote their listing among other lenders or bid on them myself. Since a large number of loans go unfunded, having a lender's assistance can be helpful.

Update on Prosper's referral program

Earlier we wrote a post about Prosper's referral program. It has been more than a month since the launch of this program.

To test this program I referred my wife to Prosper. She opened an account, transferred in $50, and funded a loan. Immediately after the loan was funded I got the following email from Prosper:

Thank you for referring [name deleted] to Prosper. He or she funded a loan today. As a result, we have deposited a referral award of $25 into your Prosper account.

My wife also got a corresponding email from Prosper. It read:

Congratulations on funding your first Prosper loan! Because you were referred by Mateo, we have deposited an invitation award of $25 into your Prosper account. View your account now. The member who referred you, Mateo, also received a referral award for referring you to Prosper. You, too, can earn money by referring friends to Prosper. Learn more about Prosper's referral program.

Corresponding messages also showed up under the messages tab in our Prosper accounts. The next business day after the loan had funded, $25 had been transferred into my Prosper account, and $25 had also been transferred by Prosper into my wife's account. It looks like Prosper is quickly paying out the referral award money as soon as the requirements of funding a loan are met.

Some lenders are trying all kinds of creative ways to earn money from the Prosper referral program including Google Adwords, links in online forums, submitting articles to Digg, and posting referral award ads on their personal websites. A quick Google search returns 47,000 search results related to the Prosper referral program.

Prosper referral program

Prosper announced their referral program one week ago. The details are pretty simple - refer a lender and you both receive $25 after the new lender funds a loan or refer a borrower and you receive 0.5% of your friend's loan amount as soon as your friend's first monthly payment clears. So far, the program has received little attention. Prosper has not advertised it prominently on their site. You actually have to look around a little to find it. Perhaps they want a slow release?

They did send out an email yesterday which revealed a few more details. They said when you refer your first active borrower or lender, they will send you a "stylish" black Prosper t-shirt. They are also running a ticket to "Proper in Las Vegas" Sweepstakes. Each time you refer someone you are entered in their drawing.

They also announced the top 10 referrers after one week. Here's the list along with information on why they might be doing so well.

#1 - loansearchers - loansearchers is the group leader for Loan Searchers. Although the group started in March it does not have any members, listings or loans. Their group description indicates they have many online resources. It looks like that must be true and they have used that same online community to move to the top of the referral list. Here's what their group description says:

While new to Prosper.com, we have over 4 years experience in helping consumers find lenders. We advertise online which helps to bring new consumers into the Prosper.com community. We will be utilizing many of our other online resources to strengthen our group and community. We will strive to create one of the most dependable and marketable wiring between lenders and consumers as possible on Prosper.com.

#2 - nonattender - nonattender is the group leader for -------ians. The group has 6 members and 1 loan.

#3 - TechnologyGuy - TechnologyGuy authors lazymanandmoney.com and often writes about Prosper. I just read through some of his posts and they seem pretty informative. He is also a member of the RateLadder group.

#4 - JaredD - Hmm...Jared's from Nevada. I guess he's not too motivated to win that trip to Las Vegas. :)

#5 - AdvisorGarage - Runs Advisor Garage, a site for entrepreneurs. He advertises Prosper on his site and has started the Advisor Garage group which targets "entrepreneurs looking for micro loans before they get to the angel or venture capital stage." The group has 23 members.

#6 - lifesettlementadvisor - Brand new Prosper member. Signed up on June 11th after the referral program was launched. Looks like he has made more money from the affiliate program than from lending through Prosper.

#7 - FitzNDR - Group leader for New Day Rising Loans which describes itself as "An extremely selective group that is designed solely to get good borrowers funded." He has a strong portfolio with no late loans in the six months since he started lending.

#8 - RateLadder_com - Group leader for RateLadder and runs rateladder.com. He also runs the statistics site ProProsper. He blogged about making the Prosper's top ten referral list and said he has "4 borrowers (3 with listings) and 2 lenders (both with bids) and 10 others without a role yet."

#9 - cardinal04 - Group leader for Stanford Students & Alumni. The group has 42 members and 3 loans. Cardinal04 has a degree in Biological Sciences from Stanford in 2004 and now works in the biotech industry.

#10 - tehc0w - Member of SA Goons, a large group with 166 members, 1 listing and 16 loans.

Not surprisingly, most of the top referrers are already very active in the community. Over half are group leaders. Several of the others run prosper websites or blogs. We wish them all very well. Perhaps we will try to interview some of the referral leaders to see if they have any tips for the rest of us.