A lot of the guys on the forum have graphs to try to explain what went wrong, what is happening, etc.. The answer is not to be found in a graph. It is much simpler. Paying a debt to your debtor is a moral obligation as well has a financial obligation. How does one quantify morality on a graph? It's impossible. You are making a bet that the debtor will honor his/her obligation. Many will not. When a person who takes out a loan doesn't make one penny of payment, no one can tell me that this debtor's intention was clear-take the money and run. No moral obligation to pay back, to honor or even to acknowledge that someone put his/her money on the line to help this person. This person boldly took the money and never paid a penny. This is stealing and fraud.
Ya know...that's exactly how I felt at first with my LC involvement. I am luckier than most on this board. Because of an interpretation error I stopped buying notes in Jan, 2016 and missed the 2016 loan debacle, but I still have plenty of charge offs, 1 of which was that "0 payment fraud" you mentioned. At first I was upset at "those conniving sobs" but that attitude eventually changed. It's true that someone making none or only a few payments probably gamed the system; those making less than 12 payments probably never "mended their ways" after getting an LC loan to payoff credit card excesses. But what do you say about those who made more than 12 payments?
Of the 1,426 loans I have bought 190 have charged off so far. The majority of those charge offs (130) paid more than 12 payments. I guess some of those could have been credit card excesses who just held on longer than others but, how can you explain someone who made 24 (or even 34) payments and then stopped?
LC opened my eyes to that fact that there are many hurting people out there who through little or no fault of their own are having problems. Maybe sickness, maybe job loss, maybe hurricanes, maybe earthquakes, maybe fires, etc. They held on as long as possible but eventually reality sets in and they just can't do it anymore.