Why is that enough? ... Then they can do it again in seven years. ... Doesn't seem like reporting is enough unless there is additional legal action being taken
Sadly, legal action is very expensive and uncertain. That's just the way it is. Because of this all banks and other lending companies use it sparingly.
Because of the anonymity, it is very difficult to track what LC is doing exactly. You can scan the various court web sites for cases involving Lending Club. Back in the early days of Prosper, when borrowers often put enough info in their listing descriptions to identify themselves, I used to scan the court web sites and find specific cases, and lenders used to follow them and discuss progress. What I learned thru this is just what I said above.
From an emotional point-of-view I agree with you. People who cheat us ought to be slammed. One of my early Prosper loans was to a guy who was a former state senator from an eastern state. A grade loan. He stopped paying after just a few payments. He continued to be quite a public figure, having opened a gay bar that got a lot of news. I was astonished and angry. My anger did nothing useful. Nothing I could do. In those early days, Prosper hadn't yet learned how to manage nonpayers. Both P & LC are much more sophisticated now. I have learned to back off and let them manage.
From a more logical perspective, what matters to an investor is that the lending company do enough to keep fraud under control and produce good numbers. That's what all lending companies try to do.
So you can look at results, and decide whether you want to buy Bank of America stock, Wells Fargo stock, etc, or buy notes thru Lending Club or Prosper.
The various lending laws pretty much prohibit you from getting involved personally, so you need to step back and the guys who can make these decisions do so.
