Lending Club promises to buy back loans (notes) "where the loan was obtained as a result of identity theft or fraud".
From the LC investor agreement...
https://www.lendingclub.com/info/lender-agreement.action4. Limited Repurchase Obligation for Identity Fraud. If the Member Loan designated for the proceeds of your purchase of a Note was obtained as a result of identity theft or fraud on the part of the purported Borrower Member, we will (a) provide notification either directly or indirectly to you as soon as reasonably practicable upon our becoming aware of such a situation; and (b) repurchase your Note by crediting your account for the outstanding principal balance of your Note. For the avoidance of doubt, (i) if you purchased the Note indirectly through a third-party platform or entity, we will work with such third party to credit your investment account through that entity or platform for the outstanding principal balance of your Note, and (ii) if you purchased the Note through FOLIOfn Investments, Inc., we will credit the Lending Club account that you established in order to purchase Notes through FOLIOfn Investments, Inc. We may, in our reasonable discretion, require proof of the identity theft, such as a copy of the police report filed by the person whose identity was wrongfully used to obtain the fraudulently-induced Member Loan, before we credit your applicable account and repurchase your Note. You agree that you will have no rights with respect to any such Notes except the crediting of the purchase price to your applicable account
Here's the thing that bothers me. Since 2009 I have bought 8399 notes from Lending Club. (I bought some before 2009 too, but I don't know how many, because they aren't included in my notes file any more.)
Given that I have bought a very large number of notes, how come I don't recall LC ever notifying me of an identity theft note? Not even once!How can this be? I figure LC is pretty good at weeding out identity theft, but there are people who work at it all day long every day. There was one talk at Lendit where the speaker talked about massive amazon cloud driven identity theft attacks on lenders. Wow. So even if LC is very very good at weeding out ID theft, one would imagine that a few still get thru. If so, then some fraction of notes we buy from LC must be ID theft notes, and ID theft notes will surely charge off, which concerns us, right?
If even 0.1% of LC notes are ID theft, then out of the 8399 notes I have purchased, there would be about 8 ID Theft notes, right?
Why have I never seen one?
Perhaps LC has been notifying me, and I've been ignoring the notifications somehow. So I'll ask the rest of you...
Have you ever been notified by LC that a note you have purchased is an ID theft note?
Ever had such a note repurchased?
If none of us have ever been notified or reimbursed, then there is something wrong, because I refuse to believe that 1.3 Million loans have been issued without a single case of ID theft.