Friday, March 5, 2010

How Not To Manage Customer Service, or, Why Lending Club Sucks

I've been wanting to play around with peer-to-peer lending, and so I picked from the two big online sites in this field: LendingClub and Prosper. LendingClub seemed to have a more straight-forward model, so I opened an account with them and moved a little money in via paypal.  Getting my portfolio up and running was painless.  I  reviewed a bunch of loan requests, choose a couple that looked interesting, and diversified my portfolio by lending in small chunks.  Two months later, I wanted to move some more money in, and this is where things quickly went downhill.

After logging into the site, I clicked a prominent "Add Funds" button.  My choices were "Fast Transfer (about 15 minutes)", "Wire Transfer (1 business day)," and "Bank Transfer (4 business days)".  I went with "Fast Transfer."  There was some fine print about how this only was available to new investors, but there was still a large "Transfer Amount" input, and a "Transfer Now" button (with a paypal logo), so I figured I was still allowed to use the instant transfer option.  The transfer seemed quick and easy, and the money was gone from my bank account.  It did not show up in my Lending Club account in 15 minutes.

I patiently waited a whole week for the funds to show up in Lending Club.  I called their support number after 7 days and Sarah (the Lending Club support person, not her real name) was unable to find my deposit in their system and suggested I contact paypal.  When I told her that was unacceptable, and that I trusted paypal a lot more than Lending Club, she put me on hold to go talk to the accountant.  A few minutes later, she was back and had found my transaction in their system.  The fact that she had tried to just brush me off instead of doing due diligence on her side was frustrating, but she said the funds would be in my account the following day, so I just accepted it and that was that.  The following day, however, the funds were not in my account.

Three days later, I send the following email:
It is well past when you told me the funds would be available in my account.  What is going on?  If Lending Club is simply unable to process a deposit, please give me my money back.

I received no response.

Another week and a half passed, and another email:

Is it really possible that you all are unable to find my money *and* unable to respond to my queries?
My money was deposited on Jan 25th. On Feb 1 I spoke with you and you eventually were able to find out that my money was indeed in your system, but wouldn't be available until Feb 2.  That was 13 days ago.
My money is still not in my account.
In my last (unanswered) email I requested that my money be processed or refunded.  That was 10 days ago.
What is going on? 
Patrick Schless

I received no response.

Two weeks passed, and I called again to speak with Sarah.  What she told me about their customer service procedures I found very disturbing (as a customer).  Apparently their system had misplaced my first email (despite the fact that it was sent to the same address as the others, with the same subject "Attn: Sarah").  She had gotten the second email, and forwarded it along to the accountant.  She did not see any need to contact me to let me know that my request was being looked into.  The accountant (according to Sarah) gave my account a cursory glance, didn't see anything wrong, and disregarded my request.  He/she also did not see any need to contact me.  I, of course, had no idea that my request had been silently ignored, so I ended up just waiting, with my frustration and anger growing.

Sarah told me that when the accountant was in for the day, she would speak with him about the matter.  I told her I expected to hear back from her (as it is apparently not their policy).  An hour later she called me back, saying that they had found my money (again), and that they weren't sure why it wasn't in my account (but at least they agreed there was a problem, unlike the accountant's first opinion).  Twenty-five hours later, she called one last time to tell me the problem had been fixed, and my funds released into my account.

Personally, I won't be sending Lending Club another dime.  They apparently have serious problems keeping track of their customers' money, despite the fact that that is precisely the business they are in.  However, this encounter for me is less about why Lending Club sucks, and more about how not to manage customer service.  The company I work for routinely gets high, unsolicited praise for its strong customer service.  I always found this a little odd, because I just expect good customer service from any company I do business with (especially ones where we're dealing with potentially large sums of money).  I understand that software can have bugs, and the fact that my initial transaction wasn't successful isn't what pisses me off.  What really gets me are the multiple points of failure on their customer service side.  If Lending Club had followed through after the first call (when they said the money would be available the next day), or if they hadn't lost my first email, or had responded to my second email, (or had responded to my tweet), this all could have gone very differently, and I would likely have remained a (reasonably) happy customer.

UPDATE March 9, 2010: I was contacted by a representative from Lending Club to tell me that it was regrettable that things went down this way, and that they will work on refactoring their process.


  1. Go get em' Patrick!
    I love the fact that the internet gives the customer a voice.
    Not that you wouldn't have driven up to their door and start a picket line. :)

  2. Thanks, Kevin :)

    I completely agree... Even if this isn't a terribly high-traffic site, it's still cathartic to put my story out. I'm already getting some traffic from google searches along the lines of "lending club problems" so I wonder if I'm not the only one that's gotten bit.

  3. Yeah, I don't like the opaqueness of this company at all. It has a feeling that if everything goes right, you'll be fine, but if it doesn't, this is what will happen and I can't even imagine waiting as long as you did without threatening legal action.

    Definitely staying away.

  4. Well after making at least 10 Paypal transfers to lendingclub over the past year or so I have been fortunate enough to have had no negative experiences with transfer. I am sure, however, if I had had this sort of experience (above) I would be pissed and actually would want to take blogging revenge on them. The only real complaint I have with the p2p lending business and lendingclub is that the stats are boring! But that is the nature of the business...interesting to note boring is starting to mean: predictable

    (better then I can say for my stocks, bonds and funds!)

  5. My question is - are people making money investing on lending club?

    1. so far i am 2 years in. but hey past performance not an indication of future result

  6. I wish I had hope of EVER getting my money invested! The whole concept with LC seems to be how long can they hold money and for how many different reasons! I now have 2k in loans I bought on their folio site--which folio says us 100% LC and -0- them despite names. The site says 'BUY OUR LOANS AND GET THEM IN 1 DAY" I say--liar liar pants on fire! And yes, emailing them gets -0- response--EVER--calling gets a snitty person with -0- answers saying wait and see for tomorrow. While being held in "processing" for a week--not a day--with MY MONEY TRANSFERRED INSTANTLY--BUT THE LOANS STILL NOT IN MY NAME, now 8 OF THE 2K IN loans have gone away AND been cancelled--due to payments I now supposedly can't buy them?? Ok, but do ya think they gave me that money back on them either? think I can get my money back when they keep it and do NOT issue the loans I bought from another customer on folio.
    no! They just keep the money and give you nothing. Call and get treated rudely and like you're stupid for even asking where/when your money or loans will EVER show up!! RUN! Yep Lending Club suxs! Like you I planned to give them money--lots--but who the Hell puts up with this lying and never doing what you say you will?

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