I’ve written about what I consider to be the best P2P lending platforms at the moment for investing, however after the debacles on various other platforms during the past few months, people have been reaching out to me to ask about which platforms they should not trust.
I think it’s a good idea to list which platforms I actively avoid so you can do your own research about them and potentially avoid them as well. I’ve had the idea to write this post for a long time but I originally wanted to write a longer post about each of these platforms to explain my reasoning. Until I have the time to do so, I’ll just list them and try to describe in a line or two why I don’t trust them.
Platforms who were in the original list and eventually went bust are marked with a strikethrough.
- Robocash – has regulatory trouble in the Philippines.
- Fast Invest – funded by an ICO and too much focus on the founder’s story, which I don’t find believable anyway. Read my review of Fast Invest.
- Housers – apparently no due diligence done on projects and a murky fee structure along with many loan projects that were never concluded.
- Nexo – lack of transparency and potentially misleading statements. Currently passing through a rough patch in terms of sustainability.
- Bitofproperty – Spelling mistakes on their website, team young and inexperienced.
- Wisefund – sparse information about the projects they are funding.
- Boldyield – not convinced about their way of measuring LTV, and I’ve had negative experiences with a similar platform in the past (Lendy).
- Grupeer – people have provided evidence of scam practices by this platform, we’re all awaiting the next few days to see how it develops (as of 30/03/2020)
Monethera– shady buyback guarantee. Kuetzal– seems to be a scam. Envestio– featured several dubious projects in the past, although things seem to be improving lately. Read my review of Envestio.
Hopefully, I’ll have some time to write about the platforms mentioned above in more depth at a later stage, if they survive till then.
There are some other platforms that I don’t necessarily think have serious management problems or are scams, however, I do avoid them just the same as I don’t think it’s worth the time and hassle to invest in them.
Lenndy and Iuvo Group are two such examples. They are small players in the business and show no signs of catching up with platforms like Mintos nor are they offering anything innovative compared to the top players. I, therefore, see no reason to invest in them.
Bondora is one such example I can think of. I’ve never liked their branding nor the returns they’ve been able to generate for investors, and although they were one of the pioneers in the industry, they now lag far behind other top players such as Mintos.
Do you agree with my choices? Let me know if there are other platforms you actively avoid investing in and why.
The P2P Platform Graveyard
Several P2P lending companies have gone bust over the past years. Here’s a list of them:
- Monethera (2020)
- Envestio (2020)
- Kuetzal (2019)
- FundingSecure (2019)
- Lendy (2019)
- Collateral UK (2018)
What’s your prediction for the next one to join the list? I’m betting on FastInvest, which as far as I can see is a total Ponzi scheme.
So far I’ve lost money on Lendy. It was one of the first platforms I invested in, and since I didn’t know much about lending at the time, I luckily had the good sense to only invest a relatively small amount into the platform. It is now in administration and there is hope for some recovery of the debts, but I will definitely lose part of my investment there.
Overall the net result from investing in P2P lending platforms is still very positive, and that is what really matters since we all know that these are relatively high-risk platforms in the first place, and there are bound to be borrower defaults, loan originators going bust and in some cases platforms themselves failing for myriad reasons.
The most important thing when you lose some money is to review what happened, understand what lessons can be learned and move on. All investors lose money at some point, but as long as you’re right about your investments most of the time you will make money. It’s important to really understand the concept of risk in investing and make peace with it right from the start.
Faced with the pain of losing money, many investors throw in the towel and write off investing altogether, but this is a mistake. As humans, we are wired to feel much worse about losing something than about gaining something, so you need to understand the psychology of risk and reward and push beyond it to continue learning and investing because it’s the only way to become a better investor and ultimately make serious money in the long run. Remember that if you’re not investing, your money is actually losing value due to the effects of inflation.
If you’re just starting out and you’re feeling that the prospect of investing in P2P lending is daunting, you might want to check out my tips for evaluating P2P lending platforms as in that post I’ve shared all the lessons learned along the way and my criteria for deciding whether or not to invest in a platform.
A note on Trustpilot
Over the years I’ve come to understand that many new investors rely heavily on Trustpilot to formulate their decisions on whether to invest in a platform or not. By default, I don’t trust sites like this and would never rely on them to make up a decision.
I have looked at Trustpilot reviews a few times as some platforms proudly display their rating, but it turns out that several of them are clearly abusing the system. Basically, it consists in posting positive fake reviews while simultaneously taking down bad reviews.
I think the following video fully exposes the uselessness of Trustpilot as a review platform: