A borrower chargeback is a process initiated outside of Prosper, in which a borrower who has made a loan payment has his or her bank cancel and request a refund on that payment. Because Prosper imposes a waiting period on incoming payments of 4 business days from the initiation of the payment request, payment failures and cancellations that occur within 4 business days of payment initiation have no impact on the lender’s account balance.
Beyond the built-in 4 business day waiting period, however, borrowers have up to 60 days to request a chargeback on their loan payments. Prosper will endeavor to contest chargebacks where appropriate, although the status of the payment will be marked as delinquent at time the chargeback is requested.
If a chargeback is processed successfully between 4 and 60 days after the payment was initiated:
- The full amount of the chargeback will be withdrawn from participating lenders’
accounts. If this causes a lender to have a negative cash balance, then the account balance will appear negative.
- Prosper lender servicing fees will be refunded to the lender commensurate with the amount of the chargeback.
- The amount of the chargeback will begin accruing interest again in the borrower’s loan balance.
- Applicable late fees will be assessed to the borrower based on the effect of the chargeback on the borrower’s payment status.