I spent 5 hours on the phone and in conference with Craig, Kerry and Troy discussing the concerns brought up in the comments on the review and interview articles. I hope that this article will alleviate some of the concerns about EarnByLoaning. I understand that there will always be people who will be positive, negative or neutral. This article is intended to clarify some issues, not to persuade anyone that has already made up their mind. As with any program, please seek multiple sources of information and do your own verification to determine if a program is for you or not. (ADD Warning: This is another one of my long articles!)

General

I asked Craig why he is borrowing from people, rather than a bank. He replied that in order to get a bank loan, he would have to secure it with assets. In addition, there are FDIC (US alphabet commission that regulates banking) guidelines that prohibits a bank from loaning for investments of this nature.

I also asked for Craig’s opinion on why EBL seems to get a lot of scoffers. He said that he really didn’t know, but thinks it could be trolls, HYIP program administrators and/or HYIP monitor owners. They aren’t members, because the members are all pleased. I asked him why EBL isn’t on any of the HYIP monitor sites. He said that there are two reasons. First, he wants to distance EBL away from the ponzi HYIPs. Second, EBL does not, nor does it ever intend to, pay for advertisements anywhere. He said that because EBL does not need new money to grow, then there is no reason to pay for advertising. He gets 8-10 emails per week from HYIP monitor owners asking for money to list EBL on their site. I asked him why he agreed to posts here and he answered, “My preference is that if we are going to be talked about, we want to answer questions, instead of blind posts. We are not hiding out”. They welcome all questions.

I also asked Craig what he would like to say to those being negative without really looking into EBL. He answered, “Join the program, and try it out first. Then if you’re still negative, shoot your mouth off or just go away.” I think that is a fair answer.

Here is the link to the Nevada, Secretary of State website where the incorporation details of Quest Holdings, Inc., are located. The “Status” field with the “Default on” date means that the information defaulted from last year’s info. That is, nothing has changed. It does not mean that the corporation is in default. (Thanks Nelson!)

PayPal

I was asked if I verified that PayPal really did investigate EBL. I can now answer that, yes, I have confirmed it. I talked to two parties that were involved. First I talked to the person that referred the big spender and afterwards I talked to the person that made the $10K spend from PayPal to EBL at one time. I’d like to reiterate that I have first hand knowledge that PayPal does investigate all $10K transactions.

The $10K spend was made on November 10th, 2006, followed by a second, smaller spend on November 11th. PayPal froze EBL’s account until December 11th, 2006. During the month long hold, EBL had to send in ID documents and business documents about the transaction. When PayPal was satisfied they released EBL’s account and allowed the transaction. PayPal has not questioned any transactions since and they approved allowing EBL’s continued use.

Both people I talked to confirmed that this is what happened, although neither had first hand knowledge of the hoops that EBL had to jump through to satisfy PayPal. Craig gave me a list of things that PayPal asked for. Rather than reading the list here, please see my PayPal Investigates Transactions $10K+ thread at NoBS Network.

Disclosure

EBL is not classified as a securities broker, because they are not selling securities. They are borrowing money and can not tell the lenders what they do with the money. The only thing that they are legally allowed to tell is included in the Lender’s Agreement, which is how long they are borrowing money and how much they will return to the lender. Anything more may change their classification. Craig said, “The SEC gets involved when it is a secured interest loan and it is inter-state commerce, which falls under the jurisdiction of the SEC.” EBL spent months with lawyers to come up with their business model.

There is a member that has a self-guided Roth IRA with an accredited financial institution (name withheld for security reasons.) The financial institution investigates and approves/disapproves the transactions for the IRA. (Note: Individual Retirement Accounts risk guidelines are stricter than non-retirement risks.) EBL is in the process of gathering all of the information that the financial institution requested. It includes a full disclosure of what EBL does to make the guaranteed returns. It will be sent to the financial institution this week. It may take up to another 30 days to finish the process, depending on how fast the financial institution reviews the information and if they need additional information. EBL can do a full disclosure to this 3rd party accredited institution without changing its classification. You can read the member’s post at NoBS Network in the EBL thread.

Guaranteed Returns and Lender’s Agreement

I have had the Lender’s Agreement verified by a contract lawyer. He approved of the document and said that it is legally binding in Pennsylvania, where I’m located. Although he believes that the language is vanilla enough for all states, he put a request out on the internet asking other lawyers, especially those in Nevada and Washington. The lawyer then cautioned me that if it comes to litigation to receive the returns, there will probably need to be a suit filed in Nevada and then moved to Washington. He said that the multiple states makes suing more difficult. I mentioned that if it came to that, there would probably one lawyer handling all of the complaints for the lenders. He said that one attorney would be most efficient. (See section 1.7 of the Lender’s Agreement for more information.)

The Lender’s Agreement is similar in form and language to the agreement that you must sign when you take out a loan from a bank. If you default on paying the bank back, they have the written agreement to get the money out of you. The same thing applies with EBL’s Lender’s Agreement in reverse. Someone asked about other documents that accompany a lender’s agreement, such as a promissory note. The promissory note and other documents are all rolled into the EBL Lender’s Agreement to make things easier for both the lender and the borrower.

What this means is that they are the first public program that guarantees the promised returns and backs it up with a legally binding contract, which I know about. If you look at the TOS, you will see the guarantee there, too. Check out the TOS of any other program you are in. Please, let me know if you find one that doesn’t have a disclaimer about returns not being guaranteed.

GC Script and New, Custom Script

Troy and Kerry gave me a bit of a history lesson for EBL. They started out as just friends and family for months. During this phase they looked around for an inexpensive script that would meet their needs. A guy sold them the GC script, bugs, open source code, and all. It didn’t quite fit, but it was as close as they could find at the time. They did not know that it was a bootleg script. Until people started asking recently about the GC license, neither of them had even heard of GoldCoder scripts. Those that don’t play HYIP games, probably never hear of GC. Kerry is a programmer, so he fixed the bugs, turned off things like automatic payments and fixed the holes. He regularly tests the changed script for holes.

OK, most of us know what a GC script looks like and can spot it from the home page. We also know that there are real, licensed GC scripts and bootleg ones. I’m not going to debate on what Craig, Kerry and Troy knew or didn’t know back then. They know now.

However, they are close to launching a brand new, custom script. They can’t give an exact date, but I did pin them down to launching in late June. The new script will have a completely new look and feel. Currently they are in the phase of obtaining licenses for all of the sub-processes that they’ve purchased. They should be done inserting the licensed processes by the end of this week or next week. Then they will have a live URL and will begin the first testing phase. I received permission to view the new, custom script while they are testing it. They also said that the last testing phase will run a simulation of a year’s worth of data. That’s a good sign that they’ll hopefully find most of the bugs before launching.

Please give them some leeway after launching. No matter how much they test it, there are bound to be things that crop up. It may be up and down during the first few weeks as they get it stabilized. Lender records and returns will not be impacted at all.

The new script will contain some changes to the way things are done. However, the TOS, including the loan plans, are not changing. There is no need to change plan terms, because they match what they are able to produce. However, they do reserve the right to make changes, if their returns change. Right now they are able to produce more than expected, so the reserve fund is growing. (No, I am not privy to how much is in the reserve fund or how much it is growing by.)

In addition, no new payment processors, such as MoneyBookers, will be added in the new script. They may add new payment processors in the future, if they get requests. The more payment processors allowed, the higher the fees and the greater the risk for injection hijackers. They picked the two most widely used payment processor/e-currencies and feel that they are sufficient for now. Almost all current loans were done via PayPal.

The EBL domain name is stuck in the Registerfly fiasco, which was reported here. ICANN is not really helping with domain names. They are not forcing Registerfly to release the domains, even though they stripped Registerfly of all accreditation. ICANN is forcing domain name owners to jump through a lot of hoops. Quest Holdings does own a couple of more domain names that are not registered with Registerfly and are already propagated. If the EBL domain name is still being held hostage by Registerfly when the new script is ready for launch, Quest may chose to launch the script with one of the other domain names. If they do, all data, including lender information, is kept offline already, so they would just move it with the new script to the new domain name. There will be no service interruption.

Other

We also had some discussions about what it costs to incorporate in Nevada (~$1,200 + lawyer fees) and what it would entail to become a security broker under the SEC regulations (too much information that is irrelevant, since EBL does not fit within SEC jurisdiction.) In addition, there were discussions about Forex, Hedgefunds, etc. and why EBL does not do those high risk instruments. I am very, very impressed with Craig’s financial knowledge. He has obviously been widely involved in the financial business for many years. His knowledge about so many different aspects of the financial industry increased my comfort level.

There was a final discussion about holding an open conference/Q&A on a regular basis, like monthly. If they do, I will let you know. It will be open to anyone that has questions about EBL.

Housekeeping

There are some housekeeping tips that Troy and Kerry asked me to pass along.

1. Please either turn on allow cookies or use IE when joining. When cookies aren’t allowed, the referrer is not set properly. Cookies are only needed for the registration, after that you can go back to your favorite browser.
2. If you want to loan EBL money, please use the buttons on the site. Never send funds directly to EBL. This is good advice for all programs.
3. When you loan money using the site, please follow through until you are back at the site. Closing out too soon means that the transaction isn’t complete and won’t be posted to your account.
4. EBL does not accept credit cards in any form, including through a loan from PayPal.
5. EBL lowered the PayPal withdraw fee to 3%. E-Gold is 8%. The E-Gold fees are due to in and out exchanges from 3rd party exchangers and bank fees, simple as that. The new PayPal fees will be done manually, until the new script is in place. The new script will calculate it automatically. For the current script, you will see the old calculations in your history, but your payment will reflect the new fee.

If you still have issues about EarnByLoaning, please feel free to post them below. Remember that all opinions (good, bad and neutral) are welcome. Please try to post your reasoning for your opinion. Also, remember that you should use many sources and only you can determine your comfort level (or lack of) for any program. Never join a program just because I say so or so-and-so says so. Only loan money that you do not have any other intensions for its use.

JMO - Sharon