I wrote about Prosper.com in January. I had good things to say about it.
While my experience hasn't changed, it appears that other Prosper users have been having a tough time. The Motley Fool recently reported that Prosper either lied to a court or its users about the nature of its business in a bankruptcy suit.
The Motley Fool reported that since June 2008, 18.5% of the money lent out at Prosper probably won't be paid back. The article does not distinguish between the borrowers' credit quality. It might be that the riskiest loans are failing, which is no surprise. All my loans (I only lent to borrowers with the highest credit quality) have either been paid back in full or are current. So far I got a pretty good rate of return.
Update: A big thanks to the person who left the comments below. I wrote previously that Prosper filed for bankruptcy. That isn't true.