Lending Club announces $5000 video contest

How do you earn money through peer to peer lending networks? Interest on your investments or referral cash? Now there is another way. Lending Club is giving away a cool $5,000 in a video contest. You do not have to be a Lending Club member, but you do at least have to have a Facebook account to view and enter the contest. Here's the announcement for those that do not have an account:

Lending Club is a person-to-person lending application available exclusively to Facebook users. Hundreds of Facebook lenders have already extended more than $300,000 in loans to Facebook borrowers since May 24. Users borrow and lend money among each other, bypass the banks and get better rates.

Now here's what we're thinking: person-to-person is a strange idea at first. When you think about it, it makes a lot of sense: users cuts the banks out and they all get better rates.

So in order to help explain the benefits of p2p lending, we are hosting a contest starting July 17 until August 10 for the best video about Lending Club and person-to-person lending. The best video wins $5,000.

The winner will be the video that has the most views on YouTube by August 10, 2007. The video must explain how Lending Club can help you refinance your debt at better rates, buy something you (really) need or just make money by lending to other users. Your video must be posted in this group's wall and in YouTube and contain the YouTube tags "Lending Club" and "person-to-person lending". See full contest rules in the "Rules" section below.

There is no obligation to join Lending Club to participate (although membership is free and you're welcome to check out our application at http://apps.facebook.com/lending-club )!

A search on YouTube for Lending Club right now turns up no results. A search for person to person lending shows two videos - one of Zopa's crop circles and a video introducting Prosper to sub-prime borrowers. Both those videos were posted in late 2006 and have approximately 2,000 views.

This seems like a great marketing strategy for Lending Club. They will likely get several very creative advertisements and in the process create fans and gain visibility. It targets their younger Facebook demographic as well.

My biggest worry is that YouTube view counts are easy to game. For a Mashable article, Gaming YouTube for Fun and Profit, Pete Cashmore showed how easy it is to build thousands of views overnight. It would be difficult for Lending Club to detect someone gaming the system since they do not have access to the YouTube platform. The potential penalties for falsely inflating view counts, however, are very strict. According to the official rules, "Any attempt by an entrant or any other individual to deliberately damage any online service or web site, tamper with the judging process, or otherwise undermine the legitimate operation of the Contest is a violation of criminal and civil laws and should such an attempt be made, Sponsor reserves the right to seek damages and/or other remedies from any such person to the fullest extent permitted by law."

I find it interesting that Lending Club did not make an announcement about the contest on their official blog. It was only advertised inside Facebook. More and more it looks like they want to focus their blog solely on finance education. Rex Dixon, Lending Club's director of social media content, did announce the contest on his personal blog.

Our previous coverage of Lending Club is here. If you create a video, please post a link in the comments.

Update (July 19): Lending Club CEO Renaud Laplanche announced the contest on their official blog.