It felt like a modern day scarlet letter, instead of a innovative new way to deliver cheaper loans. There are other techniques to deliver cheaper loans, which don't lead to social ostracism (and which don't violate any social network terms of services).

because your tricking poor investors into thinking the returns would be better. "Most" people that don't pay usually don't pay because they can't pay. And people that don't live up to their obligations and can pay will probably sue you for your predatory lending and cruel loan terms.

It is bad for the same reason that 100% interest loans are bad.

They are predatory on poor people, and they trick people into accepting something when they don't really understand the consequences or "believe" them.

A person may incorrectly accept a loan like this, while being under the mistaken assumption that they aren't at risk of the consequences. Sometimes people just make bad decisions.

It is really immoral to take advantage of someone like that.