Didn't BTCJam requires you to upload a copy of your passport ID card? And they have an international arbitrage too but I don't know if a country's jurisdiction would cover this up.
Basically the higher someone's rating is that means the more he has submitted document for verification or has a good track record of returning the loan. However if someone decided to scam, all BTCjam will give you is an arbitration award that contains all the documents that has been submitted by the person. you will then need to
sue this person at your own will with your own expenses as well
The best part is that the info they received is 80% of the time fake. There are many people who take reputation loans to boost their reputation and eventually scam down the road. BTCJam's support is non existent, I have contacted them several time in a few months but they gave me no response at all.
Not too sure about this but it seems possible if you have some skills in editing but it is indeed pretty much easy to fake where you are coming from. They track you by your IP and put up a flag in your account info based on where you are coming from despite that you submit an ID card from another country to them.
Regarding the reputations loan, this has been a long time practice there and basically people are already aware of this practice but It couldnt help that some people are greedy when they see an obvious scam loan that put up a massive amount for the interest.
What more depressing is that there are several user with pretty good track record in repaying their loan and in the end since they have earned all the trust, they borrow up a huge amount of it and never came back