What is Arbitration?
If a borrower does not make payments as required by the terms of the loan, a Notice of Default will be sent to the borrower. Simultaneously, the investors will receive a letter to encourage finding a solution. If the Default remains uncured for 90 calendar days, the entire loan will be sent to our arbitration partner, net-ARB.com. Net-ARB is an independent firm, having no ties to BTCjam.com or any of its officers.
Our arbitration partner, net-ARB, will review the loan terms, certify default and issue an Award in favor of the investor(s) for the full amount still owed. The Arbitration Award is binding and cannot be appealed. This Award may be used to procure a judgment against the borrower in a court of law. (Net-ARB will provide the investor(s) with all other information necessary to pursue a judgment).
http://help.btcjam.com/customer/portal/articles/1987707-arbitrationSeems like it's more of a hassle to the lender if ever the borrower defaults his/her loan. Not a good approach to such cases imo, if the borrower is from another country, you can't do anything about it, literally.
I just started with BTCJam and I've made four loans but only to people that have a history of previous loans. One guy made a payment 3 weeks early which was a surprise.
I would suggest making about 10 small loans to lower your risk.
Also, re-invest your interest payments to further lower your risk.
Even the A+ verified borrower fucks up sometimes, though the cases are very rare. Reviewing the profile of the borrower thoroughly and checking his/her history would give you an idea whether to give that user a loan or not. I beg to disagree but if you are a newbie on such things, trying to give a loan of a small amount and limiting your loan to a single transaction would do to familiarize yourself on the system. If you think you can handle it, then next time you can try and be bold: lend different amounts to different verified and 'trusted' users simultaneously. Just an advice though.