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.
Even more if it's for a small amount...
Does anyone knows the default percentage on BTCJam?
Return is up to 10% for about 5 out of 10 loans, the rest was 5, 6 and down to 1.65%. The first ~20 loans I saw are for a year or a bit shorter, but you can find things for 30 days as well.
@Arbitration: So this gives you help to legally pursue a party not willing to pay? I imagine scammers simply use fake details, it isn't that hard.
Suggestion: Try autoinvest, last time I looked it spreads out your investment among a lot of loans, so your chances of getting ripped of are (assuming 51% of lenders is legit) smaller.
Last time I checked, btcJam is strict on the details of the borrowers there, so I think faking details would be hard unless you are good at it. On the part of arbitration, even if you have the power to legally pursue any party who defaults a loan, if it's a small sum and the defaulter is from another country, it will basically be useless.