I think this is mandatory! You mean that btcjam does not chase the defaulter in any way? It passes it along to investors?
Correct - and most users walk away rather than go to court for what is (usually) a small amount. BTCJam doesn't care - they get their cut up front.
In Canada, it's actually very easy to collect on a debt certificate. Just simply file it in court and you get your money - the defendant has no chance to provide a defense because he/she has already lost.
I started up a website called coindebt.ca and even then I couldn't find enough interested people to make it work.
That's why you always need collateral.
Of course, by its very nature; BTCJAM is global meaning that jurisdictional and legal difference between countries makes collection of debt incredibly difficult, not to mention costly.
As said before, BTCJAM is an awesome idea but unfortunately it is a scam magnet.
So BTCjam just pushes the global jurisdictional problems onto the investors. That is really their business model, push the risks and problems on to the investors and then post nonsense guides about how one can avoid the risks or collect the small amounts owned to them by a defaulter. (Assuming the investor diversified as the site recommends.) If they would at least be honest about what they are doing it wouldn't be so bad.
You are totally correct that the site is a scam magnet.
There are many legal hurdles around what you are talking about. If it was as easy as you guys described don't you think there would be many companies doing this? Per your comment, we actually make our entire operation very clear in the terms, investor/borrower agreement, FAQ and so on. We are not stating that we do these things and don't follow through. There are numerous legal hurdles that we'd need to accomplish to provide these services you ask for. We of course want to do many of them, but it's very hard accomplishment capital wise.
BTCjam posts advise that if investors follow ensures they won't be in a position to gain by going after the scammers. Instead BTCjam should just come clean and post that when someone scams BTCjam isn't going to help and there won't be anything people can do to actually collect their money other than to beg the scammer to give it back to them! The BTCjam arbitration awards are basically a joke and most likely don't have valid information about the lender in them either. You basically want the investors to do all the work.
BTCjam even makes it very hard for investors to even provide feedback! Why should an investor have to have give his ID information to you before they can provide feedback on borrowers that they have loaned BTC too? BTCjam actually ends up being supportive of scammer and biased against the investor. That may not be the intent but that is how it works out. It shouldn't be so hard to make a profit by loaning bitcoin.
There is a very simple fix for your business. Put BTCjam in the same position as the investors. Don't collect an upfront fee, collect part of the fee from every payment. If that was done I'm sure all the problems would be fixed is short order.