Creditor gets scammer tag -> signal "meaning 
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Meaning that person is a scammer and you shouldn't borrow money from them. (See the post above me for one way they could abuse this, but there are many others.)"Quote
Obviously the latter signal is useless. Therefore, scammer tags are only assigned to borrowers in default.
I don't agree. If Patrick's portfolio had consisted of deposits from people with scammer tags, people might not have so easily underestimated the risk.Quote
Regardless of whether Patrick is a good guy or whatever, there may still be idiots who would agree to lend him more funds.
The scammer tag is intended to protect these idiots from their own stupidity.
It's not clear why that would be stupidity. He might want to borrow funds to finance his debts better. There's no evidence he would mislead people about the circumstances. He has no history of doing so. If he wants to borrow money so he can settle his debts with those he had to force terms on and instead owe money to people he freely negotiated terms with, why should that be discouraged? (But that's the best argument I've heard so far. If that's the reasoning, I wouldn't consider it particularly unfair or unreasonable -- just a bad idea.)The scammer tag is intended to protect these idiots from their own stupidity.