Fintechs’ Lax Oversight Enabled PPP Fraud, Report Says
Financial-technology companies that distributed Paycheck Protection Program loans often employed lax oversight that allowed fraudsters or ineligible individuals to receive relief funded by taxpayers, a congressional report found.
In its report, the House of Representatives' Select Subcommittee on the Coronavirus Crisis recommended that Congress and the Small Business Administration should consider carefully whether “unregulated businesses” such as fintechs should be allowed to participate in future federal lending programs. The SBA was responsible for administering PPP funds.
“While the PPP delivered vital relief to millions of eligible small businesses, at least tens of billions of dollars in PPP funds were likely disbursed to ineligible or fraudulent applicants, often with the involvement of fintechs, causing tremendous harm to taxpayers,” lawmakers wrote in the report issued Thursday.
The subcommittee looked into the roles of the online financial firms in helping to distribute the $5 trillion in pandemic-related stimulus funds. The report highlighted issues at four companies in particular: Kabbage, Womply, Blueacorn and Bluevine.
Combined, Womply and Blueacorn worked on nearly one in every three PPP loans funded in 2021, the committee found. Both companies “failed to implement systems capable of consistently detecting and preventing fraudulent and otherwise ineligible PPP applications,” according to the report. Representatives for both firms didn't immediately respond to requests for comment.
Kabbage, a small-business lender, failed to identify “clear signs of fraud,” including PPP loans given to fake farms, the lawmakers wrote. Its employees expressed reservations regarding the fraud-detection system the
Read more on tech.hindustantimes.com
