US Lawmakers Say FinTechs in PPP Acted ‘Recklessly’

A U.S. House subcommittee said FinTech companies facilitated fraud in the Paycheck Protection Program (PPP).

A staff report of the Select Subcommittee on the Coronavirus Crisis said the companies were tasked with processing PPP applications and screening out those with signs of fraud, but failed to do so, “in many cases recklessly,” according to a Thursday (Dec. 1) press release.

The companies named in the release include FinTech companies Blueacorn PPP, Bluevine, Kabbage and Womply and banks Celtic Bank and Cross River Bank.

“As today’s report details, many FinTechs, while promising to help disburse billions of Paycheck Protection Program dollars to struggling small businesses efficiently and expeditiously, refused to take adequate steps to detect and prevent fraud despite their clear responsibility to safeguard taxpayer funds,” Rep. James E. Clyburn, chair of the subcommittee, said in the release.

The FinTechs and lenders saw significant fraud in the PPP program but sought to evade responsibility, instead saying the program had been mismanaged by the Small Business Administration (SBA), the release stated.

The report’s recommendations include further investigation and urging the SBA to reconsider whether FinTechs should be permitted to have a role in future federal lending programs, according to the release.

Reached for comment, Bluevine said in a statement emailed to PYMNTS that the subcommittee noted that the firm adapted to the threats better than some of the other FinTech companies included in the inquiry. Bluevine also said it partnered with two licensed, SBA-lender banks to provide third-party services and that it followed SBA guidance and program guidelines.

“Since its founding in 2013, Bluevine has remained committed to establishing and maintaining robust internal controls and governance processes,” the statement said. “We were happy to share with the subcommittee information about the processes and controls used to issue much-needed loans to small businesses during this unprecedented time.”

A Cross River spokesperson told PYMNTS via email that the report shows that the bank’s partnerships with responsible FinTech companies provided fraud protections and controls during PPP.

“More importantly, these partnerships democratized the program and provided critical funding to the smallest businesses that were being denied by larger institutions who focused solely on serving their existing customers,” the Cross River spokesperson said.

Blueacorn, Celtic Bank, Kabbage and Womply did not immediately respond to PYMNTS’ request for comment.