A congressional panel has requested documents and information from two more financial technology companies as lawmakers expand their investigation into fraud within the Paycheck Protection Program.
The two firms, Blueacorn and Womply, processed about one-third of all PPP loans this year, according to the Select Subcommittee on the Coronavirus Crisis. Blueacorn collected at least $1 billion in fees, and Womply collected fees totaling between $1.7 billion and $3 billion, according to Nov. 22 letters by the committee’s chair, Rep. James Clyburn, D-S.C.
The panel is looking into whether the fees came from “processing fraudulent or ineligible loan applications,” Clyburn wrote. The fintech firms have until Dec. 6 to provide the requested materials.
After reports that fintech companies and their partner banks were disproportionately linked to fraudulent PPP loans, the congressional committee
“I am deeply troubled by reports alleging that financial technology lenders and their bank partners failed to adequately screen PPP loan applications for fraud,” Clyburn wrote in the most recent letters. “This failure may have led to millions of dollars worth of FinTech-facilitated PPP loans being made to fraudulent, non-existent, or otherwise ineligible businesses.”
Blueacorn is cooperating with the investigation, a spokesperson said. Womply did not immediately respond to a request for comment.
The PPP, launched in the early weeks of the COVID-19 pandemic, offered business loans that were fully forgivable for borrowers who met certain criteria. More than 11.8 million PPP loans totaling nearly $800 billion were made between the program’s launch in April 2020 and its closing in May 2021.
The program was administered by the U.S. Small Business Administration, but loan applications were processed by banks and fintech companies, which collected fees from the government.
The congressional panel is seeking documents and policies related to the processes that Blueacorn and Womply used to screen for potentially fraudulent loans, as well as any communications about possible financial crimes stemming from the program.
The committee is also seeking more specific information, such as the exact amount of revenue the companies earned from the PPP, along with documentation, internal audits and monthly estimates of the number of improper PPP payouts.
In the
The University of Texas researchers also concluded that roughly half of PPP loans made by Blueacorn’s partner financial institutions contained indicators of fraud, Clyburn wrote in the
Some loans processed by each company, the researchers found, went to businesses that either were not registered in their states or listed significantly higher pay for workers than their industries’ norms.
“As we reviewed increasing volumes of loan applications, we learned, adapted, and enhanced our fraud detection capabilities and protocols,” Blueacorn said in a statement.
“Along the way, we partnered with the SBA and other authorities to ensure the integrity of the PPP while providing a traditionally overlooked population with access to the funds they needed and deserved.”
A spokesperson for the trade group American Fintech Council said in a statement Tuesday that fintechs “unequivocally stepped up during small business’s most crucial time of need, ensuring that minority and women-owned businesses had equal access to the system.” The statement did not address the specific concerns raised in Clyburn’s letters.
“PPP showed we can break down the long-standing structural exclusion of too many Americans, and level the playing field if we create policies that embrace responsible innovation and partnerships,” the spokesperson said.
