Blueacorn employees claim they received no training on the loan underwriting process or how to spot fake driver's licenses and tax documents, according to the report.īlueacorn's loan reviewers were told "the faster the better" by managers who recommended spending no more than 30 seconds on each application.
The fintech Blueacorn spent just a few million dollars on fraud prevention even as it raked in more than $1 billion in PPP processing fees.
The fintech Womply had fraud prevention systems described in the report as "put together with duct tape and gum." Meanwhile, Womply's CEO had been convicted of insider trading yet was leading the company's fraud prevention efforts. In the spring of 2020, a fintech called Kabbage furloughed half of its workers who were dedicated to assessing risk and reviewing accounts, yet Kabbage funded billions of dollars in PPP loans by relying on temporary contractors, the report says. Banks and lending partners collaborating with fintechs admitted doing little to check for fraud in fintech-approved loan applications.įintechs invested little in fraud prevention.Fintechs profited off processing fees for each approved loan, meaning they had little incentive to find fraud that would cut into their revenues.Many fintechs "failed to stop obvious and preventable fraud" because they had little to no fraud prevention efforts in place.This week's congressional report appears to confirm those allegations of widespread fraud.ĭuring an 18-month-long investigation preceding Thursday's report, the House Select Subcommittee on the Coronavirus Crisis reviewed about 83,000 pages of internal emails, messages and other documents from more than a dozen fintechs and interviewed former employees, executives and lending partners.Ĭongressional investigators filled 130 pages of the report with their findings, including:
That amounts to $64 billion in potentially wasted taxpayer money. Kruger and his colleagues reported in a study they published last year that 1.4 million PPP loans show signs of fraud. Investigations Virtually all PPP loans have been forgiven with limited scrutiny They were lauded for those efforts.īut that speed and reach came at an expense, says Samuel Kruger, an assistant professor of finance at the University of Texas at Austin. Fintechs also reached more independent contractors, as well as businesses run by women and people of color, than long-established banks did. Congress hastily rolled out the program in spring 2020, eventually racking up a price tag of nearly $800 billion.įintechs, a nebulous term broadly defined as businesses that use technology to improve or automate financial services, told Congress they could issue PPP loans to struggling small businesses faster than traditional banks - and they did. PPP provided more than 11 million potentially forgivable low-interest loans to small businesses to help them keep employees on the payroll as COVID-19 shutdowns decimated profits. Bluevine, a fintech noted in the report, told NPR it adapted to threats of fraud better than other companies mentioned.Ī sprawling congressional report accuses several little-known financial technology companies, or fintechs, of reaping "billions in fees from taxpayers while becoming easy targets for those who sought to defraud the PPP," or Paycheck Protection Program. A congressional report found financial technology companies, or fintechs, largely fueled PPP loan fraud.
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