Several lesser-known fintech is accused of making “billions in fees from taxpayers while becoming easy targets of those who sought to defraud the PPP (Paycheck Protection Program provides) evidence of fraud in a lengthy congressional report.
Paycheck Protection Program
PPP (PPP (Paycheck Protection Program provides) evidence of fraud has provided over 11 million potentially permissible soft loans to small businesses to help them retain their workforce during COVID-19 shutdowns. Congress rushed the programme in April 2020, costing over $800 billion.
Fintechs, nebulous companies that use technology to improve or automate financial services, told Congress they could issue PPP (Paycheck Protection Program provides) evidence of fraud loans to struggling small businesses faster than traditional banks, and they did. Fintechs contacted more independent contractors and minority-owned firms than banks. They were applauded.
PPP (Paycheck Protection Program provides) evidence of fraud
The study by Kruger and co-authors was published last year and found that fraud was present in 1.4% of PPP (Paycheck Protection Program provides) evidence of fraudulent loans. That’s a potential loss of $64 billion for the government. A report from Congress released this week seems to back up those claims of systemic fraud.
As part of its 18-month investigation leading up to Thursday’s report, the House Select Subcommittee on the Coronavirus Crisis reviewed approximately 83,000 pages of internal emails, messages, and other documents from more than a dozen fintech and conducted interviews with former employees, executives, and lending partners.
Findings of Congressional investigators
The 130 pages of the report were filled with the investigators’ findings, which included:
• A significant number of fintech companies “failed to stop evident and preventable fraud” because they had insufficient or nonexistent fraud protection measures in place.
• Because fintech companies made money off of processing fees for every loan that was approved, they had little incentive to look for fraud because doing so would reduce their revenues.
• Banks and other lending partners that collaborate with fintech have admitted that they do little to check for fraud in loan applications that are approved by fintech.
A decrease in spending aimed at preventing fraud
Fintech Womply’s anti-fraud system was “built of duct tape and chewing gum,” and its CEO was convicted of insider trading. Blue corn, a fintech, earned over $1 billion in PPP PPP (Paycheck Protection Program provides) evidence of fraud processing fees but spent only a few million on fraud prevention. According to the investigation, Blueacorn personnel were not trained on loan underwriting or identifying false driver’s licences and tax documents.
Managers advised Blueacorn’s loan evaluators to complete applications in 30 seconds or less.
As NPR reported, the SBA did little to prevent fraud. It could barely police the programme and did few fraud checks during the loan application and forgiveness. Despite widespread fraud, it made loans easier to forgive.
As Congress precipitously unveiled PPP (Paycheck Protection Program provides) evidence of fraud in April 2020, it offered to pay a chance for each loan to banks and lenders. These processing freights were meant to incentivize their participation, and runner after runner of internal dispatches included in the report shows the incitement worked.
” The further you submit, the further we get paid,” Blueacorn directors allegedly told workers.
The report also claims that Blueacorn offered preferential treatment and lower scrutiny to large-bone loans they dubbed” VIPPP.”
” ending these monster loans will get everyone paid,” wrote Blueacorn co-founder Stephanie Hockridge in internal company dispatches included in the report, adding that loan pundit should” cancel” certain lower loans.
Blame on the Trump administration
According to the report, as PPP (Paycheck Protection Program provides) evidence of fraud went on, fintech attempted to place blame for the significant amount of fraud that was happening to the Trump administration.
NPR contacted five companies whose names stood out in the report. Two of them, Blueacorn and Womply, did not respond, and investigators were found to be responsible for about a third of all PPP loans funded in 2021. Bluevine, Celtic Bank and Cabbage told NPR they cooperated with the commission’s investigation and were proud of the work they did in the unprecedented circumstances.
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