Report: Financial Technology Companies Fueled Massive PPP Fraud

Fintechs attempted to place blame for widespread fraud on Trump administration

  • A 130-page congressional report accused financial technology companies, known as fintechs, of reaping “billions in fees from taxpayers while becoming easy targets for those who sought to defraud the PPP [Paycheck Protection Program].”
  • The report appears to confirm results found in a previous study by Samuel Kruger, an assistant professor of finance at the University of Texas at Austin, and his colleagues. Their research uncovered 1.4 million PPP loans that showed signs of fraud amounting to $64 billion in potentially wasted taxpayer money.
  • Congressional investigators concluded that many fintechs “failed to stop obvious and preventable fraud” and had little incentive to do so because the companies profited off processing fees for each approved loan.
  • The report also found that banks and lending partners admitted to doing little to check for fraud among fintech-approved loan applications.
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