Somehow Blueacorn (who?) and Womply (who?) became the faces of Fintech in the congressional investigative report on PPP fraud
ONEaccording to a recently published congressional committee investigation report, fintechs arranged for OPS fraud. How this happened is laid out in 130 pages of detail that apparently puts the brunt of the blame on Blueacorn, an alleged fintech which was paid $1 billion in SBA processing fees for its role in facilitating PPP loans.
Of course, everyone knows Blueacorn because they…oh wait, they probably don’t because until April 2020, Blueacorn didn’t even exist. According to the report, the CEO and co-founder of Blueacorn was in the business of selling mobile phone accessories until he founded Blueacorn with the singular purpose of facilitating PPP loans. This highly technologically advanced company consisted of “off-the-shelf fraud control software” and a “single direct employee who helped process PPP applications,” according to the report. In the eyes of the investigators, this apparently qualifies as fintech.
When 1.7 million loan applications poured into Blueacorn, the company relied on an affiliate that hired friends and family members with little or no experience and virtually no training to process the loans. Inevitably, frauds piled up, bad things happened, mistakes may have happened, and Blueacorn somehow got paid a billion dollars for his work. The real villain in this mess? Fintech obviously!
A fintech is how investigators cast Womply, an online reputation management company that helped people manage online reviews. Womply had no ties to lending or fintech until it suddenly became an OPS loan broker in April 2020.
“Womply entered into referral agent agreements with ten lenders or platforms and ultimately referred approximately 7,000 PPP loans totaling $360 million in taxpayer dollars while acting as a referral agent,” the report said. It was only in 2020 when it earned just $3 million in fees. Buoyed by its early successes, Womply went on to generate $2 billion in fees for its role in facilitating PPP loans. Ultimately, as a company with no background in lending or finance, investigators were shocked to discover what had happened along the way.
The bottom line of this report?
ProPublica: Fintechs made ‘massive profits’ on PPP loans and sometimes engaged in fraud, House committee report finds
Select press release from subcommittee: New Select Subcommittee Report Reveals How Fintech Companies Facilitated Paycheck Protection Program Fraud
NBC News: Executives at ‘fintechs’ made hundreds of millions handing out PPP Covid cash, report says
NEW post: Tech firms defrauded federal government by brokering shady PPP loans to collect fees: report
It would be fair to punish bad actions and bad actors exposed in the report, but to take a multi-billion dollar industry that has been built over a decade and have it defined by a cell phone accessory store owner and a reputation management company online hardly seems fair. The committee that published their report should change the title and almost all mentions of fintech throughout. With the report’s own weak logic, the US Congress could also be characterized as a fintech.
Last changed: 5 December 2022
Sean Murray is the President and editor-in-chief of deBanked and the founder of the Broker Fair Conference. Contact me on LinkedIn or follow me further twitter. You can view all future deBanked events here.
