Two Fintechs to Pay $59 Million to Resolve FTC’s PPP Loan Claims

The FTC recently entered into settlements with two fintechs involved in the Paycheck Protection Program.  The fintechs will collectively pay $59 million to settle allegations that they misrepresented their PPP loan services and the processing of PPP loan applications.

The first settlement is with a fintech who offered PPP financing services and its CEO.  The FTC alleged that they misrepresented that consumers who applied with the fintech would receive PPP loans and that PPP loan applications would be processed within 24 hours.  However, of the more than 3.25 million applications that were initiated by consumers, approximately 61% of them were not funded.  Additionally, it took up to several weeks for applications to be processed, and, in some instances, applications had been cancelled.  There were technical issues that contributed to delays.  As part of the settlement, the fintech and its CEO will pay $26 million in monetary relief and will be subject to compliance reporting for the next 10 years.

The second settlement is with a fintech who marketed and offered PPP loans.  The FTC alleged that the fintech misrepresented that PPP loan applications would be processed within 10 to 14 business days.  However, the average processing time was 25 business days, with some applications taking over two months to process.  The FTC also alleged that the fintech did not allow consumers to withdraw applications, which delayed or prevented those consumers from applying for PPP loans with another lender.  As part of the settlement, the fintech will pay $33 million in monetary relief and will also be subject to compliance reporting for the next 10 years.

The fintechs neither admit nor deny the allegations.