A new report from US lawmakers has found that a number of FinTech firms responsible for facilitating pandemic-related loans failed to stop “obvious and preventable fraud”.

The report from the US House Select Subcommittee on the Coronavirus Crisis said that the failure to stop fraud led “to the needless loss of taxpayer dollars.”

An investigation into Kabbage and Bluevine and their partner banks was launched in May 2021 after they were linked to a disproportionately high number of fraudulent loans. This investigation was subsequently expanded to include Blueacorn and Womply.

Blueacorn in particular was highlighted for putting staff under pressure to review loans in less than 30 seconds, and telling them that Covid-related loans did not need as much scrutiny as high-dollar loans. Womply meanwhile was accused of allowing “rampant fraud” by its lending partners who described its fraud prevention practices as “put together with duct tape and gum.”

The report also said that Kabbage, acquired by American Express in October 2020, was found to have approved potentially fraudulent loans as they “imposed minimal risk on lenders who approved questionable applications.”

Kabbage responded to the report by arguing that it “does the American people a disservice by parsing bits of information out of context to reach a predetermined conclusion,” and said that it “adhered to the applicable rules and regulations" of the pandemic relief programme.

Elsewhere, the report noted that Bluevine’s lending partner Celtic Bank observed a steep decline in fraud after it pushed the FinTech to introduce manual review processes.

Commenting on the report, committee chair Rep. Jim Clyburn said: ““Even as these companies failed in their administration of the program, they nonetheless accrued massive profits from programme administration fees.”

When it closed in May 2021, the programme had seen the lending of about $800 billion.

Across the Atlantic in the UK, the government acknowledged that £4.9 billion of the £47 billion lent by banks to 1.1 million companies between May 2020 and March 2021 was fraudulent.

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