KServicing has hit back at allegations that it facilitated high rates of fraudulent PPP loans.
KServicing and other fintech companies have been accused in a report by the House Select Committee on the Coronavirus Crisis, of defrauding the federal government with large sums of money.
“Unfortunately, the report does a disservice to the American people by analyzing information out of context to reach a predetermined conclusion. Looking back on the tumultuous times of the height of the COVID-19 pandemic, the fintech community played a role vital in helping to strengthen America’s small business community and we are proud to have been a part of this endeavor,” KServicing said in a statement.
KServicing Returns to House Subcommittee on PPP Loans Inquiry
The report blames fintech companies for failing to stop obvious and preventable PPP fraud, resulting in an unnecessary waste of taxpayers’ money.
He accused fintech companies of existing largely outside the regulatory structure governing traditional financial institutions and with little or no oversight from lenders. They were also alleged to have collected billions of dollars in fees from taxpayers while becoming easy targets for those seeking to defraud the PPP loan scheme.
KServicing, formerly Kabbage, reportedly facilitated PPP loans while ignoring employee concerns and several red flags about potentially fraudulent loans. It was alleged that he had approved loans with clear indicators of probable fraud.
This was partly because the program imposed minimal risk on lenders approving questionable applications. As fraud increased in the program, Kabbage reduced its full-time fraud prevention staff, the subcommittee report alleged.
This is the latest challenge facing the small business loan manager. In October 2022, it filed for Chapter 11 bankruptcy and is under investigation by the U.S. Department of Justice (DOJ) over its Paycheck Protection Program (PPP) loan approval practices. ).
Here is the full statement from KServicing released this week:
“Kabbage dba KServicing (“Kabbage or KServicing”) is proud of the role it has played in supporting American businesses during the COVID-19 pandemic, which has enabled nearly 300,000 small businesses to receive critical funding to keep their doors open and their employees paid. Kabbage’s existing online lending platform was able to process the sudden flood of loan applications, in a timely manner, in the midst of a national crisis and in light of the ever-changing federal lending rules. Kabbage has complied in good faith with applicable rules and regulations. Two and a half years later, Kabbage remains committed to borrowers who have used our services during this difficult time to access Protection Program loans. paychecks (PPP).
The select subcommittee has played an important role in reviewing government COVID-19 programs and protecting the interests of the American people in relation to one of the worst pandemics this country has seen. Kabbage worked diligently with the subcommittee to provide timely and transparent information during this investigation. Unfortunately, the report does a disservice to the American people by analyzing information out of context to reach a predetermined conclusion. Looking back on the tumultuous times during the height of the COVID-19 pandemic, the fintech community played a vital role in helping to strengthen America’s small business community and we are proud to have been a part of that endeavour.
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