A congressional subcommittee aimed at investigating financial fraud during the pandemic broadened its probe into online lending this week to include two of the most prominent processors of coronavirus assistance, USA Today reported. Rep. James Clyburn (D-S.C.), chairman of the Select Subcommittee on the Coronavirus Crisis, sent letters to Blueacorn and Womply yesterday requesting information about fraud prevention. Both emerged as major players that fused tech and financing to speed up lending through the government’s Paycheck Protection Program. Womply had no lending experience before COVID-19 and Blueacorn did not exist, yet together the companies captured more than $3 billion in fees – eclipsing their direct competitors. The startups are not banks but worked as middlemen, marketing to struggling businesses and quickly approving loans with partner banks, backed by the Small Business Administration. The companies make their money through a government-paid fee for facilitating the loans. “Unfortunately, many of these fees may have been earned by processing fraudulent or ineligible loan applications,” Clyburn wrote in his letter requesting a trove of internal compliance documents, including “emails, chat room logs and transcripts, direct electronic messages and minutes” that discussed financial crimes. Womply worked with 17 lenders and processed 1.4 million loans totaling more than $20 billion of the government’s $800 billion program. Blueacorn processed at least $14 billion in loans, according to Clyburn.
