KServicing responds to the house’s subcommittee on the request for PPP loans

KServicing has hit back against allegations that it has facilitated high incidences of fake OPS loans.

KServicing and other fintech companies were accused in a report by the House Select Committee on the Coronavirus Crisis of defrauding the federal government of large sums of money.

“Unfortunately, the report does the American people a disservice by analyzing bits of information out of context to reach a predetermined conclusion. Looking back at the tumultuous time at the height of the COVID-19 pandemic, the fintech community played an important role in to help strengthen the American small business community, and we are proud to have been a part of this effort,” KServicing said in a statement.

KService claps back in the house’s subcommittee for the request for OPS loans

The report accuses fintech companies of failing to stop obvious and preventable PPP fraud, leading to the unnecessary loss of taxpayer dollars.

It accused fintech companies of largely existing outside the regulatory structure that governs traditional financial institutions and with little or no oversight from lenders. It was also alleged that they took billions in fees from taxpayers while becoming easy targets for those who tried to defraud the OPS loan program.

KServicing, formerly Kabbage, is alleged to have facilitated OPS loans while ignoring employee concerns and several red flags about potentially fraudulent loans. It was alleged that it had approved loans with clear indicators of probable fraud.

This was in part because the program imposed minimal risk on lenders who approved questionable applications. As fraud increased in the program, Kabbage reduced its full-time fraud prevention staff, the subcommittee’s report claimed.

This is the latest challenge facing the small business loan broker. In October 2022, it filed for Chapter 11 bankruptcy and is being investigated by the US Department of Justice (DOJ) regarding its Paycheck Protection Program (PPP) approval practices.

Here is the full statement from KServicing issued this week:

“Kabbage dba KServicing (“Kabbage or KServicing”) is proud of the role it played in supporting American businesses during the COVID-19 pandemic, which resulted in nearly 300,000 small businesses receiving critical funding to keep their doors open and 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 ever-changing federal lending rules. Kål followed the applicable rules and regulations in good faith. Two and a half years later, Kabbage remains committed to the borrowers who used our services during the difficult time to access Paycheck Protection Program (PPP) loans.

The Select Subcommittee has played an important role in reviewing COVID-19 government programs and protecting the interests of the American people during one of the worst pandemics this nation has experienced. Kabbage worked diligently with the subcommittee to provide timely and transparent information as they engaged in this investigation. Unfortunately, the report does the American people a disservice by analyzing bits of information out of context to reach a predetermined conclusion. Looking back at the tumultuous time at the height of the COVID-19 pandemic, the fintech community played an important role in helping strengthen the US small business community, and we’re proud to have been a part of that effort. »

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