FinTech Companies Settle PPP-related Claims with FTC

On March 18, 2024, the Federal Trade Commission (FTC) announced ​that it ​entered into proposed orders with two fintech firms, resolving allegations of misconduct tied to the firms’ involvement in federal COVID-19 Paycheck Protection Programs (PPP).  Specifically, the proposed orders resolve allegations that the firms violated Section 5(a) of the FTC Act, 15 U.S.C. § 45(a) and the COVID-19 Consumer Protection Act, which prohibit unfair or deceptive acts or practices in or affecting commerce.

According to the FTC’s allegations, the two firms violated the FTC Act and COVID-19 Consumer Protection Acts by (i) making false, misleading, or unsubstantiated claims regarding application processing time, (ii) unfairly blocking consumers from applying with other lenders, and (iii) making false, misleading, or unsubstantiated claims regarding PPP loans.

As indicated by the proposed orders, one company​ agreed to pay $33 million and the other​ agreed to pay $26 million in damages to settle the FTC’s charges.  The companies also agreed to refrain from making any misrepresentation or deceptive, false, or unsubstantiated claims, and from preventing​ consumers from promptly withdrawing loan applications.