When Robyn Mathis, a 41-year-old food production plant worker from Brunswick, Georgia, stepped off a flight to Philadelphia last June, she expected an easy passage to her destination. She was set to pick up her rental car and charge it to her Chime card, as she had done several times before. For the last few years, the digital bank’s debit and credit cards had been her payment methods of choice. But at the Budget car rental desk at Philadelphia’s International Airport, Mathis got an unpleasant surprise. Budget would not accept her Chime credit or debit card. Frustrated, Mathis, who was traveling with her two college-aged children, called other airport rental outlets—Enterprise, Avis and Dollar. All said they wouldn’t take her card. After two hours, Mathis finally gave up and called an Uber. Fintech had failed her. Upon returning home, she moved most of her money from Chime to her account at Bank OZK, a regional institution with more than 200 branches and roots stretching back to 1903.
In particular, the report found that the largest three fintech issuers of PPP loans — Cross River, Capital Plus and Harvest — all had “high and increasing rates” of misreporting and received more than $900 million each in processing fees.The sheer scope of the suspicious lending by the fintechs, the authors wrote, suggests that “many lenders either encouraged such loans, turned a blind eye to them or had lax oversight procedures.”The fintech industry pushed back against those arguments.”Cross River stepped up to answer the mandate from Congress and in the process, deployed fraud detection standards that far exceeded the continuously evolving SBA program requirements,” a spokesperson for Cross River said in a statement, adding that it reached nearly half a million of the “smallest and most vulnerable businesses in need.”
Fort Lee, NJ-based Cross River said it’s “disappointing that some would use misdirected criticism, gross assumptions and unsubstantiated claims to undermine the sacrifice and countless hours that were dedicated to getting the American economy back up and running.”The Financial Technology Association, an industry trade group, defended the role of fintechs during the pandemic.”Despite evolving government guidance and inadequate processing systems, financial technology companies executed the goal of the PPP program with the regulatory compliance standards in mind throughout the lending process, helping to save hundreds of thousands of small businesses,” Penny Lee, the trade group’s CEO, said in a statement.Lee also pointed the finger at traditional lenders.”While small businesses suffered, many large, legacy financial institutions refused to provide loans to businesses without existing relationships,” she said in the statement.Capital Plus and Harvest did not respond to requests for comment