The Federal Trade Commission (FTC) has reached settlements with two companies accused of making fake promises to small businesses seeking to participate in the Paycheck Protection Program (PPP). The companies, Biz2Credit, Inc. and Womply, will pay millions to the FTC for their conduct. According to the FTC, these are the largest damages ever secured by the agency under Section 19 of the FTC Act.

PPP Loans

PPP loans were designed to help small businesses keep their workers on payroll during the Covid-19 pandemic. While loans were obtained from various lenders, they were guaranteed through the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. PPP loans help fund payroll costs, including benefits, and are used to pay for, among other things, mortgage interest, rent, utilities, and worker protection costs related to Covid-19. And quite favorably, borrowers who met specific criteria were eligible for loan forgiveness.

Initially, Congress authorized up to $349 billion in forgivable loans as part of the program. Congress subsequently authorized over $300 billion in additional PPP funding.

Time mattered for PPP applicants. The PPP was a temporary program that ended when loan funds ran out in mid-2021. That means that consumers subjected to delayed processing of their applications lost their opportunity to obtain PPP loans at all. And in numerous instances, the delays in processing applications deprived struggling small business consumers of emergency funds they needed immediately.

Biz2Credit, Inc.

Biz2Credit, Inc., and its subsidiary, Itria Ventures, agreed to pay $33 million in damages to settle charges the company of falsely advertised that PPP loan applications would be processed in an average of 10-14 business days when, in reality, the average processing took well over a month.

According to the FTC’s complaint, between at least May 2020 and May 2021, Biz2Credit advertised, marketed, and offered PPP loans to struggling small business owners. Biz2Credit originated these loans through its lending arm, Itria. Their marketing paid off: in 2021, Biz2Credit was one of the ten largest PPP lenders in the U.S., accepting over 500,000 applications in the first five months of that year.

The FTC charged that Biz2Credit falsely touted that they would process applications within an average time frame of 10-12 business days or, in some instances, 12-14 business days. In reality, the FTC says, the application processing was riddled with delays, and the average processing time was more than a month (25 business days), with tens of thousands of consumers waiting over two months. And, the FTC alleged that many applicants never received funding at all—roughly 40% of Biz2Credit’s consumers had their applications canceled or rejected, which, according to the agency, was, by far, the highest rate of any of the other ten largest PPP lenders.

During these delays, the FTC says that Biz2Credit failed to update consumers regarding their applications or respond to basic questions or complaints. They cited one example where the customer wrote, “Biz2Credit approved a…PPP loan for my restaurant back in February [2021]. As of today [May 6], we are still waiting for funds to be deposited into our bank account…We are in desperate need of these funds…The last time we heard from the[m] was [March 31]. Since then all of our messages have gone unanswered.”

Another consumer complained to the FTC that “I applied for [a] PPP loan with Biz2credit…believing loan process would take 12-14 days as stated on Biz2credit website. After 56 days I’ve yet to receive the funds nor any meaningful assistance.”

According to the complaint, Biz2Credit knew they accepted more applications than they could successfully process in the timeframe promised but did not change their messaging. The FTC also alleged that Biz2Credit blocked consumers from withdrawing their applications so they could apply to other lenders. One consumer noted, “We have asked to withdraw this application so many times. It has been over a month, and we don’t understand why the loan is still active with SBA…You are preventing us from getting the help that is crucial to our business.” The FTC says that only after SBA flagged this specific complaint to Biz2Credit did they finally withdraw this consumer’s application.

Biz2Credit’s promises of fast processing times were critical because the PPP was time-sensitive, providing loans on a first-come, first-served basis. When the program ran out of funds in May 2021, the government stopped accepting new applications, leaving some Biz2Credit consumers without funds. Even the consumers who eventually obtained loans had to wait.

The FTC says those delays in processing loans left small businesses struggling to stay open, and stressed that deceiving consumers about these delays violated the law.

In addition to the $33 million monetary judgment, the settlement with Biz2Credit prohibits the defendants from misrepresenting key information about loan applications or any material fact about a government benefit. The proposed order also prohibits Biz2Credit from failing to allow consumers to withdraw loan applications promptly.

Womply

Oto Analytics, Inc., which also does business as Womply, and its CEO, Toby Scammell, agreed to pay $26 million to settle similar FTC charges. The FTC’s complaint alleges that Womply and Scammell advertised that small businesses—particularly one-person businesses like gig workers—could successfully get PPP funding. According to the complaint, that more than 60% of Womply applications never resulted in funding.

Between February 2021 and May 2021, Womply and Scammell advertised or made statements claiming consumers would receive loan funds if they applied with Womply. For example, an email announcing “PPP Fast Lane”—Womply’s automated PPP loan application system—claimed Womply would “[g]et maximum PPP stimulus” of up to $41,000 deposited directly into their bank accounts and that the application process would take “as little as five minutes.” Sample emails to referral partners promised consumers “up to 20x more money.” These claims were also made on social media.

The FTC claims that, of more than 3.25 million PPP loan applications initiated by consumers, Womply and Scammell failed to achieve funding for more than 1.99 million of them. That’s a 61% fail rate.

Many consumers who never received funding were eligible for PPP loans, but according to the FTC, Womply and Scammel failed to fix known technical issues or provide the assistance necessary to process applications. After receiving more than 4,800 telephone calls to Womply’s customer service line in March 21, and facing increasing requests by email that were frequently not resolved, Womply disconnected their telephonic customer service. In thousands of instances, the FTC says no one from Womply ever replied to consumers’ chat messages.

Advertisements and statements to consumers indicated that PPP loan applications would be reviewed and processed within 24 hours. Womply claimed it was “faster than a bank,” and encouraged applications through their “PPP Fast Lane.” Numerous consumers complained that their applications were not processed within 24 hours. In some instances, when asked by applicants why there had been no update within 24 hours, Womply admitted that they could not estimate the time it would take to process applications.

When asked about referring to Womply’s customer service the consumers who sought help using LinkedIn, the complaint alleges Scammell said, “You should ignore them.” Another Womply executive reportedly reacted similarly when she and Scammell learned about consumers’ use of Google forms to request help with their applications, explaining that they were already aware that “customers will use very clever ways to get personalized assistance,” and, as a rule, did not respond.

Despite being flooded with customer service requests and complaints about stalled applications, Womply and Scammel increased advertising spending to increase traffic to PPP Fast Lane. They also used referral programs to generate new PPP loan applications, offering what Scammell called “aggressive rewards” to those who referred new applicants and using “very strict time bound campaigns to drive urgency and capture attention.”

Millions of consumers initiated PPP applications through Womply. Still, many who were eligible never received funding. And small business owners still faced problems even after their applications were approved. The complaint alleges that one small business owner received notice that her loan had been funded, but never received the money. After weeks pleading for help, she had to close her business.

In addition to the $26 million monetary judgment, the settlement with Womply and Scammell prohibits them from making any deceptive, false, or unsubstantiated claims about financial services or products.

Biz2Credit Response

The company issued a statement, saying, “Biz2Credit is proud of its record of helping small business owners, and of the steps it took to protect against PPP fraud and abuse of taxpayer funds. During PPP, we viewed it as our role to provide funding only to the eligible small business that applied to us, and the statements on our website about average processing time gave those legitimate applicants an accurate estimate of what they could expect.”

The company said, about the settlement, “We are disappointed that the FTC took the positions that it did. Legal compliance is central to our business and strong reputation, and during the PPP program we did as much as any lender to comply with the government’s guidance. Not only that, we answered the call of the Biden Administration to fund truly underserved small businesses, as 47% of the businesses we funded during PPP were minority-owned businesses and 32% were women-owned businesses. The typical business we funded had under 3 employees.” They added, “the unfortunate reality is that FTC actions like this are very costly to litigate. Our decision to settle rather than contest the FTC’s claims in court represents a pragmatic decision to put the matter behind us with no admission of wrongdoing. In short, Biz2Credit agreed to this settlement so it can continue to fully concentrate on the important work of financing small underserved businesses in these uncertain times.”

You can read their entire response here.

Womply

Womply did not respond to a request seeking comment. Their website is currently rather meager, with visible links to only two sections: PPP Fast Lane Login and Legal.

FTC

“Biz2Credit and Womply deceived small business owners trying to secure loans at their time of greatest need,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “The FTC is committed to protecting small businesses from these sorts of unlawful practices.”

These cases are part of the FTC’s continuing work to protect small businesses from deceptive and unfair practices in the marketplace. You can report fraud, scams, and bad business practices at ReportFraud.ftc.gov.

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