The Federal Trade Commission (FTC) recently reached settlements with two companies, Biz2Credit, Inc. and Womply, for making false promises to small businesses seeking to participate in the Paycheck Protection Program (PPP). These companies have agreed to pay millions in damages to the FTC, marking the largest settlements ever secured by the agency under Section 19 of the FTC Act. The PPP loans were designed to assist small businesses in maintaining their workforce during the Covid-19 pandemic, with loans guaranteed through the Small Business Administration (SBA) under the CARES Act.
Biz2Credit, Inc. and its subsidiary Itria Ventures have agreed to pay $33 million in damages to settle charges of falsely advertising that PPP loan applications would be processed within an average of 10-14 business days, when in reality, the processing took well over a month. The company accepted over 500,000 applications in the first five months of 2021 but faced significant delays in processing applications, with many small business owners waiting months for funding, or not receiving it at all. The FTC alleged that Biz2Credit failed to update consumers about their applications or respond to complaints.
Similarly, Oto Analytics, Inc., doing business as Womply, and its CEO Toby Scammell have agreed to pay $26 million to settle similar charges by the FTC. Womply advertised that small businesses, including gig workers, could easily obtain PPP funding, but more than 60% of Womply applications never resulted in funding. The company failed to address technical issues or provide the necessary assistance for processing applications, leading to significant delays and a high fail rate in securing funding for eligible consumers.
Both Biz2Credit and Womply were accused of misleading consumers about the processing time for PPP applications, causing delays that left many small businesses struggling to stay open. The FTC alleged that these deceptive practices violated the law and prohibited the companies from making any false or unsubstantiated claims in the future regarding financial services or products. The settlements include monetary judgments as well as restrictions on misrepresentation of loan application processing times or government benefits.
In response to the settlements, Biz2Credit defended its record of helping small business owners and its compliance with government guidance during the PPP program. The company expressed disappointment with the FTC’s claims but decided to settle the matter without admitting wrongdoing to focus on financing underserved businesses during uncertain times. Womply also refuted the allegations, highlighting its success in facilitating over 1.3 million PPP loans during the pandemic and the positive impact it had on small businesses during a national crisis.
The FTC emphasized its commitment to protecting small businesses from deceptive and unfair practices in the marketplace. These cases are part of the agency’s ongoing efforts to safeguard small businesses and consumers from fraudulent activities. Small business owners are encouraged to report fraud, scams, and bad business practices to the FTC through ReportFraud.ftc.gov.
