The Federal Trade Commission (FTC) and the Small Business Administration (SBA) warned IT Media Solutions and Lendio to stop possible misleading advertising and marketing related to the coronavirus relief.
The Coronavirus Aid, Relief and Economic Security Act (CARES Act) provides financial assistance to individuals, families, and businesses significantly affected by the COVID-19 pandemic.
The law includes a loan program called the Paycheck Protection Program (PPP) for small businesses struggling to keep their workforce employed. Small businesses can avail the PPP by applying through lenders authorized by the SBA
In the warning letter to ITMedia and Lendio, the FTC and the SBA wrote that the companies “may be unlawfully misleading small business consumers about federal loans or other temporary small business relief,” in violation of the FTC Act.
The federal consumer protection watchdog noted that ITMedia is operating several websites including SBA.com. Its advertising and marketing include claims such as “Your Paycheck Protection Program Loan starts here!” and encouraging consumers to “Get Started” with PPP loan applications. It is also telling consumers that sba.com “connect[s] you to our large nationwide network/marketplace of approved PPP (Paycheck Protection Program) lenders”.
On the other hand, the FTC and the SBA stated that Lendio and its lead generators including IT Media made claims noted above. The consumer protection watchdog also pointed out that another Lendio lead generator claimed that it was an authorized SBA loan packager for PPP and it is advertising that its service fee is $495.
The SBA prohibits lead generators and other agents from charging gees to PPP loan applicants.
The FTC and the SBA told ITMedia and Lendio to take immediate action to remove all deceptive claims regarding the coronavirus relief and to remediate all harm to small business consumers due to their claims.
Additionally, the FTC and the SBA directed both companies to report within 48 hours the specific actions implemented to address the agencies’ concerns.