A recent lawsuit seeks to hold a fintech company liable for failing to adequately service loans made as part of the Paycheck Protection Program (PPP), marking what may be the first putative class action lawsuit challenging the manner in which PPP lenders process loan forgiveness applications.

The suit, filed in late March 2022, alleges that Kabbage failed to appropriately process borrowers’ PPP loan forgiveness applications. See Carr v. Kabbage, Inc., Case No. 1:22-cv-01249 (N.D. Ga.). The PPP permitted borrowers to have their loans forgiven if they were able to meet certain criteria. The complaint alleges that Kabbage issued billions of dollars in PPP loans, but made it difficult or impossible for borrowers to submit loan forgiveness applications. It contends that Kabbage failed to process applications within the time required by federal regulations, asked customers to sign altered forms, and demanded that customers provide unnecessary documents.

The complaint faults Kabbage for other conduct that it says made it more difficult for borrowers to have loans forgiven. It claims that Kabbage services PPP loans through a separate, understaffed entity. It argues that Kabbage should have participated in the Small Business Administration’s loan forgiveness portal. And it alleges that Kabbage has wrongfully attempted to collect on loans that should have been forgiven.

The suit seeks to certify a nationwide class of Kabbage borrowers, along with five state sub-classes. Notably, it seeks to disgorge from Kabbage all of its origination fees from PPP loans.