WASHINGTON — The Consumer Financial Protection Bureau and 11 states reached a $30 million agreement on Monday with tech "boot camp" company Prehired for deceiving students with false guarantees of employment, marketing illegal loans and deploying abusive collection practices for borrowers who struggled to repay.
"Prehired lured student borrowers into debt with false promises of job placements and claims that students wouldn't have to pay until they got a job," said CFPB Director Rohit Chopra. "Today's action with our state partners ensures that borrowers harmed by Prehired can receive redress and have their illegal loans canceled."
The settlement — filed Monday in Bankruptcy Court for the District of Delaware — was the result of a collaboration between the agency and a coalition of states including Washington, Delaware, California, Oregon, Minnesota, Illinois, South Carolina, North Carolina, Massachusetts, Virginia and Wisconsin. The agency says that pursuant to the order, Prehired will need to reimburse $4.2 million to borrowers who made payments on the income share loans between May 2019 and March 2023. The company will also need to cancel all its remaining income share loans — roughly $27 million — making them ineligible for collection and permanently close its doors. Prehired is also permanently prohibited from offering income-share loans or vocational education services. While the vocational company already
Delaware-based Prehired provided 12-week virtual training programs, which it claimed would guarantee employment for students — as well as six-figure salaries — as software sales development representatives. Prehired also offered income-share loans for students to finance program expenses. An income-share agreement is a contract through which a student receives upfront money for college in exchange for a fixed percentage of future income. Consumer advocates
The company must also pay into the CFPB's victims relief fund, which the agency says will open the door for the fund to be tapped for future student compensation in the event further damage to Prehired's clients is uncovered.
"Prehired will make a $1 payment to the CFPB victims relief fund," the agency noted in a release. "The payment will make it possible for the CFPB to use that fund to provide additional compensation to borrowers harmed by the company's illegal conduct."
The order also implicated two associated entities, Prehired Recruiting and Prehired Accelerator, which were also involved in seeking repayment on income share loans in default.
The CFPB and state officials — pursuant to the Consumer Financial Protection Act — can enforce federal consumer financial laws including the law's prohibition of deceptive acts or practices. Monday's settlement comes after the CFPB and states
