A federal watchdog is suing a tech boot camp, accusing it of loading students up with 'predatory' debt and telling them it could collect 'more than the consumer legally owed'
The CFPB and the statesthat Prehired"misrepresented" the nature of the income-share agreements it made with people who enrolled in its 12-week online training program. Income-share agreements, or ISAs, generally require a borrower to pledge a certain portion of their income to the lender in exchange for money to pay for education.
"Prehired failed to advise consumers about the cost of these loans, and deceptively represented that the ISAs are not loans and did not create debt," the complaint said."Prehired also represented that consumers would pay nothing until they got a job and 'partner[ed] with' Prehired in their career.
The lawsuit also accused Prehired of"falsely representing the amount of debt owed by consumers by stating that Prehired could collect more than the consumer legally owed."The states and the CFPB are seeking to void the ISA loans, compensate consumers who were harmed, and obtain a penalty from Prehired to be deposited into the CFPB's victims-relief fund.
The complaint said Prehired filed more than 280 lawsuits in 2022 demanding that former students who it said had defaulted pay $25,000 each. Those lawsuits have since been dropped. Prehired said in its bankruptcy filing that it"believed that in these lawsuits, it acted in the defaulted members' best interests, as well as Prehired's, because it reduced the amount owed on the ISAs from $30,000.00 to $25,000.00, and the members could participate in the proceedings virtually.
Another commenter said that"the ISA payment and the fear of defaulting have been my single & biggest stressor financially since I started working after finishing the course."
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