The Consumer Financial Protection Bureau (CFPB) along with 11 states recently announced a decisive enforcement action against Prehired, a Delaware-based company offering a 12-week online training program. The company is ordered to provide over $30 million in relief to student borrowers for making false job placement promises, issuing illegal “income share” loans, and resorting to abusive debt collection practices.
The states partnering with the CFPB in this action include Washington, Delaware, California, Oregon, Minnesota, Illinois, South Carolina, North Carolina, Massachusetts, Virginia, and Wisconsin. Alongside Prehired, two affiliated companies, Prehired Recruiting and Prehired Accelerator, have also been named in the order for pursuing collection on defaulted income share loans.
Prehired falsely claimed to prepare students for entry-level software sales development representative positions, promising “six-figure salaries” and a “job guarantee”. To finance their program costs, Prehired offered students income share loans.
In July 2023, the CFPB and the states sued Prehired for deceptive practices, including claiming its loans were not loans, withholding key loan information from borrowers, tricking consumers with deceptive debt collection practices, and suing students in distant locations.
The order approved by a federal court demands Prehired to:
- Refund $4.2 million to student borrowers who made payments on income share loans between May 2019 and March 2023.
- Cancel all outstanding income share loans, which are valued at nearly $27 million by Prehired. These loans are permanently voided and cannot be sold or collected on by Prehired or anyone else.
- Cease all operations permanently. Prehired is banned from offering income share loans or any activities related to vocational education in the future.
- Pay a civil money penalty of $1 to the CFPB victims relief fund. This payment will allow the CFPB to provide additional compensation to borrowers harmed by the company’s illegal conduct.
Read the stipulated judgment here.
For more information, go to prehiredclaims.com.