Company made false promises, trapped students in illegal loans
A job training company that purported to offer a "job placement guarantee" for jobs in the software industry has been ordered to cease operations and pay $30 million in refunds.
Prehired operated a 12-week training program financed by loans the company said students would not have to repay unless they were placed in a job. The loans were "income share" agreements that were issued in violation of federal law. Additionally, the loans carried contract terms that required students to repay regardless of whether or not they obtained a job. This was the exact opposite of the way the program was marketed to prospective students.
“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 enforcement action issued by the CFPB requires not only that the company refund impacted students, but also that Prehired cease any and all operations. The company has filed for bankruptcy and the agreed terms of this order mean it will be shut down for good.