On November 20, 2023, the CFPB and 11 states announced that Prehired will provide more than $30 million in relief to student borrowers for making false promises of job placement, trapping students with “income share” loans that violated the law, and resorting to abusive debt collection practices when borrowers could not pay. In July this year, the CFPB and several state attorneys general and a state regulator filed a complaint against Prehired for deceptive marketing and debt collection practices.
Prehired was a Delaware-based company that operated a 12-week online training program claiming to prepare students for entry-level positions as software sales development representatives with “six-figure salaries” and a “job guarantee.” The states and the CFPB alleged that Prehired, among others, deceived borrowers by claiming its loans did not create a debt, hid important loan terms from borrowers, and tricked consumers with deceptive debt collection practices.
The order approved by a federal court also names two affiliated companies, Prehired Recruiting and Prehired Accelerator, that pursued collection on defaulted income share loans. The order requires Prehired to:
Refund $4.2 million to student borrowers. Prehired will pay $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. All outstanding loans, which Prehired valued at nearly $27 million, are permanently voided and cannot be sold or collected on by Prehired or anyone else.
Shut down permanently. Prehired is permanently banned from offering income share loans in the future, or any activities related to vocational education. The company has already filed for Chapter 7 bankruptcy and ceased operations.
Pay a civil money penalty. In addition, Prehired will make a $1 payment to the CFPB victims relief fund.
Read the CFPB’s announcement here.
The final judgement order can be found here.