Vocational training outfit sued over deceptive practices by CFPB, state entities

A company called Prehired that operated a vocational training program was sued Thursday by the Consumer Financial Protection Bureau (CFPB), several state attorneys general and California’s financial protection agency over deceptive marketing and debt collection practices, the bureau announced.

The bureau said that Prehired operated a 12-week online training program claiming to prepare consumers for entry-level positions as software sales development representatives with “six-figure salaries” and a “job guarantee.” It then “drove” interested applicants to sign an “income share” loan to finance the costs of the program, and it represented that consumers would pay nothing until they got a high-income job through Prehired, the CFPB said.

“In reality, Prehired deceptively buried terms that required consumers to pay even if they never got a job and, in many cases, unilaterally increased consumers’ required minimum monthly payments without any evidence that they had secured employment or experienced an increase in income,” the agency said.

It said the firm engaged in unfair acts and practices and violated Truth in Lending Act and Regulation Z, the Fair Debt Collection Practices Act (FDCPA), and the Consumer Financial Protection Act of 2010.

The CFPB said that Prehired, which operated the vocational training program and originated the income share loans, was a limited liability company incorporated in Delaware. It had two debt-collection companies, Prehired Recruiting in South Carolina and Prehired Accelerator in Florida, that primarily pursued collection activities on defaulted income share loans.

The bureau said the firm originated more than 1,000 “income-share” loans for students enrolled in its program around the country. Between Jan. 27, 2022, and Feb. 16, 2022, Prehired Recruiting filed more than 280 lawsuits in Delaware courts against consumers who entered into income share loans that it claimed were in default, the CFPB said, and it sought to collect $25,000 from each consumer, for a total of more than $7.2 million.

The bureau said that when Prehired Recruiting’s Delaware debt collection lawsuits came under scrutiny from the Delaware Department of Justice and Delaware courts, Prehired unilaterally changed the terms of its contracts with consumers to force them into arbitration.

The suit seeks to void the loans and obtain redress for affected consumers and a penalty, which would be deposited into the CFPB’s victims relief fund.

The agency was joined in the action by the attorneys general from Washington, Oregon, Delaware, Minnesota, Illinois, Wisconsin, Massachusetts, North Carolina, South Carolina, and Virginia, along with California’s Department of Financial Protection and Innovation, it said.

State Partners and CFPB Sue Prehired For Illegal Student Lending Practices