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Income share student loan scam - CFPB enforcement [1]
['This Content Is Not Subject To Review Daily Kos Staff Prior To Publication.']
Date: 2023-07-17
Education outfit induced borrowers to take on debt based on false promises about jobs and income, engaged in bait-and-switch tactics on “income-share” loans
On July 13, 2023, the Consumer Financial Protection Bureau (CFPB) and several state attorneys general filed a complaint against Prehired, LLC, Prehired Recruiting, LLC, and Prehired Accelerator, LLC.
Prehired is a private, for-profit vocational training program for software sales representatives.
The company charged up to $30,000 for its program and encouraged consumers who could not pay upfront to enter into income share agreements.
These agreements required consumers to make minimum payments equal to between 12.5% and 16% of their gross income for 4 to 8 years or until they had paid a total of $30,000, whichever was sooner.
Prehired transferred ownership of many of these financing agreements to other entities, including Prehired Recruiting and Prehired Accelerator.
The complaint alleges that Prehired:
Deceptively represented that its income share agreements were not loans.
Deceptively represented that consumers would pay nothing until they had a job making at least $60,000 a year.
Failed to disclose key financing terms required by the Truth in Lending Act and Regulation Z.
Engaged in unfair acts and practices by filing debt collection lawsuits in a distant forum when consumers neither lived in that forum nor were in that forum when they executed the financing agreement.
Violated the Fair Debt Collection Practices Act (FDCPA) and the Consumer Financial Protection Act of 2010 by deceptively inducing consumers to enter into settlement agreements, and the FDCPA by claiming the consumers owed more than they did.
The attorneys general from Washington, Oregon, Delaware, Minnesota, Illinois, Wisconsin, Massachusetts, North Carolina, South Carolina, and Virginia, and California's Department of Financial Protection and Innovation joined the action. The complaint seeks to void the income share loans, damages, and civil money penalties.
In short, the CFPB and the state attorneys general are alleging that Prehired engaged in deceptive and unfair practices in connection with its income share agreements. The complaint seeks to void these agreements and to hold Prehired accountable for its actions.
CFPB Press Release
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