Prehired Sued for Illegal Student Lending Practices

Allegations suggest company used deceptive marketing to sign students up for loans, then sued the students for millions of dollars

A lawsuit filed by the Consumer Financial Protection Bureau (CFPB) alleges that a company known as Prehired used deceptive tactics to sign consumers up for a job training program that was paid for with a type of student loan known as an income share agreement. When the students didn't pay, the company also operated two debt collection companies it used to sue the students for, collectively, millions of dollars at an average student cost of $25,000.

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.” Prehired drove interested applicants to sign an “income share” loan to finance the costs of the program and represented that consumers would pay nothing until they got a high-income job through Prehired.

“Prehired falsely pitched its purported training program as a risk-free investment, but instead often saddled its students with debt,” said CFPB Director Rohit Chopra. “The CFPB is joining with the states to void these loans obtained through illegal student lending practices.”

The reality of the Prehired program was that students were obligated to pay even if they never received a job and, in fact, that payments were often increased without notice.

When Prehired filed suit against borrowers in default, the suits were often filed in Delaware regardless of the student's actual location. This prevented the borrowers from appearing in court to challenge the suits and resulted in default judgments for Prehired.

While Prehired's marketing suggested that students would pay nothing on the loans unless they received a job with a salary of at least $60,000, the fine print terms of the loan actually required repayment regardless of job status.

The CFPB is seeking a civil money penalty against Prehired that includes reimbursement to defrauded borrowers and an additional penalty to discourage further bad acts.

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