The Consumer Financial Protection Bureau and 11 states announced earlier this week that an online training company will close its doors and provide $30 million in relief to student borrowers, in part because of abusive debt collection practices that it deployed when individuals were unable to make their payments.
Who: Prehired, a Delaware-based company that offered online training programs that offered income shared loans to finance the costs of the program, and two affiliate companies, Prehired Recruiting and Prehired Accelerator, which was the united that collected on defaulted loans.
- The CFPB worked with Washington, Delaware, California, Oregon, Minnesota, Illinois, South Carolina, North Carolina, Massachusetts, Virginia, and Wisconsin to bring this action.
What: The CFPB and the states originally sued Prehired last July, accusing it of burying the repayment terms — individuals would be required to repay the loans whether they got a job or not — and when consumers couldn’t pay, the company filed collection lawsuits in jurisdictions far from where the individuals lived. The company also pushed borrowers into converting their loans into settlement agreements that had more burdensome resolution and collection terms.
- Under the terms of the stipulated judgment, Prehired will:
- Refund $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, which Prehired valued at nearly $27 million.
- Shut down permanently. The company has already filed for Chapter 7 bankruptcy and ceased operations.
- Pay a civil money penalty of $1 to the CFPB victims relief fund.
