RICHMOND, Va. (WRIC) — Attorney General Jason Miyares has announced that Prehired — a student lender — is required by an order to provide more than $30 million in relief to student borrowers after allegedly making false promises of job placement, among other practices.
Prehired was a Delaware-based company that ran 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,” according to a spokesperson for Attorney General Miyares.
In addition to falsely promising job placement to students, the Office of the Attorney General also alleged that the lender trapped students with “income share” loans that violated the law and used “abusive debt collection practices” when borrowers could not pay.
Prehired is required to cease all operations, pay $4.2 million in redress — or compensation — to borrowers that were affected and void all of its outstanding income share loans, which a spokesperson for the Attorney General said were valued by Prehired at nearly $27 million.
Prehired offered students income share loans to help finance their costs of the program. The order also names two affiliated companies, Prehired Recruiting and Prehired Accelerator, that pursued collection on defaulted income share loans.
In July, Prehired was sued by the states and the Consumer Financial Protection Bureau (CFPB) to void the illegal loans and facilitate consumer redress.
The states and the CFPB alleged that Prehired:
- Deceived borrowers by claiming its loans were not loans: Prehired’s marketing allegedly falsely claimed that its loans did not create a debt because the loan was contingent on job placement with a yearly salary over $60,000. But the company also deceptively buried terms in the loan that required graduates to pay even if they never got a job.
- Kept borrowers in the dark about key loan information: Prehired allegedly hid important loan terms from borrowers, including the amount financed, finance charges, and the loans’ annual percentage rate.
- Tricked consumers with deceptive debt collection practices: Prehired Recruiting and Prehired Accelerator allegedly pushed borrowers into converting their income share loan into a revised “settlement agreement” that required them to make payments even if they had not found a job, and which contained more burdensome dispute resolution and collection terms. Prehired Recruiting and Prehired Accelerator also falsely represented the amount of debt owed by consumers and stated Prehired could collect more than the consumer legally owed.
- Sued students in a faraway location: Prehired Recruiting filed debt collection lawsuits in a jurisdiction far away from where the consumers lived and were not able to be physically present when they executed the financing contract. Many consumers were unaware that Prehired Recruiting could file an action in Delaware because Prehired’s income share loans did not provide for venue in Delaware or the consumers had little or no opportunity to review or negotiate that provision.
Anyone who was affected by Prehired’s actions can submit a claim here.