The Consumer Financial Protection Bureau (CFPB) has issued an order against coding bootcamp BloomTech, also known as the Bloom Institute of Technology, and its CEO, Austen Allred, alleging that they deceived students about the real cost of loans and made false claims about the hiring rates of the bootcamp’s graduates.
The order permanently bans BloomTech from all consumer-lending activities; bans Allred from any student-lending activities for 10 years; and orders both to stop collecting payments on income share loans for graduates who did not have a qualifying job, eliminate finance changes for certain agreements and allow students the option to withdraw without penalty, the CFPB said in a Wednesday (April 17) press release.
It also orders BloomTech and Allred to pay over $164,000 in civil penalties, according to the release.
“BloomTech and its CEO sought to drive students toward income share loans that were marketed as risk-free, but in fact carried significant finance charges and many of the same risks as other credit products,” CFPB Director Rohit Chopra said in the release. “Today’s action underscores our increased focus on investigating individual executives and, when appropriate, charging them with breaking the law.”
BloomTech did not immediately reply to PYMNTS’ request for comment.
The CFPB found that BloomTech, which is headquartered in San Francisco and owned primarily by Allred and some Silicon Valley venture funds, made false promises to potential students, according to the press release.
The agency determined that the school hid the cost and true nature of students’ debt by falsely claiming that its “income share” agreements were not loans; advertised job placement rates of 71% to 86% within six months while reporting to investors that the rates were closer to 50%; claimed “We don’t get paid until you do” when in fact it sold many loans to investors and got paid long before students graduated; and failed to include a required provision making any owner of the loan subject to legal claims and defenses students could assert against BloomTech.
In another recent move, the CFPB said in January that it has been monitoring the experiences of student borrowers and has notified student loan servicers that they may be violating federal consumer financial protection law.
In December, the agency reported that many college-sponsored credit cards and deposit accounts have higher fees and worse terms and conditions than comparable products.
