CFPB Releases 2023 Settlement Funds Following Pressure from Raoul and Coalition of AGs
Chicago – Attorney General Kwame Raoul today announced victims of student lender Prehired LLC (Prehired) will start receiving long-delayed relief payments from a more than $30 million settlement Raoul announced in 2023. As a result of advocacy by Raoul and a coalition of states, the Consumer Financial Protection Bureau (CFPB) is disbursing $4.2 million in restitution to borrowers who used predatory loans to cover the costs of enrollment in Prehired’s tech sales program in Illinois and other states.
Attorney General Kwame Raoul, as part of a coalition including state attorneys general, issued a letter May 6, pressing the CFPB’s acting director for details related to relief payments. The letter detailed the 2023 court order requiring Prehired to pay $4.2 million to around 660 borrowers nationwide who were victims of Prehired’s illegal, deceptive and abusive practices. In the letter, Raoul and the coalition demanded explanations for continued delays that kept the CFPB from distributing those checks.
“Prehired deceived student borrowers with false promises of lucrative employment and pursued them with aggressive collection tactics when they could not repay these illegal loans,” Raoul said. “I am pleased that victims will finally be receiving the financial relief they deserve, and I will continue working to hold bad actors accountable to borrowers.”
The CFPB announced the allocation of restitution in May 2024. Throughout 2024, states received regular updates regarding the federal government’s progress on distributing funds to Prehired’s victims. However, the CFPB ceased providing information about the process starting in February of this year
Prehired was a Delaware-based company that operated a 12-week online training program claiming to prepare students for entry-level positions as software sales development representatives with high-figure salaries and job guarantees. Prehired offered students income-share loans to help finance their program costs.
Raoul, with the CFPB and several states filed a lawsuit against Prehired in 2023, alleging the company used deceptive marketing tactics to lure Illinois residents into paying up to $30,000 for its unlicensed online sales training program. Prehired deceived borrowers by claiming its unlawful income-share loans were not loans and hid important loan terms from borrowers, including the amount financed, finance charges and the loans’ annual percentage rate.
Prehired “guaranteed” students would land tech sales jobs paying $60,000 or more but buried the loan terms that required graduates to pay even if they never obtained a job. At the same time, the company demanded monthly payments from students who were earning far less. When students failed to pay on their debt, Prehired pursued aggressive collection techniques such as filing lawsuits and initiating arbitration proceedings in jurisdictions far from where borrowers resided.
In addition to requiring Prehired to pay restitution, the settlement permanently banned Prehired from offering income-share loans in the future or any activities related to vocational education. The settlement also required the company to void all outstanding income-share loans, valued by Prehired at nearly $27 million.
Joining Raoul in sending the letter to CFPB were the states of Colorado, Delaware, Massachusetts, Minnesota, New York, North Carolina, Ohio, Oregon, South Carolina and Washington, as well as the California Department of Financial Protection and Innovation.
