SACRAMENTO – Today, Commissioner KC Mohseni of the Department of Financial Protection and Innovation (DFPI) and leaders from eleven states are pressing the federal Consumer Financial Protection Bureau (CFPB) to issue long-delayed restitution to victims of a predatory tech sales program.
In a letter sent today to the CFPB’s acting director, the multistate coalition details how a court order against Prehired, LLC and its related entities (Prehired) for illegal, deceptive, and abusive practices resulted in an award of $4.2 million in restitution to 660 consumers nationwide. Unexplained delays at the agency level are keeping those checks from being distributed. The court issued its order in November 2023 and the states worked with the CFPB to allocate funds for harmed consumers. The CFPB announced the allocation in May 2024.
States received regular updates throughout 2024 regarding the federal government’s progress to distribute these funds to Prehired’s victims. In February of this year, the CFPB stopped providing information about the process.
Prehired misled consumers by promoting its vocational training program using deceptive claims. It promised students a “6-figure sales career” within 12 months of completing the program and offered enrollment with “zero upfront costs” through income share agreements (ISAs). These ISAs required students to repay a fixed percentage of their future income.
Prehired failed to disclose key terms, including that students would be required to pay even if they never secured a job. In many cases, the company also raised minimum monthly payments without confirming whether students were employed or earning more. These misrepresentations led many students to take on significant, unsustainable debt.
Once borrowers were indebted to Prehired, the company engaged in unfair debt collection practices by falsely representing the amount of debt owed by consumers and inducing students to enter into harmful “settlement agreements” that benefited Prehired.
The DFPI and various state attorneys general joined the CFPB in filing a complaint against Prehired under the Consumer Financial Protection Act of 2010 (CFPA) for its administration of ISAs used to finance students’ tuition. The court found that Prehired’s conduct was unfair, deceptive, or otherwise unlawful and violated federal law. As a result, Prehired was ordered to repay $4.2 million in restitution to borrowers who entered into ISAs.
The letter urges the CFPB to provide a timeframe for when the agency plans to distribute the funds to victims. The impacted consumers deserve the refunds that were secured for them.
Joining DFPI in the letter are Colorado, Delaware, Illinois, Massachusetts, Minnesota, New York, North Carolina, Ohio, Oregon, South Carolina, and Washington.
About DFPI
The Department of Financial Protection and Innovation protects consumers, regulates financial services, and fosters responsible innovation. DFPI protects consumers by establishing and enforcing financial regulations that promote transparency and accountability. We empower all Californians to access a fair and equitable financial marketplace through education and preventing potential risks, fraud, and abuse. Learn more at dfpi.ca.gov.