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On its website, the student lender Prehired promises that it will “help you get hired, promoted and leveling up to six figures.” The idea was that students fresh out of college would use the service, paying for its training program that promised, as the statement said, help getting hired in entry level jobs. That’s a promise multiple Virginia college students, including some in Prince Edward and surrounding counties from the region, have fallen victim to. Instead, according to a federal court order, the lender made “false promises of job placement, trapping students with income share loans that violated the law and resorted to abusive debt collection practices when borrowers could not pay.” 

As a result, the lender is being ordered to provide more than $30 million in relief to its borrowers. That’s $30 million combined, thanks to a lawsuit filed by Virginia Attorney General Jason Miyares. In addition, Prehired has to cease all operations, pay $4.2 million in damages to consumers and void all of its current income share loans, an amount estimated at almost $27 million. 

“The transition from college to the working world is challenging for our students. Prehired preyed on young people during this time of uncertainty and adjustment, setting them up for failure rather than success,” said Attorney General Miyares. “Today’s action rights Prehired’s wrongs and brings almost $100,000 worth of relief for affected Virginians.” 

WHAT WAS PREHIRED? 

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 “sixfigure salaries” and a “job guarantee.” Prehired offered students income share loans to help finance their costs of the program. This order also names two affiliated companies, Prehired Recruiting and Prehired Accelerator, that pursued collection on defaulted income share loans. 

In July 2023, Miyares sued Prehired to void the illegal loans and facilitate consumer redress. In the lawsuit, he alleged that Prehired: 

• Deceived borrowers by claiming its loans were not loans: Prehired’s marketing 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 hid loan terms from borrowers, including the amount financed, finance charges, and the annual percentage rate. 

• Tricked consumers with deceptive debt collection practices: Prehired Recruiting and Prehired Accelerator 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. 

TAKING ACTION 

Under the Consumer Financial Protection Act (CFPA), state attorney generals have the authority to take enforcement action against institutions that violate federal consumer financial laws, including the CFPA’s prohibition of deceptive acts or practices and the Fair Debt Collection Practices Act. 

Under the order approved by the court, Prehired will: 

• Refund $4.2 million to student borrowers: Prehired will pay $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: All outstanding loans, which Prehired valued at nearly $27 million, are permanently voided and cannot be sold or collected on by Prehired or anyone else. 

• Shut down permanently: Prehired is permanently banned from offering income share loans in the future, or any activities related to vocational education. The company has already filed for Chapter 7 bankruptcy and ceased operations, and under the terms of this order it will stay shut down for good. 

• Pay a civil money penalty: In addition to the direct consumer redress above, Prehired will make a $1 payment to the CFPB victims relief fund. The payment will make it possible for the CFPB to use that fund to provide additional compensation to borrowers harmed by the company’s illegal conduct. 

HOW CAN YOU SUBMIT A CLAIM? 

Prehired students affected by this action can submit a claim at https://cms.www. prehiredclaims.com/.