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Media Press Releases Federal Enforcement Officials Issue Sharp New Warning to Industry: “Workers Face Risks from Employer-Driven Debt”

Federal Enforcement Officials Issue Sharp New Warning to Industry: “Workers Face Risks from Employer-Driven Debt”

Advocates Applaud First-of-Its-Kind CFPB Report Warning of Risky and Unlawful Training Repayment Agreement Provisions (TRAPs)

July 20, 2023 | WASHINGTON, D.C. — Today, the Consumer Financial Protection Bureau (CFPB) released new findings highlighting the risks workers face from employers’ increasing use of predatory debt to trap people in abusive jobs and poor working conditions. 

In response to the CFPB’s announcement, SBPC Deputy Executive Director and Managing Counsel Persis Yu released the following statement:

“Training should be a means of social mobility. Instead, employers seeking to trap workers in unsustainable, low-paying jobs have weaponized workers’ need to learn and build new skills. The abusive practices uncovered by the Bureau should be a wake-up call to consumer protection officials and policymakers at all levels. TRAPs impose significant financial burdens on workers and foster monopsony in labor markets by reducing worker mobility and bargaining power. The largest corporations in America are now on notice: the use of TRAPs and other predatory contract terms must stop.”

The Consumer Financial Protection Bureau’s report on the findings of their federal inquiry into employer-driven debt is available here.

As shown by past SBPC investigations and academic research, if workers bound by a TRAP attempt to leave their job, the cost that they will be on the hook for can be—and often is—arbitrarily made up by the employer. These contracts also frequently include hidden fees and terms and conditions that employers can unilaterally change.

Although employers argue that these provisions are a way to recoup the cost of teaching skills to employees who may depart sooner than anticipated, TRAPs are often instead used to hold people in poor working environments and low-paying jobs without having to face the consequences or demands of market competition.  

Put plainly, low-road employers are exploiting unequal bargaining power over workers by leveraging TRAPs as a penalty for leaving a job. And, even if the TRAP is not enforced, the threat still has a chilling effect on worker freedom and mobility within the labor market.


A growing body of evidence indicates that employers nationwide are increasingly using a new de-facto non-compete called Training Repayment Agreement Provisions (TRAPs) to hold workers hostage in bad jobs. TRAPs turn workers into debtors via “shadow” student debt acquired from forced on-the-job education and training.

Last year, a former PetSmart pet groomer filed a groundbreaking class action lawsuit against the retail pet supply giant, alleging that the firm is engaged in a scheme to trap trainee pet groomers in their low-wage jobs by levying thousands of dollars in abusive and unenforceable debts against them. The lawsuit alleges that PetSmart uses a TRAP to limit groomers from seeking out better working conditions, locking low-wage workers for years into high-volume groomer jobs that can be grueling and dangerous. For groomers who quit within two years of training, the groomer alleges PetSmart uses debt collectors to pursue workers for training debts that can total more than $5,000.

Earlier this year, in January, a former Ameriflight pilot filed a class action lawsuit alleging that Ameriflight, the nation’s largest Part 135 cargo airline, indebted pilots with unlawful training costs of up to $30,000 to lock pilots into grueling work for wages starting as low as $12.50 an hour, even as the rest of the industry suffered from a pilot shortage. The complaint alleges that Ameriflight routinely used TRAPs to limit pilots’ mobility and suppress wages. In particular, the complaint asserts that the company threatened to sue pilots who leave their jobs with Ameriflight within 18 to 24 months of receiving training.

In April, a former Smoothstack employee filed a class-action lawsuit against a tech-training and employee-staffing agency. The lawsuit alleges that Smoothstack steals wages from employees and requires them to sign predatory TRAPs as a precondition of employment, putting them on the hook for tens of thousands of dollars in debt if they tried to leave or were fired from low-wage tech jobs working on projects for some of the largest corporations in the world. To get new workers to sign up, Smoothstack allegedly sold the promise of a permanent lucrative career—a tactic reminiscent of the recruiting practices used by failed for-profit colleges like Corinthian Colleges, Devry University, and ITT Technical Institute.

These complaints highlight how TRAPs impose significant financial burdens on workers and foster unfair methods of competition by reducing worker mobility and bargaining power.

Further Reading

SBPC report on TRAPs: Trapped at Work: How Big Business Uses Student Debt to Restrict Worker Mobility

Open Markets Institute (OMI) and SBPC joint letter to the CFPB on TRAPs: Protecting Workers Against Predatory Employer Loans

American Economic Liberties Project, OMI, SBPC, and Towards Justice letter to the Department of Transportation on TRAPs: The Growing Threat of Aviation Training Repayment Agreement Provisions

Lawsuit against PetSmart for its use of TRAPs, Scally v. PetSmart: Groundbreaking Lawsuit Seeks to Block PetSmart’s Predatory Lending Scheme

Lawsuit against Ameriflight for its use of TRAPs, Fredericks v. Ameriflight: Major Cargo Airline Company Accused of Illegally Trapping Pilots in Up to $30,000 of Training Debt Amidst Supply Chain Crisis

Lawsuit against Smoothstack for its use of TRAPs, O’Brien v. Smoothstack: “Unconscionable” Debt-for-Training Scheme Funnels Low-Wage Tech Workers to Fortune 500 Companies; Groundbreaking Class-Action Lawsuit Seeks to Void Predatory Training Repayment Agreement Provisions


About Student Borrower Protection Center

The Student Borrower Protection Center (SBPC) is a nonprofit organization focused on alleviating the burden of student debt for millions of Americans. The SBPC engages in advocacy, policymaking, and litigation strategy to rein in industry abuses, protect borrowers’ rights, and advance economic opportunity for the next generation of students.

Learn more at or follow SBPC on Twitter @theSBPC.

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