State Enforcement Action Follows Public Warning by SBPC that Prehired, LLC was Engaged in Fraud, Offers New Evidence of Endemic Lawbreaking by Student Lenders and Tech Bootcamp Operators
June 9, 2022 | Washington, D.C. — Yesterday, Washington Attorney General Bob Ferguson filed a lawsuit against the disgraced online tech sales bootcamp Prehired, LLC and its founder, Joshua Jordan, for a startling array of illegal acts and practices. As the Attorney General’s office described in filing its lawsuit, Prehired “duped Washingtonians into paying $30,000 for an online course” that proved not to be what the company advertised, offered a “guarantee” to land students “a $60k+ job offer” only for that claim “to be a lie,” and “used aggressive collection techniques like lawsuits and forced arbitration to get the money” it had trapped students into paying, among several other areas of illegal and harmful conduct.
In response to Washington’s lawsuit against Prehired and Joshua Jordan, SBPC Director of Research & Investigations Ben Kaufman released the following statement:
The practices of Prehired and its founder, Joshua Jordan, are emblematic of everything wrong with the for-profit ‘bootcamp’ landscape and the predatory income share agreement financing that empowers it. Attorney General Ferguson’s lawsuit sends a clear signal that the State of Washington intends to be a leader in student borrower protection at the treacherous intersection of bootcamps and risky private student lending.
But we should remember that this case broke through only because Joshua Jordan flew too close to the sun in aggressively taking his students to court to collect on their dubious debts. Every day, thousands of students across the country struggle under the weight of predatory ISAs that are just as expensive and that were taken on for bootcamps just as fraudulent as Prehired. These bootcamps appear to exist for no purpose beyond feeding the vanity and lining the pockets of the tech industry. And in almost every case, law enforcement at all levels has so far been silent.
Policymakers and law enforcement agencies should follow Washington’s example and end the fly-by-night bootcamp scams trapping students in tens of thousands of dollars of risky private student loans. Because, as too many financially ruined students have learned the hard way, promises of ‘aligned incentives’ between students and bootcamps are often just bait to trap students in high-cost debts.
Prehired is a technology sales training bootcamp founded in 2017 by Joshua Jordan. Using a six-week course, the school claimed it could prepare students for and place them in jobs as “sales development representatives” at software companies, including the offer of a “Member Success Guarantee” stating “We guarantee you land a $60k+ job offer within 12 months of finishing coursework ($40k base + expected commissions.)” The school claimed that students “average [incomes of] $69,000 in their first year with 6-figure potential after that,” that “96%” of Prehired members are hired within six months, and that “Prehired members are HIRED in 12 weeks on average.”
To pay for this program, students took on income share agreements (ISA) with Meratas (previously with Leif) wherein students agreed to pay 12.5 percent of their income each month if their annualized income was above $60,000. The ISA debt would be extinguished at the sooner of the borrower making 48 payments, the borrower making payments that cumulatively reach a $30,000 “cap,” or 8 years passing in the borrower’s repayment sequence. Prehired touted that its use of ISAs allowed it to “align our success with yours,” claiming in marketing materials that “[o]ur members only start paying dues only after they land a job and make enough money per month” and that the ISA helped ensure that the program involved “No Risk.”
From January 13th to February 15th 2022, Joshua Jordan filed 290 lawsuits—all in Delaware state court, although the defendants live all across the country—demanding former students pay $25,000 apiece on defaulted ISAs. Subsequent posts online from students targeted in these lawsuits and otherwise scammed by Prehired made clear that the school was little more than a glossy grift aimed at trapping students into expensive private loans for a fraudulent educational product.
As the Student Borrower Protection Center outlined in a blog post published soon after these lawsuits were filed, Prehired students’ stories included the following:
I had to file bankruptcy. . . . Nothing I’ve ever used in any sales role since has been from PreHired.SOURCE, EMPHASIS ADDED
When I started my time with PreHired, I was promised the dream of having a 6-figure income. . . . I completed the training in about 2 weeks, started my career search journey and applied to 50+ job postings as I was instructed. None reached out to schedule more interviews. . . . Nearly 2 years later I still do not make close to 6-figures. I have exhausted my savings to keep me afloat but I am just ashamed to have gone through PreHired’s training bootcamp.SOURCE, EMPHASIS ADDED
I was a former school teacher desperate to change careers during covid. . . . I was angry when I realized [the training] was pre recorded and that there was no one really there to help you along the way. The job I got approached me because of my degree in business and not because of PreHired. They were not even familiar with them. I was even more angry when I realized that no matter what the training PreHired offered as ‘like nothing else’ was only a blip of the training you get PAID to do during your onboarding process with the company. Absolutely a predatory company.SOURCE, EMPHASIS ADDED
At the start of Covid I started to search for a work-at-home option in a different field. That night I found a Facebook ad for Prehired. I went through the orientation and the training and then went straight for the mentor job search part of the program. For the next 12 months, I was submitting twice the required applications a week and went on countless interviews but never got a job, except for a job my mentor told me to take that was purely on a commission that only lasted a week, and then the search was back on.SOURCE, EMPHASIS ADDED
Students also reported being instructed to misrepresent their income as being higher than it actually was so that Prehired could increase payments on students’ ISAs, being sent into collections even after being declared 100 percent disabled, and learning after graduation that comparable courses of study are available for free online. Further, students claimed that they had been directed to astroturf the web with positive reviews for Prehired, and that students seeking protection under Prehired’s employment guarantee were systematically given the runaround. As Washington Attorney General Ferguson noted yesterday, many of these students appear to be military veterans. Finally, a student who refused in protest to pay on his ISA and who went on to found his own software sales staffing business claimed that Joshua Jordan hired him to threaten students with lawsuits if they did not pay on their Prehired ISAs, adding that he “received a lecture from Joshua Jordan on the dynamics of using fear within business tactics.”
According to public reports, “Prehired voluntarily dismissed the [Delaware] collection cases after the state consumer protection unit expressed its concerns in a March 8 letter, noting that virtually all of the defendants resided outside of Delaware and had no practical way to defend themselves in the lawsuits.”
However, those reports indicate that “Days later, Prehired began refiling the same cases on the Ejudicate online arbitration platform — even though students never agreed to [arbitration].” Washington’s action announced today is the first public enforcement action related to Prehired’s 290 lawsuits.
Background on Income Share Agreements and Bootcamps
ISAs are a risky form of student financing that ties students’ loan payments to their future wages. A growing body of evidence demonstrates that leading ISA providers routinely engage in a wide range of abuses extending across companies and across the higher education sector. For example, ISA providers have been accused of the following:
- Relying on Deceptive Marketing. The National Consumer Law Center and the SPBC filed a complaint with the Federal Trade Commission alleging the ISA company Vemo engaged in a range of deceptive marketing tactics related to Vemo-backed ISAs offered by Purdue University and the University of Utah.
- Servicing and Collecting Void, Unenforceable Debts. Prominent legacy student loan companies may be servicing and collecting on ISAs made in violation of state licensing or usury laws. The servicing or collection of void, unenforceable debts may be an unfair practice in violation of federal and state consumer law.
- Engaging in Racial Discrimination. The NAACP Legal Defense Fund and the SBPC demanded ISA provider Stride Funding cease discriminatory lending practices that appear to charge students attending Historically Black Colleges and Universities more than similarly situated borrowers who attend predominantly white colleges.
- Charging Illegal Prepayment Penalties. A review of publicly available ISA agreements reveals that in most cases, ISA providers charge borrowers extremely high prepayment penalties, locking vulnerable borrowers into high-cost subprime credit—a practice common among predatory mortgage lenders in the years before the financial crisis. The federal Truth in Lending Act bans this practice for all private student lenders, including ISA providers.
- Denying that They Have to Comply with Any Consumer Financial Laws. ISA providers routinely argue that their product is not credit or a loan for the purposes of state and federal consumer financial protection statutes and regulations, and that they therefore do not have to follow any laws currently on the books. Even though state and federal agencies have taken action to indicate that this view is clearly incorrect, participants in the ISA market continue to insist that it is the case.
With the ISA market growing rapidly and companies in the space pushing the product ever more aggressively, consumer advocates have urged federal and state regulators to crack down on these abuses and ensure that ISA companies are acting in accordance with existing laws and regulations.
ISAs are closely related to the world of for-profit vocational bootcamps, which are short-term credential-based programs usually claiming to offer training for jobs in the technology sector. Like Prehired, these schools usually rely specifically on claims that their ISAs “align incentives” across students and the school to build false trust and lure in customers. However, as evidenced by a startlingly long line of financially ruined ISA-backed bootcamp attendees, these companies all too often offer nothing more than a tech-branded pathway to financial devastation—all while their founders run off with millions.
Worse, even when operating without a license, and even after being reprimanded for doing so, bootcamps have systematically been given little more than a slap on the wrist by law enforcement. Plus, when borrowers try to seek justice through the courts, they often find that fine print in their ISA contracts mean their only option is back-door, lopsided arbitration. It is long past due for policymakers and law enforcement at all levels to crack down on this harm-ridden space.
Student Borrower Protection Center is a nonprofit organization focused on alleviating the burden of student debt for millions of Americans. 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.