AG Jennings Announces $30-million Order Against Student Lender for Illegal Practices

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A Delaware bankruptcy court has approved a stipulated judgment that will require bankrupt student lender Prehired to provide over $30-million in relief to student borrowers nationwide. Delaware AG Kathy Jennings says Prehired 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.

Additional information from the DOJ:

The order approved by a federal bankruptcy court requires Prehired to cease all operations, permits the potential payment of $4.2 million in redress to consumers that were affected by its illegal practices, and voids all of its outstanding income share loans, valued by Prehired at nearly $27 million.

“When Prehired decided to use the Delaware courts to perpetrate an illegal nationwide debt collection scheme, my office quickly took action to stop them in their tracks.  Today, through an effort that grew to include 11 other states and the Consumer Financial Protection Bureau, we are pleased to announce this resolution that will provide real relief to borrowers around the country,” said Attorney General Jennings.  “My office will continue to do the work to ensure that Delaware’s courts and judicial system are not used to perpetrate frauds, either here in Delaware or across the nation.”

Prehired operated a 12-week online training program claiming to prepare students for entry-level positions as software sales development representatives with “six-figure salaries” and a “job guarantee.” Prehired offered students “income share” loans to help finance their costs of the program. Today’s order also names two affiliated companies, Prehired Recruiting and Prehired Accelerator, that pursued collection on defaulted income share loans.

AG Jennings’ Consumer Protection Unit initially took action in early 2022, starting the chain of events that the led to today’s nationwide resolution. That investigation began after Prehired filed nearly 300 debt-collection lawsuits in the Delaware Justice of the Peace Court seeking to enforce its income share agreements. Prehired started filing the lawsuits one month after forming two Delaware limited liability companies, including the plaintiff in the debt collection actions. Prehired voluntarily dismissed those cases after the CPU expressed its concerns in a March 8 letter that virtually all of the defendants resided outside of Delaware and had no practical way to defend themselves in the lawsuits. Just days later, Prehired began refiling those same cases on the Ejudicate online arbitration platform—even though students never agreed to arbitrate on Ejudicate. Once again, the Consumer Protection Unit acted quickly seeking to stop the illegal arbitrations.

More information about today’s order can be found in a companion release issued by the CFPB today, available here.  A copy of the federal bankruptcy court’s order is available here.

In addition to the work of its sister states and the CFPB, AG Jennings also recognizes the efforts of the Delaware Justice of the Peace Courts for acting promptly to stay the lawsuits filed by Prehired against hundreds of consumers. 


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