CFPB Takes Action Against Coding Boot Camp BloomTech and CEO Austen Allred for Deceiving Students
On April 17, 2024, the Consumer Financial Protection Bureau (CFPB) took action against BloomTech and its CEO Austen Allred for deceiving students about the cost of loans and making false claims about graduates’ hiring rates. The CFPB found that BloomTech and Allred falsely told students that the school’s “income share” agreement contracts were not loans, when in fact, they were loans carrying an average finance charge of around $4,000. BloomTech and Allred lured prospective enrollees with inflated promises of job placement rates as high as 86 percent when the company’s internal metrics showed placement rates closer to 50 percent and in some cases as low as 30 percent.
The order permanently bans BloomTech from all consumer-lending activities and bans Allred from any student-lending activities for ten years. BloomTech and Allred must also pay over $164,000 in civil penalties, which will be deposited in the CFPB’s victims relief fund.
BloomTech is a for-profit vocational school that originated at least 11,000 income share loans since 2017, and most of its students funded their tuition with these loans. Under almost all these loans, students who earn more than $50,000 in a related field are required to pay BloomTech 17 percent of their pre-tax income each month until they make 24 payments or hit a “cap” of $30,000 in total payments. The CFPB found that BloomTech students were lured with false promises and deceptive marketing.
BloomTech and Allred:
– Hid the cost and true nature of students’ debt
– Tricked prospective students with inflated job-placement rates
– Misrepresented their financial interests by selling loans to investors
– Engaged in illegal contract practices
Under the CFPB’s order, BloomTech and Allred must cease collecting payments on certain graduates, eliminate finance changes for certain agreements, and allow students the option to withdraw without penalty.
The Consumer Financial Protection Bureau is a 21st-century agency that implements and enforces Federal consumer financial law and ensures that markets for consumer financial products are fair, transparent, and competitive. For more information, visit www.consumerfinance.gov.
