A Silicon Valley coding boot camp is in hot water over allegations of student loan fraud,
Attorneys in the Consumer Financial Protection Bureau say that BloomTech LLC and its CEO Austen Allred had lied to prospective students about the terms of loans and the interest rates that would be charged.
The IT training school was charged with a number of crimes related to the way it advertised and financed its student loan payments, including allegations of inflated job placement rates and misstating the cost of student loans.
Both the school and CEO Austin Allred were served with complaints.
"The CFPB found that BloomTech and Allred falsely told students the school’s 'income share' agreement contracts were not loans, when in fact the agreements were loans carrying an average finance charge of around $4,000m," the CFFB said.
"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."
Authorities say that the coding students were served with what can legally be termed as "false promises and deceptive marketing."
"BloomTech operates short-term, typically six-to-nine-month training programs in areas such as web development, data science, and backend engineering. Since 2017, BloomTech originated at least 11,000 income share loans, with most of BloomTech students funding their tuition with these loans," the CFBP said,
"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."
Under the terms of the agreement the CFBP stands to collect roughly $164,000 in penalties.
