Dive Brief: 

• Washington state Attorney General Bob Ferguson filed a lawsuit this month against Prehired, accusing the online tech sales boot camp of misleading students about its programs and of advertising sham job guarantees. 
• The lawsuit, filed in King County Superior Court, alleges South Carolina-based Prehired and its founder, Joshua Jordan, violated state consumer protection law and didn’t have a license to operate as a private vocational school in the state. Ferguson is seeking civil penalties against Prehired and restitution for Washington citizens who signed up for the company’s boot camp. 
• The complaint also takes aim at Prehired’s use of income-share agreements, in which students agreed to pay up to 16% of their gross income for as many as eight years. The lawsuit alleges that these contracts are invalid because Prehired operated in Washington without a license. 

Dive Insight: 

The lawsuit reflects growing scrutiny of the booming boot camp industry. Other companies offering short-term training have faced legal challenges asserting that they’ve misled students about their program costs and outcomes. 

Many boot camps allow students to finance their programs through income-share agreements, or ISAs, which are arrangements that let students pay back expenses like tuition through a portion of their income over a set time frame. ISAs have recently faced backlash from consumer advocates, who are concerned these contracts burden students with more debt than they would have under traditional loans and that they don't give students an accurate picture of how much they will pay for their programs. 

Launched in 2017, Prehired advertises itself as a program to prepare people for software sales representative positions and offers online training that lasts up to 12 weeks. By 2022, the company started calling itself a “membership association,” though it didn’t make significant changes to the program, according to the lawsuit. 

The for-profit company claims that the average student makes $69,000 in their first year and has the ability to earn a six-figure salary after that. It also says students can start the boot camp program with zero payments upfront and guarantees they will find jobs. 

The lawsuit challenges those claims. As of May 2018, Prehired’s program includes about 15 hours of videos that its founder Jordan made himself, the complaint says. The attorney general’s office also asserts that the $69,000 figure is based on industry standards for software sales and does not reflect students’ ability to get a larger salary by completing Prehired’s program. Additionally, the company did not disclose that students would have to apply to at least 25 jobs per week for up to 12 weeks in a row to be eligible for its job guarantee, according to the complaint. 

“Washingtonians forked over tens of thousands of dollars in hard-earned money based on Joshua Jordan’s lies,” Ferguson said in a statement. “I intend to make sure Jordan and his company do not prey on anyone else. I will fight to see his victims paid back and help get them out from under these illegal contracts.”

Prehired began offering ISAs to students in at least 2019, according to the lawsuit. Terms have varied over time. As of November 2020, the ISA agreement required students to pay 12.5% of their gross income for 48 months, with total payments capped at $30,000, according to the company’s website. Prehired’s agreements “deceptively state” that the ISAs aren’t loans and don’t create any debt, the lawsuit says. 

The federal Consumer Financial Protection Bureau said last year that laws and regulations concerning private loans also apply to ISAs.

The Washington lawsuit also alleges that Prehired misled students about the terms of its ISAs. Prehired’s ISA contracts require payments once students make about $40,000 annually, but they also allow the company to collect payments if the consumer makes less than that amount, according to the lawsuit. Students making as little as $30,000 a year could be on the hook for payments if they don’t complete the career search process or don’t accept job offers meeting the company’s criteria.  

Prehired has aggressively attempted to collect on these ISAs. From mid-January to mid-February, Jordan filed nearly 300 lawsuits demanding former students pay $25,000 each on their defaulted ISAs, according to the Student Borrower Protection Center, an advocacy group. The students live across the country.

Prehired did not immediately respond to a request for comment Tuesday.