The U.S. Consumer Financial Protection Bureau (CFPB) has issued several penalties against coding bootcamp Bloomtech (formerly known as Lambda School) for alleged deceptive business practices. From the report: The company, which claims on its site to help students land “dream jobs” in tech fields at companies like Amazon, Cisco and Google, accepted the consent order without admitting or denying wrongdoing. Ta. In yesterday's announcement, the CFPB accused BloomTech and its CEO of failing to disclose the true cost of student loans and claiming that recruitment rates for BloomTech graduates were overly optimistic. announced that they have taken action against Austin Allred. Bloomtech (formerly Lambda School) has been running since 2017 and offers his 6-9 month vocational programs in science and engineering with an emphasis on computer technology.
CFPB Director Rohit Chopra said, “Bloomtech and its CEO attempted to lure students into income share loans that were advertised as risk-free, but in reality were subject to hefty finance fees and similar to other credit products.'' “There were a lot of risks involved.” The CFPB alleged that Bloomtech allowed students to pay tuition later through income share loans and income share agreements, but in exchange they had to pay a portion of their future income. The agency alleged that Bloomtech explicitly told students that its Income Share Loans (which come with an average $4,000 “finance fee” to avail) were not actually loans at all. The CFPB alleges in its settlement order that a “substantial majority” of students use these loans to fund their education, with each student ultimately receiving up to $30,000 of their income to settle their loans. He argued that there was a possibility that he would have to pay Bloomtech. From the CFPB press release: Bloomtech advertised on its website that between 71 and 86 percent of its students found employment within six months of graduation, but private reports to investors showed that the employment rate was consistently closer to 50 percent. It had been. Allred tweeted that the school had achieved a 100 percent job placement rate for one student, but later acknowledged in a private message that the sample size was just one student.
