The BloomTech Group: SF-based coding school BloomTech fined $160K for 'deceptive acts' against students

( KRON )-Today, the Consumer Financial Protection Bureau (CFBP) issued an order against BloomTech, a for-profit coding school that touts "dream tech jobs," along with its CEO, Austen Allred, for deceiving students about loan prices and making false claims about graduates' hiring rates. STUDENT DEBT According to the CFBP, Bloomtech claimed its financial agreements were "not loans, did not create student debt, did not carry a finance charge, and were 'risk-free'". As a way for students to pay back their debt, BloomTech advertised an "income share" agreement. If a student were to earn over $50,000 after graduating from Bloomtech, the company claimed 17% of a graduate's pre-tax income until they make 24 payments or hit a "cap" of $30,000 in total payments, CFBP said. If the graduate were to miss one of the 24 payments, SFBP said BloomTech required its alumni to pay the $30,000 immediately. BloomTech further hid the cost and nature of the "income share" loans by not disclosing key terms like the finance charge and annual percentage rate, as required by law. Despite its denial in relation to a loan, CFBP claims the agreements are loans with an average finance charge of $4,000. INFLATED JOB PLACEMENT RATES CFBP said the company's CEO, Allred, once tweeted that the school achieved a "100% job placement rate" in one of its cohorts but later acknowledged in a private message that "the sample size was just one student." On the school's website, BloomTech advertised a 71-86% job placement rate within 6 months post-graduation. According to the CFPB, however, the company's non-public reporting to investors "consistently" showed placement rates of 50%. FUTURE ACTION Under the Consumer Financial Protection Act (CFPA), the CFPB has the authority to take action against companies violating consumer financial laws, including engaging in unfair, deceptive, or abusive acts or practices. The CFPB found that BloomTech and Allred used "unfair, deceptive tactics" and "took advantage" of consumers' reliance on BloomTech to act in their interests. Under the CFPB's order, BloomTech and Allred must: Cease collecting payments on certain graduates: BloomTech must not collect any additional payments on "income share" loans for graduates who did not have a qualifying job in the past year. Amends "income share" loan contracts: The order reforms "income share" loan terms to eliminate the finance charge for consumers who graduated from the program more than 18 months ago and obtained a qualifying job making $70,000 or less. Allow students to withdraw without penalty: Current students will have the option to withdraw from the program and cancel their "income share" loans or continue in the program with a third-party loan. Pay over $164,000 in penalties: BloomTech will pay over $64,000, and Allred will pay $100,000 in penalties to the CFPB's victims relief fund. For the latest news, weather, sports, and streaming video, head to KRON4.