On November 20, Delaware Attorney General (AG) Kathy Jennings, along with the Consumer Financial Protection Bureau (CFPB) and 11 other states, announced a settlement in excess of $30 million with Prehired LLC and affiliated debt collection companies. This settlement resolves allegations of unlawful practices in originating, servicing, collecting, and enforcing Income Sharing Agreements (ISAs) in violation of the Consumer Financial Protection Act of 2010, the Truth in Lending Act, and its implementing Regulation Z, and the Fair Debt Collection Practices Act. Specifically, regulators alleged in a July 2023 complaint that the ISAs were unlawful, and that Prehired and its affiliates made false promises of job placement and resorted to abusive debt collection practices when borrowers could not pay. As part of the stipulated final judgment entered by the Delaware bankruptcy court, Prehired is required to cease all operations, pay $4.2 million in redress to students who made loan payments between 2019 and 2023, pay $1 million to the CFPB victims relief fund, and void all of its outstanding ISAs, which are valued at nearly $27 million. |