[HN Gopher] CFPB Takes Action Against Coding Boot Camp BloomTech...
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CFPB Takes Action Against Coding Boot Camp BloomTech and CEO Austen
Allred
Author : Jimmc414
Score : 112 points
Date : 2024-04-17 17:48 UTC (5 hours ago)
(HTM) web link (www.consumerfinance.gov)
(TXT) w3m dump (www.consumerfinance.gov)
| Jimmc414 wrote:
| Announcement from CFPB Director
| https://twitter.com/chopracfpb/status/1780651320766058684
| mistrial9 wrote:
| a quick search shows this post dated 2020 (a long time ago)
|
| https://www.applieddivinitystudies.com/lambda-lies/
| taytus wrote:
| April, 17th, 2024
|
| https://www.consumerfinance.gov/about-us/newsroom/cfpb-takes...
| Twirrim wrote:
| This is the boot camp school formerly known as Lambda School,
| that came under a lot of fire in the past for these types of
| practices, and other issues.
|
| Previous trouble they've been in:
|
| https://dfpi.ca.gov/2021/04/26/lambda-school-reaches-settlem...
|
| https://techcrunch.com/2021/05/13/lambda-school-lawsuits/
| dylan604 wrote:
| This is one of those situations lending support to the
| corporate death penalty. Allowing name changes like Worldcom,
| Spectrum, and so on to write off some liabilities while
| operating as if nothing happened.
| avarun wrote:
| Their name change was unrelated to this. Somebody else owned
| a trademark for Lambda and sued them over it, so they were
| forced to change their name.
| JumpCrisscross wrote:
| > _the corporate death penalty_
|
| This is a silly idea lobbyists love because it sidesteps the
| _actual_ corporate-destruction mechanism: liquidation to pay
| massive fines, license revocation and /or personal liability
| for senior management.
|
| Consider even the penalties here, which effectively ban
| Allred and Lambda from doing business. If you corporate
| death'd them, the contracts and assets would still exist.
| Allred would be unpunished. Everything would go back to
| shareholders who were presumably fine with the _status quo_ ,
| and would be fine putting them into a new entity that Allred
| could manage. Okay, so you cancel the contracts. Now the
| janitor who hasn't been paid in two months is screwed. Okay,
| so you exempt employees. Allred's an employee! Exempt him?
| What do you even pay the janitor with? Okay, exempt some
| assets. How many? How do you choose who must keep paying
| versus who is let off? Maybe _pro rata_? Who will administer
| all this? _Et cetera, et cetera._
|
| Contrast that to a massive fine. Company goes Chapter 7 and
| into a deep body of law that has experience dealing with the
| above. (Ideally paired with a license revocation from any
| lending for Allred and the entity, in case they try to
| Chapter 11.) Shareholders are wiped and free to pursue
| Allred. Allred and Lambda are neutralised.
| adrr wrote:
| Or you could just toss people in jail. This case is clearly
| wire fraud if the company knowing provided fraudulent hiring
| rates to get people to pay money for a service.
| willcipriano wrote:
| > making false claims about graduates' hiring rates.
|
| How seriously have colleges been investigated for the claims they
| made convincing students to attend?
| ceejayoz wrote:
| Any you'd like to highlight that come anywhere close to "we
| picked a sample size of one student" or "no finance charge
| means $4k finance charge"?
| bee_rider wrote:
| Colleges generally make nebulous claims about producing well-
| rounded students I think. Seems hard to find anything specific
| enough to be actionable.
| saadatq wrote:
| Unreal:
|
| > Allred tweeted that the school achieved a 100 percent job-
| placement rate in one of its cohorts, and later acknowledged in a
| private message that the sample size was just one student.
| syntaxing wrote:
| Aha that's a gem, it's like that crypto company listed "audited
| by <some famous reliable auditor >". They do not mention they
| failed the audit, but they "did" get audited.
| g42gregory wrote:
| Technically, the statement is still valid. It's just that the
| confidence interval will be wide. :-)
| threeseed wrote:
| He seems to be the king of technically.
|
| "For a few months in 2013, Allred camped out of his car while
| in Silicon Valley, and frequently describes this period as
| having been homeless. However, a deleted post on his blog
| titled 'Voluntarily Homeless in Silicon Valley' explains that
| he lived out of a car by choice."
| sandofsky wrote:
| When confronted about this on Hacker News, Austen defended
| himself with:
|
| > I did say the hiring rate of a cohort of one student was
| 100%. And in the same tweet I said, in all caps BUT VERY SMALL
| SAMPLE SIZE. Odd how that doesn't make the article, don't you
| think?
|
| https://news.ycombinator.com/item?id=26813371
|
| Incidentally, it _did_ make it into the article he 's referring
| to, twice.
| tempsy wrote:
| From what I've read about his career before this he was
| basically a growth marketer/hacker
|
| Like the only thing he knows how to do is fudge things with
| dark patterns to achieve growth at any cost
| solardev wrote:
| Are there any _legit_ income-sharing schools of this type, tech
| or otherwise? Done fairly, it sounds like an interesting
| alternative to upfront tuition.
|
| On the surface it doesn't seem like a bad model, but of course it
| could be twisted to evil ends. From the article:
|
| > The loans carry substantial risk, as a single missed payment
| triggers a default and the remainder of the $30,000 "cap" becomes
| due immediately.
|
| > Students were therefore deprived of rights they should have had
| when their "income share" loan was sold to an investor [without
| the required Holder Rule provisions transferring legal
| responsibilities to the new owners].
| jimberlage wrote:
| App Academy (in a much hotter 2013 job market) honored its 10%
| of my first year's salary ISA when I attended. Anecdotally from
| my cohort, they worked with people on missed payments without
| triggering a balloon repayment.
| LamaOfRuin wrote:
| The income based repayment plans for federal student loans are
| not that different (but without most of the sketchy practices).
|
| The fact that those are an option for accredited schools means
| I think it would be hard to make it work in a program like
| this. Especially if there is any sort of venture interest
| expecting actual returns. Actually educating people well is not
| cheap and I have not seen any of these programs that actually
| do anything innovative either.
| foobarqux wrote:
| Remember that the initial reporting of these crimes many years
| ago was called a "hit piece".
| etaioinshrdlu wrote:
| These fines seem incredibly low to me - they're slaps on the
| wrist!
| next_xibalba wrote:
| Putting these together:
|
| "permanently bans BloomTech from all consumer-lending
| activities and bans Allred from any student-lending activities
| for ten years"
|
| "ordering BloomTech and Allred to cease collecting payments on
| income share loans for graduates who did not have a qualifying
| job, eliminate finance changes for certain agreements, and
| allow students the option to withdraw without penalty"
|
| This order seems like a death sentence. If ISAs are defined as
| consumer-lending, which the CFPB clearly says they are,
| BloomTech cannot recruit new customers. And they cannot collect
| on 50% of their outstanding loans (if the quoted internal
| placement rate is true).
| adubashi wrote:
| There's probably a good argument to ignore rule breaking and
| little deceptive marketing if the student outcomes are good but
| it looks like in-aggregate that they weren't and that students
| were better off taking a loan and attending Oregon State's Post
| Bac in CS or Hack Reactor.
| petsormeat wrote:
| It's disappointing that California's Bureau for Private and Post-
| Secondary Education (BPPE) continued to approve this boot camp. I
| thought the rationale for creating the bureau was to discourage
| scams in job training.
| sandofsky wrote:
| At first I found it weird that the BPPE can't discipline a
| company until it's registered and operating legally. So for the
| first few years, it couldn't do anything. The twist is that
| until the BPPE approves a school to operate, any student debt
| obligations up to that point are not valid. In theory, anyone
| in California who enrolled before August 2020 owes them
| nothing.
|
| The problem is that Lambda School still tries to service those
| debts. The victims are usually low-income, so they lack the
| resources to lawyer up. If they do lawyer up, they end up being
| forced into arbitration due to an arbitration clause in their
| student agreements.
|
| So in the end, it does feel like the BPPE is a half-measure
| that doesn't fully tackle predatory companies.
| wtf92345923 wrote:
| Am I crazy, or do fines never come close to matching damages? Or
| jailtime? I'm constantly seeing rulings or indictments where an
| article says "defendant faces $1500 in fines or two years jail
| time", as if those are in any way equivalent. Were all the fine
| quantities written up in 1875 and just never got updated?
|
| In this case, defendants are accused of conning "at least 11,000
| income share loans" "carrying an average finance charge of around
| $4,000", but their fine is $164,000? A fraud of $44M just for the
| financing charges produces a fine of $164K? As I missing
| something?
| openasocket wrote:
| Those articles you are reading are just poorly worded. For any
| criminal case, it is a matter of fines AND jail time. You could
| be sentenced to jail time and no fines, or fines and no jail
| time (though this is rare), but the majority of the time you
| get fines and jail time. Generally, for criminal issues, the
| punishment is really in the jail time, the fine is just extra.
| tempsy wrote:
| Biggest red flag for me is Austen has basically become a full
| time right wing reactionary on X/Twitter
| afavour wrote:
| It's been an illuminating few years realising how many
| transition from startup tech bro to right wing reactionary.
| Quite the customer intake funnel.
| TheMagicHorsey wrote:
| This is great. But I hope they do the same thing to so called
| "legitimate" universities who have long deceived students as to
| the value of the degrees they grant.
|
| I recently met a liberal arts student from an Ivy League
| university who has been under-employed for twenty years. She
| still has unpaid student loans and she graduated in 2007! She has
| had to work in retail positions from time to time. And she's
| considering retraining via a vocational school to be an
| electrician because that's what her father and brothers do and
| they make 300K+ a year via the family business.
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