CFPB Takes Action Against Coding Boot Camp BloomTech and CEO Austen Allred (consumerfinance.gov)

Article summary

The Consumer Financial Protection Bureau (CFPB) has taken action against BloomTech, a for-profit coding boot camp, and its CEO Austen Allred for deceiving students about the cost of loans and making false claims about job placement rates. The CFPB found that BloomTech's 'income share' agreements were actually loans with an average finance charge of $4,000, and that the company had misrepresented its job placement rates. As a result, BloomTech and Allred are banned from certain activities and must pay over $164,000 in penalties. The order also requires BloomTech to cease collecting payments on certain loans and to allow students to withdraw without penalty.

Main themes

• Consumer protection
• For-profit education
• Deceptive marketing
• Income share agreements
• Regulatory enforcement

What commenters say

• The corporate death penalty is not an effective solution to prevent companies from engaging in deceptive practices, and instead, personal liability for executives and liquidation to pay victims is a more effective approach.
• The concept of a corporate death penalty is flawed because it does not address the underlying issues of corporate culture and accountability, and may not prevent executives from starting new companies.
• Holding executives personally responsible for a company's actions is essential to preventing future instances of deception and abuse, and laws like Sarbanes-Oxley already provide a framework for this.
• The idea of a corporate death penalty is not about restitution, but rather about punishing companies for their wrongdoing, and it is not an effective deterrent when companies can simply change their name and continue operating.
• Some commenters argue that the income share agreement model can be a viable alternative to upfront tuition if done fairly, but it can be easily twisted to exploit students.
• Others believe that the problem lies not with the model itself, but with the lack of regulation and oversight, and that stricter enforcement of existing laws is necessary to prevent abuse.
• There is a debate about the effectiveness of banning executives from working in the same industry for a certain period, with some arguing it would be a deterrent and others seeing it as an overreach.
• Some argue that the focus should be on providing restitution to victims and holding executives accountable, rather than on punishing the company as a whole.