CFPB Takes Action Against Coding Boot Camp BloomTech and CEO Austen Allred

WASHINGTON, D.C. – Today, the Consumer Financial Protection Bureau (CFPB) issued an order against BloomTech and its CEO, Austen Allred, for deceiving students about the cost of loans and making false claims about graduates’ hiring rates. The CFPB found that BloomTech and Allred falsely told students the school’s “income share” agreement contracts were not loans, when in fact the agreements were loans carrying an average finance charge of around $4,000. BloomTech and Allred lured prospective enrollees with inflated promises of job-placement rates as high as 86 percent, when the company’s internal metrics showed placement rates closer to 50 percent and in some cases as low as 30 percent. The order permanently bans BloomTech from all consumer-lending activities and bans Allred from any student-lending activities for ten years. The CFPB is also 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. BloomTech and Allred must also pay over $164,000 in civil penalties, which will be deposited in the CFPB’s victims relief fund.

“BloomTech and its CEO sought to drive students toward income share loans that were marketed as risk-free, but in fact carried significant finance charges and many of the same risks as other credit products,” said CFPB Director Rohit Chopra. “Today’s action underscores our increased focus on investigating individual executives and, when appropriate, charging them with breaking the law.”

BloomTech is a for-profit vocational school that is headquartered in San Francisco and owned primarily by Allred and various Silicon Valley venture-capital funds. Allred founded the company as the Lambda School in 2017, and rebranded it as BloomTech or the Bloom Institute of Technology in 2022.

BloomTech operates short-term, typically six-to-nine-month training programs in areas such as web development, data science, and backend engineering. Since 2017, BloomTech originated at least 11,000 income share loans, with most of BloomTech students funding their tuition with these loans. Under almost all these loans, students who earn more than $50,000 in a related field are required to pay BloomTech 17 percent of their pre-tax income each month until they make 24 payments or hit a “cap” of $30,000 in total payments.

The CFPB found that BloomTech students were lured with false promises and deceptive marketing. BloomTech and Allred:

  • Hid the cost and true nature of students’ debt: BloomTech falsely claimed its “income share” agreements were not loans, did not create debt, did not carry a finance charge, and were “risk free.” In fact, the agreements are loans with an average finance charge of $4,000. The loans carry substantial risk, as a single missed payment triggers a default and the remainder of the $30,000 “cap” becomes due 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.
  • Tricked prospective students with inflated job-placement rates: BloomTech advertised on its website that 71 to 86 percent of students were placed in jobs within six months of graduation, when its non-public reporting to investors consistently showed placement rates closer to 50 percent. 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.
  • Misrepresented their financial interests by selling loans to investors: BloomTech’s marketing represented that its own interests were aligned with students, through claims such as “We don’t get paid until you do,” and “Because we invest in you, instead of the other way around, we only make money when you do.” In fact, the company was selling many “income share” loans to investors and thus often got paid long before a student finished the program and started earning a salary.
  • Engaged in illegal contract practices: BloomTech violated a federal consumer protection known as the Holder Rule, by failing to include a required provision making any owner of the loan subject to the legal claims and defenses that students could assert against BloomTech. Students were therefore deprived of rights they should have had when their “income share” loan was sold to an investor.

Enforcement Action

Under the Consumer Financial Protection Act (CFPA), the CFPB has the authority to take action against institutions violating consumer financial laws, including engaging in unfair, deceptive, or abusive acts or practices. The CFPB found that BloomTech and Allred used deceptive statements and took unreasonable advantage of consumers’ reasonable 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 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.

Read today’s order.

Consumers can also submit complaints about financial products or services by visiting the CFPB’s website or by calling (855) 411-CFPB (2372).

Employees of companies who they believe their company has violated federal consumer financial laws are encouraged to send information about what they know to whistleblower@cfpb.gov.


The Consumer Financial Protection Bureau is a 21st century agency that implements and enforces Federal consumer financial law and ensures that markets for consumer financial products are fair, transparent, and competitive. For more information, visit www.consumerfinance.gov.

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