Fintech

Tech bootcamp students are suing over income-share agreements

Their lawsuits allege they were tricked into repayment agreements for a program they say didn’t teach them anything substantial.

 A diploma illustrating criticisms of income share agreements

Two former students allege they were misled on the terms of the ISAs in order to join a 10-week online tech sales bootcamp.

Image: Christopher T. Fong/Protocol

Two former students filed separate lawsuits Thursday against tech sales bootcamp Top Applicant, which also does business as Elevate, as well as income share agreement provider Leif Technologies, alleging the school tricked students into joining and left them with large debts to pay to the ISA provider.

One lawsuit was filed by Fanxin (Amy) Zeng in King County Superior Court in Washington state and another was filed by Justin Chi in the Central District of California.

With income share agreements growing in use by students, state and federal regulators have been scrutinizing these contracts and examining whether they should be classified as loans, with the same protections as other forms of consumer debt.

The former students allege they were misled to think they were applying for jobs and misled on the terms of the ISAs in order to join a 10-week online tech sales bootcamp for “sales development representatives.” But the lawsuits allege that the students did not learn much while being tracked into entry-level jobs that didn't need training — and then faced harassment to pay back high debts.

Elevate students can pay cash up front or enter into income share agreements, but the plaintiffs said they were tricked into signing up for ISAs, which require payment based on a percentage of the borrowers’ salaries rather than set principal and interest payments.

Top Applicant and Leif could not be reached for comment.

In a striking look at how ISAs work, Zeng’s lawsuit also alleges deceptive and threatening collection practices involving Top Applicant’s CEO and COO. According to the lawsuit, one collection email from Top Applicant CEO Norman Rodriguez starts off:

“Amy,
I understand that you would prefer to simply disappear on us now that you're comfortable in a role. Sadly, you really can't ghost your way out of a financial contract, this isn’t a tinder date you are one and done with.
There are two ways this can go from here.
1) You man up, swallow your pride and embarrassment and contact us to ensure you are in compliance with your Leif contract and make clear you intend to pay the ISA as agreed upon.
2) You don’t step up to the plate and hope this inconvenience just disappears. In that case, we will sell the right to your ISA to a hedge fund that specializes in distressed assets. They will sit on it and do nothing for a while because they know that you probably haven’t read it and don’t realize that if you remain maliciously out of compliance for a period of time, you then simply owe 100% upfront instead of 10% of your income for X months. Then they will come after you and your employer, as well as wreck your credit score for at least a decade and a half…”

Zeng had originally responded to a job post by Elevate on LinkedIn, thinking she was applying for a job, her lawsuit alleges. Zeng then received an email saying she had earned a seat as one of the “top 10% of applicants,” and was given a link to apply for an ISA through Leif, making the ISA seem like a part of applying for a position before enrolling in Elevate, according to the complaint.

Ten days after receiving the Elevate email, she received another job offer without Elevate’s help, the complaint states. The next day, she accepted it. Zeng told Elevate she didn’t want to enroll, but an Elevate representative convinced her not to withdraw, the lawsuit says. When she started the program, she realized it was not helpful, so she withdrew, she said in her complaint.

But Elevate still tried to collect 10% of her income for three years, the lawsuit states.

Zeng’s lawsuit alleges that Elevate’s agreements contain terms that violate Washington laws, such as not having a “uniform statewide cancellation and refund policy,” the lawsuit states.

Chi’s federal lawsuit alleges that Elevate and Leif violated the Truth in Lending Act and the Rosenthal Fair Debt Collection Practices Act, among other allegations. Melody Sequoia, an attorney representing Chi, said the companies’ practices were “fundamentally unfair and illegal.”

Elevate promises students will earn $60,000 on its website: "We’re so confident in our program that we guarantee you land a $60k+ job within the first year of completing Tier 1."

Elevate also says on its LinkedIn profile that Elevate doesn't get paid unless students land a role "making over $60,000" a year. However, Elevate contracts obtained by the Student Borrower Protection Center and reviewed by Protocol show payments due if students make $40,000 a year.

Chi’s lawsuit says Elevate’s LinkedIn job listing offered “a base salary of $60,000-$82,000, with dental, vision and medical insurance.”

Chi was still required to pay back the ISA provider Leif even though he found a job that he applied for before attending the bootcamp, his lawsuit alleged.

“The program curriculum was non-existent or underdeveloped and was essentially a guided job hunt. Indeed, because a SDR position is entry level, no training was actually needed to find a job in the industry,” the lawsuit states.

Elevate is not licensed to operate by the state of Washington’s private vocational school regulator, so the ISAs that Top Applicant issued are “unenforceable by law,” the lawsuit alleges. Critics of ISAs have raised questions in other cases about whether the agreements are valid loans and argued that if they aren’t, then ISA issuers shouldn’t be able to collect on them.

Chi’s lawsuit also alleges that Top Applicant’s ISAs are not enforceable because the company is not authorized to operate in California; it seeks to stop Top Applicant from collecting on its ISAs with California borrowers.

Top Applicant Inc. is a Delaware corporation; Elevate does not appear to be a registered business name. Elevate says in its LinkedIn profile it is a San Francisco company, but Top Applicant’s headquarters is in Arizona, according to the Arizona Secretary of State website. A filing with the state of California also shows an Arizona mailing address for Top Applicant, and Top Applicant CEO Norman Rodriguez lists his location as Arizona on LinkedIn.

The Student Borrower Protection Center, which provided documents to Protocol and supported the lawsuits, said it has sent information about the cases to the Consumer Financial Protection Bureau, which has shown intense interest in how a variety of new consumer-lending practices affect consumers.
Workplace

What the economic downturn means for pay packages

The war for talent rages on, but dynamics are shifting back to the employers.

Compensation packages could start to look different as companies reshuffle the balance of cash and equity.

Illustration: Nuthawut Somsuk/Getty Images

The market is turning. Tech stocks are slumping — which is bad news for employees — and even industry powerhouses are slowing hiring and laying people off. Tech talent is still in high demand, but compensation packages could start to look different as companies recruit.

“It’s a little bit like whiplash,” compensation consultant Ashish Raina said of the downturn. Raina, who mainly works with startups that have 200 to 800 employees, previously worked as the director of Talent at Index Ventures and head of Compensation and Talent Analytics at Box. “I do think there’s going to be an interesting reckoning in terms of pay increases going forward, how that pay is delivered.”

Keep Reading Show less
Allison Levitsky
Allison Levitsky is a reporter at Protocol covering workplace issues in tech. She previously covered big tech companies and the tech workforce for the Silicon Valley Business Journal. Allison grew up in the Bay Area and graduated from UC Berkeley.
Sponsored Content

Why the digital transformation of industries is creating a more sustainable future

Qualcomm’s chief sustainability officer Angela Baker on how companies can view going “digital” as a way not only toward growth, as laid out in a recent report, but also toward establishing and meeting environmental, social and governance goals.

Three letters dominate business practice at present: ESG, or environmental, social and governance goals. The number of mentions of the environment in financial earnings has doubled in the last five years, according to GlobalData: 600,000 companies mentioned the term in their annual or quarterly results last year.

But meeting those ESG goals can be a challenge — one that businesses can’t and shouldn’t take lightly. Ahead of an exclusive fireside chat at Davos, Angela Baker, chief sustainability officer at Qualcomm, sat down with Protocol to speak about how best to achieve those targets and how Qualcomm thinks about its own sustainability strategy, net zero commitment, other ESG targets and more.

Keep Reading Show less
Chris Stokel-Walker

Chris Stokel-Walker is a freelance technology and culture journalist and author of "YouTubers: How YouTube Shook Up TV and Created a New Generation of Stars." His work has been published in The New York Times, The Guardian and Wired.

Policy

How 'Zuck Bucks' saved the 2020 election — and fueled the Big Lie

The true story of how Mark Zuckerberg and Priscilla Chan’s $419 million donation became the 2020 election’s most enduring conspiracy theory.

Mark Zuckerberg is smack in the center of one of the 2020 election’s multitudinous conspiracies.

Illustration: Mike McQuade; Photos: Getty Images

If Mark Zuckerberg could have imagined the worst possible outcome of his decision to insert himself into the 2020 election, it might have looked something like the scene that unfolded inside Mar-a-Lago on a steamy evening in early April.

There in a gilded ballroom-turned-theater, MAGA world icons including Kellyanne Conway, Corey Lewandowski, Hope Hicks and former president Donald Trump himself were gathered for the premiere of “Rigged: The Zuckerberg Funded Plot to Defeat Donald Trump.”

Keep Reading Show less
Issie Lapowsky

Issie Lapowsky ( @issielapowsky) is Protocol's chief correspondent, covering the intersection of technology, politics, and national affairs. She also oversees Protocol's fellowship program. Previously, she was a senior writer at Wired, where she covered the 2016 election and the Facebook beat in its aftermath. Prior to that, Issie worked as a staff writer for Inc. magazine, writing about small business and entrepreneurship. She has also worked as an on-air contributor for CBS News and taught a graduate-level course at New York University's Center for Publishing on how tech giants have affected publishing.

Fintech

From frenzy to fear: Trading apps grapple with anxious investors

After riding the stock-trading wave last year, trading apps like Robinhood have disenchanted customers and jittery investors.

Retail stock trading is still an attractive business, as shown by the news that crypto exchange FTX is dipping its toes in the market by letting some U.S. customers trade stocks.

Photo: Lam Yik/Bloomberg via Getty Images

For a brief moment, last year’s GameStop craze made buying and selling stocks cool, even exciting, for a new generation of young investors. Now, that frenzy has turned to fear.

Robinhood CEO Vlad Tenev pointed to “a challenging macro environment” marked by rising prices and interest rates and a slumping market in a call with analysts explaining his company’s lackluster results. The downturn, he said, was something “most of our customers have never experienced in their lifetimes.”

Keep Reading Show less
Benjamin Pimentel

Benjamin Pimentel ( @benpimentel) covers crypto and fintech from San Francisco. He has reported on many of the biggest tech stories over the past 20 years for the San Francisco Chronicle, Dow Jones MarketWatch and Business Insider, from the dot-com crash, the rise of cloud computing, social networking and AI to the impact of the Great Recession and the COVID crisis on Silicon Valley and beyond. He can be reached at bpimentel@protocol.com or via Google Voice at (925) 307-9342.

Enterprise

Broadcom is reportedly in talks to acquire VMware

It hasn't been long since it left the ownership of Dell Technologies.

Photo: Yichuan Cao/NurPhoto via Getty Images

Broadcom is said to be in discussions with VMware to buy the cloud computing company for as much as $50 billion.

Keep Reading Show less
Jamie Condliffe

Jamie Condliffe ( @jme_c) is the executive editor at Protocol, based in London. Prior to joining Protocol in 2019, he worked on the business desk at The New York Times, where he edited the DealBook newsletter and wrote Bits, the weekly tech newsletter. He has previously worked at MIT Technology Review, Gizmodo, and New Scientist, and has held lectureships at the University of Oxford and Imperial College London. He also holds a doctorate in engineering from the University of Oxford.

Latest Stories
Bulletins