BloomTech, Inc.
On April 17, 2024, the CFPB issued a consent order against BloomTech, Inc., a vocational school that originated over 11,000 income share agreements marketed as 'risk-free' non-loans. The CFPB found that BloomTech's ISAs were in fact credit extensions that included approximately $4,000 in finance charges and carried credit reporting risks, but lacked required TILA disclosures on APR and finance charges. BloomTech was ordered to pay a $64,235 civil money penalty to the CFPB and its CEO was personally fined $100,000. The company was barred from consumer lending and required to rescind all outstanding ISAs. While BloomTech is not a bank, the action is significant for the BaaS ecosystem as ISAs and similar alternative lending products are sometimes facilitated through bank-fintech partnerships.
Verified from source: On April 17, 2024, the CFPB issued a consent order against BloomTech, Inc. and its founder/CEO for deceptive and abusive acts or practices, TILA/Regulation Z violations, and FTC Holder Rule violations related to over 11,000 income share agreements originated for its vocational training programs.
- Sets precedent that ISAs are credit products subject to TILA disclosure requirements, impacting fintechs and bank partners offering similar products
- Signals CFPB willingness to pursue personal liability for fintech executives
- Banks partnering with fintechs offering ISAs or similar alternative lending structures face heightened compliance scrutiny