Students of BloomTech, formerly known as Lambda School, filed a class-action lawsuit against the coding boot camp

• Students of the Bloom Institute of Technology have filed a class-action lawsuit against the school.
• They say the coding boot camp, formerly known as Lambda School, advertised false job-placement rates.

Four students at the coding boot camp Bloom Institute of Technology, formerly known as Lambda School, have filed a class-action lawsuit against the school.

Student Defense, along with cocounsel Miner, Barnhill & Galland and Cotchett, Pitre & McCarthy, filed the lawsuit Thursday on behalf of the students. The school, known as BloomTech for short, offers students the option to pay up-front tuition or pay no up-front tuition fees but pay back their tuition through an income-share agreement, meaning that when they land a job paying $50,000 or more, they must pay back 14% of their income for four years or until they hit a cap of $40,000.

The students, who attended from March 2020 until the present, say in the lawsuit that they enrolled because they were attracted by the high job placement rates in tech. They allege that the school had false and misleading information about job placement rates on its website and on CEO Austen Allred's Twitter account.

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What's more, they allege that BloomTech engaged in unlicensed lending and point out that the school operated without California state approval until August 2020. The students are asking for equitable relief, such as canceling their income share agreements or getting a refund.

While students have previously taken legal action against BloomTech, this is the first class action lawsuit against it.

Alex Elson, vice president at Student Defense, says the firm has received many complaints about the school, particularly about the misleading job placement rates, as well as dissatisfaction with the quality of education.

"They wouldn't have gone if they didn't know what the true rates are," Elson told Insider.

BloomTech has raised over $129 million from investors like GV (formerly Google Ventures), Stripe, and even Ashton Kutcher.

Former BloomTech students said that the school fell short of its promise with under-qualified instructors and an incomplete curriculum, Insider first reported. They said they often had to rely on self-teaching and were brushed off when they voiced concerns about the program or complained about harassment. Leaked documents also showed that BloomTech's job placement rates were much lower than advertised, Insider previously reported.

Income share agreements have become popular among coding bootcamps as students don't have to pay upfront tuition. One risk is they're not clearly regulated by federal laws, which focus on consumer loans.

BloomTech did not immediately respond to a request for comment.

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