
Lambda School fined $75k by CA for operating without state approval [pdf] - lanrh1836
https://www.bppe.ca.gov/enforcement/actions/lambdainc_ord.pdf
======
austenallred
It’s true. Our counsel informed us that we didn’t need to register. Counsel
was wrong. Now we have new counsel :)

We’ve submitted all the paperwork and have worked closely with California.
This all happened a long time ago.

I’m not sure what the right level of regulation is (it’s hard taking care of
50 states at once - one state registration was 2,277 pages and weighed 25
pounds
[https://twitter.com/austen/status/1153450365712388096?s=21](https://twitter.com/austen/status/1153450365712388096?s=21)),
but it’s reasonable that it would be regulated somehow.

~~~
merpnderp
25 lbs of paperwork to register an online school? Sounds less about protecting
students and more towards protecting incumbents and cronies.

~~~
QuadmasterXLII
When the government makes you waste a a day filling out paperwork to prove
that your dog food doesn’t contain human remains, don’t blame the regulators.
Blame the guy before you who made a buck by vertically integrating his cannery
and his morgue.

~~~
freehunter
I used to work in compliance and the number of regulations that are punitive
punishments for bad things that actually happened is just astounding.

SOX compliance is arduous but it only exists (and is as strict as it is)
because some banks decided to destroy the global economy just to make a bit of
money and couldn't understand why this was a bad thing.

~~~
rgbrenner
Sox was passed in response to Enron. While that may have been a big failure,
it had no effect on the wider economy. In fact Enrons scandal only came out
after the 2001 recession ended... the economy grew during and after Enron’s
failure.

~~~
digitaltrees
What are you talking about. It was a massive drag on the California economy
while they existed. They were literally shutting the power system for millions
of people down to jack the price.

~~~
stretchwithme
That was more a failure of the artificially constructed electricity market. It
didn't allow longterm contracts.

Weirdly enough, cities that had their own power companies could have such
contracts and didn't get rolling blackouts. I worked in Santa Clara at the
time and lived in Sunnyvale. We never lost power at work but frequently found
all the clocks flashing when I got home.

Which sort of suggests that centralization is the problem, not public versus
private. We had a private company failing and public power companies
unperturbed.

~~~
digitaltrees
Yet some how the same regulated market didn’t experience the same problems
after their bankruptcy? Come on, you’re really stretching here when there is
an obvious answer.

You seem to be looking to blame centralization to fit a preconceived normative
view of economics rather than just acknowledging maybe markets were not
effective or efficient in this particular instance and in fact suffered a
massive distortion specifically because a decentralized profit motive allowed
one party to abuse market making mechanisms and hijack the price setting
function so crucial to efficiency.

~~~
stretchwithme
I think if you and I lived on the same street and everybody on our street
decided to generate and distribute our own power, we would never create such
dysfunctional rules.

And if we did, we would probably change it the day after it failed.

Centralization enables a lot of good thing but also some bad things. Lobbying
thrives on centralization because it is easier for decision makers to scam
people they don't know, more likely to happen with centralization.

~~~
digitaltrees
Have you ever lived in a neighborhood with a home owners association? Any
institution that is made up of more that a few people will come up with rules
that seem stupid. Even in a small scale like that.

------
tibbon
Doesn't shock me one bit. I worked for General Assembly ~5 years ago, and they
were really serious about getting and staying on top of all the state
guidelines. I got the sense that we were the only school taking that seriously
at the time. The only thing that shocks me is that we haven't seen such
earlier.

I don't have a strong opinion about if such things should be regulated or not,
but I do know that there's a lot of people who have just slapped together
programs to ride a money wave, and offer relatively little in exchange and
it's hard to vet the places by yourself.

~~~
mieseratte
I'm not quite sure where I stand on the regulation vs. lack thereof when it
comes to these types of operations either, but between working in a hiring
capacity, serving as a mock-interviewer, being courted as a potential
instructor, and being friends with both instructors and unsuccessful graduates
(across ~5 years) from my local, now defunct code camp - there are a lot of
folks who go into these programs, often going into non-trivial debt, and
coming out with nothing to show for it.

I will never forget watching a grown man cry in a mock interview because he
could not solve FizzBuzz. I made sure they understood the relevant operators,
the problem, inputs and expected output, gave ample time, kept things very
casual and relaxed, and told them to ask any questions they needed. This was
practice, after all.

I suppose I would cry too, if I wasted months and ~20,000, likely banking on a
great new life as a programmer.

At the same time I've worked with great entry-level developers who used the
code camps to jump from "bad" positions, e.g. young dead-ended professionals,
folks with complimentary degrees but no job prospects in that industry, etc.
The common thread with these folks is either prior background programming, a
personal support network of programmers, or both.

What kind of regulation would help for this? Mandated entrance exams with a
hard-cutoff?

~~~
saidajigumi
If you've spent months and $20k, now "wasted", in a school environment then I
have serious questions about the school's feedback and gating systems. Why
wasn't this individual given unambiguous signals about their progress (i.e.
insufficient)? Even hard stops because they "failed a required class" or
similar?

~~~
tibbon
Oh wow, I could talk for hours about this. From what I've heard at a lot of
schools, the teachers would like to "fail" people or have higher standards for
entry - but management and sales (I mean, admissions) push back hard. A
student leaving is money lost. A student just not doing well afterward is
something that they can write off as some glitch. They'd rather have the
latter. Or they want the instructors to do superhero efforts to get the
student to pass.

The teachers know within a week or two who is going to have real problems with
the material. The schools do not want them to put assessments in place that
would have them leave, because they want money.

~~~
austenallred
That's the nice thing about the aligned incentives of Lambda School.

~~~
tibbon
I'd like to know more about that. It sounds like a great idea!

~~~
austenallred
Students pay $0 unless they get hired in a software role making $50k/yr or
more.

So it’s not in our best interest to string someone along who can’t write
fizzbuzz.

We use mastery-based progression so realistically that person wouldn’t
progress past the first week or two, then would repeat until he or she had
mastered the content.

------
CesareBorgia
This isn't the first time that the CA regulator (BPPE) has surprised code
schools with cease-and-desist letters :)

That said, we (App Academy) found that the BPPE was a mostly accommodating
regulator that worked with us to come into compliance. We did face a couple
challenges that will likely still exist today:

1) BPPE won't give approval to operate until the whole application process is
completed. This means that Lambda School is likely operating without approval
and will continue to do so for 6-12 months at a minimum. Contracts are
unenforceable during this period, the school could be forced to shut down CA
operations overnight, etc.

2) BPPE doesn't have a formal policy for Income Share Agreements (ISAs). We
were able to get our ISA approved in 2015, but it took some doing and was not
nearly as straightforward as getting a normal tuition contract approved.
Several other ISA programs that applied a year or two after us were not
approved.

More info: [https://venturebeat.com/2014/01/30/california-bootcamp-
will-...](https://venturebeat.com/2014/01/30/california-bootcamp-will-work-
with-regulator-whatever-the-cost-its-worth-it-to-satisfy-the-state-interview/)

~~~
austenallred
I can't say much publicly, except to say that nearly everything you just said
is wrong.

~~~
CesareBorgia
Totally possible that things have changed in the intervening ~5 years, but
that was our experience at the time.

~~~
austenallred
Seems likely. I think they have wrapped their mind around code bootcamps _a
tiny bit_ now. They still haven't fully wrapped their minds around the ISA
yet, but that's doable too.

------
Someone1234
After reading this thread and considering it, the regulations seem fine, but
lack of consistency between states seems to be a large pain-pont.

I realize California isn't just "any" state but needing to seek unique
approval from up to all 50 states just to run an online school seems like a
really high (and expensive) bar.

It would be nice if more states cooperated on things like this. Then you seek
approval from the collective, rather than at an individual level.

~~~
mychael
The "lack of consistency" between state regulations is a feature, not a bug.
States are Laboratories of democracy.

~~~
abdulmuhaimin
it might be a feature, but the side effect of the messy complexity is still a
bug

------
chasontherobot
And this is why we need more regulations on the "Bootcamp" industry:
[https://twitter.com/KeziyahL/status/1155154616281178114](https://twitter.com/KeziyahL/status/1155154616281178114)

~~~
kevintb
This needs to be higher up. HN reserves skepticism for so many bootcamps but
throw all their judgement out the window when it comes with Lambda School.

------
jedberg
Their only penalty was $75,000? Sounds like "ask for forgiveness not
permission" worked out pretty well for them here.

I assume they also have to come into compliance to avoid further fines, but
given that they provide a legit educational service, that shouldn't be too
hard for them.

~~~
austenallred
To be clear, we were never trying to ask for forgiveness, we were told we
didn’t need to ask for permission :)

We’re lucky to be big and VC-backed and growing fast. $75k would be near
deadly to a lot of smaller schools, so I’m sure the BPPE sized the fees
accordingly.

~~~
jedberg
I replied before you started commenting and before I had the whole story. :) I
wrongly assumed you were acting like most other startups and just figured
"we'll sort it out later".

My apologies for assuming that!

~~~
austenallred
No worries at all! Reasonable assumption

------
randyrand
Looking at the text of the fine, you can't charge money to teach people things
("offer education" in their parlence) in a physical location without state
approval.

Could that be any more broad? Education is often just verbal and written
communication between people. Seems like a first amendment violation.

~~~
dragonwriter
> Looking at the text of the fine, you can't charge money to teach people
> things ("offer education" in their parlence) in a physical location without
> state approval.

It looks like you ignored _a lot_ of the text of the order, such as the
citation of exemptions, and the limiting qualifier “postsecondsry” before
education.

> Could that be any more broad?

Well, no, it would be harder for it to be more broad than your
mischaracterization.

> Seems like a first amendment violation.

Probably not even if it was as broad as you mischaracterize it. The first
amendment does not prevent the State from general regulation of commerce, even
if what is being traded is speech.

~~~
macinjosh
You're so called 'limiting qualifier' describes literally everyone who has
graduated high school. If I got on the bad side of the government and they
wanted to throw the book at me I could be fined for giving guitar lessons to
my neighbor.

~~~
dragonwriter
> You're so called 'limiting qualifier' describes literally everyone who has
> graduated high school. If I got on the bad side of the government and they
> wanted to throw the book at me I could be fined for giving guitar lessons to
> my neighbor.

No, the applicable legal definition of “postsecondary education” is not as
broad as you are painting it: I've directly quoted it, with citation to the
Education Code, in another subthread:
[https://news.ycombinator.com/item?id=20559878](https://news.ycombinator.com/item?id=20559878)

------
hiei
Lambda employees always do PR damage on HN. Had commented about a poor
experience of mine and was told to reach out via email, no response ever.
They're all talk.

~~~
austenallred
When did this happen? I can look into it

~~~
hiei
[https://news.ycombinator.com/item?id=19375303](https://news.ycombinator.com/item?id=19375303)

------
ddebernardy
It's not everyday where you see a typo on a numeric value in a legal document:

[https://i.imgur.com/CKt5ZGT.png](https://i.imgur.com/CKt5ZGT.png)

(notice the $75,0000.00 - in bold, no less)

~~~
camhart
Found this too... quite funny.

------
yalogin
Can someone tell me what a Lambda school is? From the comments here it appears
its a specific class of school. From their site it just looks like a regular
online learning company.

~~~
nabnob
It's a scammy, for-profit, private school that charges $30k+ for online
classes.

Edit: 20k up front, versus 30k if taken out of your salary over 2 years.
That's around 20% interest. They mention that payments are 17% of your income,
but this is calculated pre-tax and paid after taxes.

~~~
projectileboy
That seems exceptionally unfair. They’re very up front about what they charge,
how they charge it, and whether or not you even pay anything at all. I got a
lot out of my overall college experience and so I probably wouldn’t opt for
it, but if one of my kids was only interested in software development, I would
suggest they attend Lambda School with no reservations whatsoever.

~~~
austenallred
People who don't like the idea of capitalism in general tend to not be huge
fans of Lambda School.

But we only get paid $30k in the case where you get a software engineering job
after Lambda School that pays $85k+. Everyone else pays less, and absolutely
no one pays more than $30k.

Our upfront tuition for the nine-month, full-time course is $20k if paid
upfront.

~~~
pl0x
This is distasteful coming from the founder of this institution.

~~~
nabnob
I'm pretty sure he dug through my history before making that comment and is
downvoting any comments that are negative.

~~~
cloverich
There are likely many people down voting based on the content of your comments
here. Specifically, calling a school "scammy" and being generally negative
about it, without providing much reason. For context, 30k is about 1/4 what I
paid for my B.S., and mine did not come with a guarantee of employment. Is
there some other reason you consider Lambda School to be a scam?

~~~
chasontherobot
Not OP, but there is a myriad of reasons:
[https://twitter.com/KeziyahL/status/1155154616281178114](https://twitter.com/KeziyahL/status/1155154616281178114)

------
sethammons
I decided to parse what was given to them. Slightly restructured:

> A person shall not open, conduct, or do business as a private postsecondary
> educational institution (a private entity with a physical presence in this
> state that offers – advertise, publicize, solicit, or recruit –
> postsecondary education to the public for an institutional charge) in this
> state without obtaining an approval to operate under this chapter. The
> institution must be approved to operate, which means approved to establish,
> keep, or maintain any facility or location in this state where, or from
> which, or through which, postsecondary education programs are provided.

I think the key part is the determination of their location. Their California
headquarters counts as a facility through which programs are provided. The
fact that the classes are fully online is unrelated. They would have to argue
that their headquarters don't have anything to do with providing postsecondary
education programs.

~~~
austenallred
Our instructors aren't in California, though, which is why our counsel thought
we were OK.

------
minimaxir
Per the dates the fine was issued in April at the latest; why is this
surfacing now?

~~~
floatingatoll
The judgement from April was not posted on HN at the time, and as a (YC S17)
it's relevant to HN. It also appears, from a brief search, that there are
active social media conversations elsewhere than HN that have caused attention
to be paid to Lambda School this week.

------
siruncledrew
Everyone complaining about regulation should take a read through Common Law on
Wikipedia and understand how U.S. regulation ends up more additive than
subtractive in many cases over the years.

The reason we have inordinate amounts of regulations to fill out paperwork for
is because “reason” doesn’t work the same way in law as it does in
practicality. What’s absurdly stupid in layman’s situations is but a part of
the game of legal chess in court.

We could have a law that says “Use common sense and don’t be an idiot”, which
makes perfect sense in theory, and without very specific precedents will
debated to hell in court with how common law cases work.

We end up with a lot of nonsense clauses and rules and requirements due to
this, but it also is how chaos is supposed to be kept in check from erupting
at the seams when people use lack of specific regulation as an incentive to
find ways to screw other people over.

------
duxup
This seems like a reasonable agreement. Pay a fine (they can afford it I
think), get in compliance, everyone moves on.

------
amerf1
These things happen when you're just getting starting its normal we live and
learn.

Just hoping they start a slightly more flexible cohort for people who are
working and looking for the next promotion

~~~
austenallred
What would we need to change about our part-time classes to make it accessible
to you?

~~~
amerf1
Having shorter weekday hours and longer weekend hours would make it perfect. I
was in the process of registering for the March 2019 data science cohort,
however I dropped it as I did not want to take someone else's spot. Could not
commit to 3 hours a day (on a week day)

~~~
austenallred
Interesting. So could you give me an example schedule that gets to at least 20
hours/week?

~~~
amerf1
Monday to Thursday 1 hour each Friday off Saturday 8 hours Sunday 8 hours

That’s one example I could think of. The day off could also move around so
Monday could be off

~~~
austenallred
Hmm, very interesting

------
AJRF
[https://twitter.com/Austen/status/1153451563664343040](https://twitter.com/Austen/status/1153451563664343040)

~~~
austenallred
This was for a different state! And it was a full-time contract lawyer and my
assistant (pictured); our first legal hire joins later next month.

------
pl0x
How is Lamda School any different from Thinkful who has been doing this for
over a decade? I have a few friends interested in online bootcamps?

~~~
austenallred
Different curriculum, different instructional design, different length,
different approach to hiring partners

------
dollar
Reason #91836218 not to have nexus in California.

~~~
noodlesUK
I’m not sure that this has anything to do with where the organisation is
registered, rather where services are provided. CA has particularly strict
education regulations from what I understand (I’m not an expert at all, but I
was homeschooled, and that’s certainly more heavily regulated in CA than most
states). I’d be curious where Lambda has to register, and how all of this is
managed from a compliance perspective, especially as they expand into
international markets.

------
wishinghand
Something very similar happened to Origin Code Academy in San Diego. I believe
their situation is that one of the state bodies told them they would be exempt
from a certain type of tax. Once they registered and were approved, they were
then asked to pay their back taxes which they of course didn't have saved up.

------
29_29
Many states are light touch. California is a heavy touch state. Our hands are
everywhere and all over you.

------
chaoxu
So Lambda School is considered as an educational institution. Does this mean
any foreigner enrolled in it probably need a student visa? Can non-US
residents take online courses while in the US without a student visa?

~~~
austenallred
It's an entirely online school, and we're not Title IV accredited, so we have
no authority over visas.

However, we can only offer the $0 upfront option to permanent residents of the
US and EU right now. Hopefully soon other countries.

------
tomohawk
Our universities regularly award high priced degrees that lack the important
quality of employability. Unsophisticated (18 yo) purchasers of these degrees
go deeply into debt, lured by false promises.

So much for regulation.

------
westonplatter0
@austenallred - sorry about the hiccup. Sucks to get caught on the wrong side
of regulations. Thanks for being so incredibly open about it. Cheering for LS.

------
auvi
do MOOCs or any online course go through similar regulation?

~~~
austenallred
In theory if they charge for the course they do.

~~~
CesareBorgia
If the course is less than $2k or $3k (can't remember the exact figure), the
regulations don't apply. Also, it depends on who the payer is. If the
purchasers are solely companies (think corporate training), this regulation
doesn't apply.

~~~
austenallred
Yeah it's $2k

------
mtrombetti
Why does Lamda School need to be registered in California and not somewhere
else?

~~~
passivepinetree
Reading the currently top-rated comment from the co-founder of Lambda School,
it looks like they must register in all states:
[https://news.ycombinator.com/item?id=20555707](https://news.ycombinator.com/item?id=20555707)

------
prennert
Learned something today. I thought lambdas operate without state.

~~~
vga805
Thank you for the reminder of why I spend so much time browsing HN comments.

------
baggy_trough
Nuts that the state has the right to block this kind of thing. What
foolishness is that?

~~~
_Microft
Basically that's Quality Assurance. While Lambda School might be doing good by
having the right incentives for all involved parties, a lot of money could be
made by tricking people to enroll into questionable schools. So it's for the
public good to regulate that market.

The question is rather why Lamda School didn't get themselves approved?

~~~
moate
Answered elsewhere in thread: Their legal counsel said they didn't need to.
The lawyer was wrong, and they now have new legal counsel. Seems like a legit
oops which they're since fixed.

~~~
_Microft
Thanks! I must have missed that by a few seconds.

------
RA_Fisher
Folks get jealous of success.

------
macinjosh
Why does anyone need permission from The State to teach? Seems like a
violation of the first amendment.

~~~
bontaq
Wait until you hear that you can't lie about being a doctor.

It's beneficial for society to make sure entities representing that they are
something, actually are that something.

------
macinjosh
Feel sorry for all the suckers who pay these Lambda folks tens of thousands of
dollars to learn something that can easily be self taught through the plethora
of blogs, videos, e-books, etc. available online.

------
rhacker
What is the purpose of having a law requiring approval for post-secondary
education?

Isn't this a trade school? Why in the world does a trade school need this kind
of regulation. It just seems like most of our laws are passed in secret you
don't know you violated anything until you get hit.

~~~
throwawayjava
_> What is the purpose of having a law requiring approval for post-secondary
education?_

There are many.

Perhaps the most compelling is a long history of scams. California's
regulations might be arduous, but they didn't come out of nowhere.

Another reason is that the customers almost by definition doesn't know how to
asses quality.

 _> It just seems like most of our laws are passed in secret._

This law wasn't passed in secret.

