The coding bootcamp market is self-evaluating following the fallout of Devschool, an online coding school whose founder suddenly disappeared and is believed to have taken with him more than $100,000 in student tuition.

The episode is by far the biggest alleged fraud in the young history of the market, but it threatens to ruin the integrity of other coding bootcamps, said Jonathan Lau, founder and CEO of SwitchUp, a reviews website for coding bootcamps.

"We should take this very seriously," Lau said. "It is an issue."

Until late September, Devschool was an online coding program run by a man who went by the name Jim O'Kelly, based out of Mexico. Some 19 students said O'Kelly charged tuition ranging from about $5,000 to about $15,000 before suddenly ceasing contact with them on September 27. Following O'Kelly's disappearance, the students learned he was also known as Eric James O'Kelly and is listed among the "Most Wanted" for the Clackamus County Sheriff's Office in Oregon. The Devschool incident was first reported by Inc.

Fortunately for the affected students of Devschool, several coding bootcamps have reached out with discounted offers to help them get back on track. A number of students said they have enrolled in programs offered by Thinkful, Turing School, DigitalCrafts, Tech Elevator, Prime Digital Academy, DigitalCrafts, Launch School, and others. Additionally, a handful of the students were able to recover all or part of their tuition after contacting their banks and credit card companies, said Jane Lundgren, one of the impacted students.

As for O'Kelly, there is still a warrant out for his arrest, on separate charges related to an assault case, said Sergeant Brian Jensen of the Clackamas County Sheriff's Office.

But while O'Kelly remains a fugitive, the incident is reverberating in the bootcamp community.

"What happened with Devschool is reprehensible and affects every company in this industry," said Chris Lee, instructor at Launch School, an online coding bootcamp. "We want students to know that there are honest, transparent, and caring people and companies in this space."

Coding bootcamps are a relatively new phenomenon whose exponential growth has been fueled by an influx of venture capital funding and low barriers to entry. Often, schools of this nature promise to give students the education necessary for a career in software engineering in as little as three months for a fraction of a traditional university's tuition. Many schools also promote job placement rates well above 95 percent for their graduates.

There are now more than 90 in-person coding bootcamps across North America, and it is projected they will graduate nearly 18,000 students in 2016 alone, according to Course Report, another website for coding bootcamp reviews.

Demand for the graduates of these schools has grown due to hyper-growth of the tech industry and its unquenchable need for software engineers. In addition, tech companies searching for diversity have been drawn to bootcamps, which tend to have more student body diversity than traditional universities such as Stanford, Harvard, or Berkeley.

The O'Kelly incident, however, is a black eye for coding bootcamps, calling into question the reputation of the industry and raising major flags for both prospective students and tech employers.

"In a nascent industry like ours, it's a shame when one criminal contrives to give a legitimate and effective educational model a bad name," said Max McChesney, co-founder and director of operations at DigitalCrafts, a school that operates out of both Georgia and Texas. "It's important to point out that most programs are run by good people with good intentions."

This is why several coding schools have reacted swiftly to the news of Devschool, calling on their peers to provide more transparency in outcome reports and increase regulation of the market.

Since the demand for bootcamps began rising in 2011, the market has been hesitant to welcome government regulation. But following Devschool, some are saying formal oversight may now be necessary.

"From an industry standpoint, it needs more regulation," Lau said. "Private education, when allowed to run rampant like this, never ends well. There needs to be public intervention."

At the very least, several schools said, local and state regulatory agencies should step up enforcement of existing laws that govern entities of higher education. While industry regulation aimed at bootcamps would be "welcome," cracking down using "local and state licensure regulations would be a good start toward protecting students," said Mark Hurlburt, president and co-founder of Prime Digital Academy in Minnesota. Many agree, however, that the resources of local governments are already stretched while coding bootcamps are growing rapidly.

There are now several schools that have sought out approval or certification by state regulatory agencies. That includes schools like Prime Digital, Sabio in California, Turing School in Colorado, Tech Elevator in Ohio, and DigitalCrafts in Georgia and Texas.

Many entrepreneurs in the coding bootcamp market have avoided government certification in an effort to act fast and grow their businesses quickly, as tech founders tend to do. Schools that have gone through the process, however, say getting that type of certification can give a number of protections and benefits to students.

"It's a bureaucratic bollocks, to be honest with you, to go through the process," said Anthony Hughes, CEO and co-founder of Tech Elevator. "But I'm perfectly willing to go through it, because it makes sense."

Aside from government regulation, numerous schools are also calling on their peers to be more transparent by offering outcome reports that are preferably third-party audited. Several already release this type of information, including Thinkful, Hack Reactor, Turing School, Flatiron School, and General Assembly, which issued its first verified report last week. These reports tend to detail how many students completed the program, how many graduates were able to find jobs, the types of jobs they found, their range of salaries, and how long it took students to find those roles, among other information.

It's time "for every school that wants to create a lasting institution to level up to what is quickly becoming the industry standard: transparent, audited, and regularly updated student outcomes," said Darrell Silver, co-founder and CEO of Thinkful.

Some founders of coding bootcamps expressed concern that lack of self-regulation could cause their industry's reputation to take a beating, similar to that of other for-profit education business, such as DeVry University, ITT Tech, and Trump University.

"That cannot happen to this industry. This industry has so much promise," Hughes said. "The jobs are there. It's such a great opportunity."

Schools are also hoping to see improvements from review sites like Course Report and SwitchUp, which prospective students often turn to when gaging the legitimacy of coding bootcamps.

"I'd like to see the bootcamp evaluation companies become more neutral and help students navigate the various learning paths in a more unbiased manner," Lee of Launch School said. "Most of them make money by taking advertising money from bootcamps, which causes a conflict of interest."

Other bootcamp founders raised concerns over how Course Report and SwitchUp verify the authenticity of reviews left by users. Devschool, for example, had a mix of legitimate and inauthentic student reviews left on these type of sites, which helped mislead several of the affected students.

SwitchUp's Lau acknowledges that "earlier this year our process was not down, and that's our fault." He added that SwitchUp now uses a multistep process to ensure the validity of reviews and comments left by both students and schools, as "we certainly don't want to mislead students."

Similarly, Liz Eggleston, co-founder of Course Report, said "our review process continues to evolve as the industry grows." She noted that reviews of Devschool on Course Report "speak to the declining quality over time."

In terms of advertising, SwitchUp avoids conflicts by accepting ads only from bootcamps with at least a four-star review average, and may consider becoming a nonprofit down the road, Lau said. Course Report, meanwhile, conducts business "with future bootcampers in mind," Eggleston said, adding: "I don't know of a reviews site that doesn't generate revenue from listed businesses, but no, that doesn't create a conflict of interest."

Experts advise prospective students to take a number of steps to verify the authenticity of any coding bootcamp. For starters, students should seek to independently find school alumni and ask to connect with those individuals for a candid review of the program. Students should also focus on programs that regularly publish outcome reports. Additionally, many experts recommend choosing programs that have received regulatory approval or certification.

"We all have to move fast as entrepreneurs," Hughes of Tech Elevator said, but not at the risk of "compromising quality and ... the interests of our customers." More stories like Devschool's, he said, "will pull the rug out from underneath what, by and large, is a really great thing that's happening in education."

Published on: Oct 24, 2016