FTC asks court to approve $43.5M settlement against for-profit school

Federal Issues FTC GLBA TSR FTC Act

On July 29, the FTC released its complaint and stipulated order against a for-profit educational institution located in Georgia for allegedly making false or unsubstantiated representations to convince consumers to enroll in its programs, in violation of Section 5(a) of the FTC Act, Section 521 of the GLBA, the Telemarketing Act, and the Telemarketing Sales Rule. The FTC sought relief, including a permanent injunction and monetary relief. According to the complaint, the educational institution allegedly “lured” consumers — specifically, servicemembers and their families — with false employment rates and deceptive job placement rates, misrepresented externships and the time-to-completion of its programs, and used deceptive incentivized reviews to promote its services. The FTC levied five counts against the defendant. Three counts were for violations of the FTC Act — one for misrepresenting its educational services, one for falsely claiming that its consumer reviews were conducted independently, and one for failing to disclose its material connections to consumers who submitted reviews and endorsed the educational institution. Another count alleged a violation of the GLBA for making false statements to obtain consumers’ customer information about a financial institution, and the final count alleged a violation of the Telemarking Sales Rule for making deceptive telemarketing calls. The FTC requested that the court enter a permanent injunction to prevent future violations of the law and award monetary relief, among other things. The FTC’s stipulated order asked the federal court to approve a settlement to pay $43.5 million, which included $15.7 million for consumer redress and a cancellation of $27.8 million for debts owed to the defendant by consumers and former students.