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FTC Puts For-Profit Schools on Notice

Updated | Julie Provost
Predatory schools

In 2021, a Federal Trade Commission press release, the FTC announced the agency was stepping up its efforts to “stop shady practices on campus.” In doing so, the FTC issued a Notice of Penalty Offenses to 70 for-profit colleges. These notices targeted the colleges’ alleged false promises concerning job prospects and potential earnings for their graduates.

“For too long, unscrupulous for-profit schools have preyed on students with impunity, facing no penalties when they defraud their students and drive them into debt,” said FTC chair Lina M. Khan. “The FTC is resurrecting a dormant authority to deter wrongdoing and hold accountable bad actors who abuse students and taxpayers.”

In 2024, marketing compliance agency Performline looked into some of those investigations to see what happened with some of those initial cases.

Performline notes, “the FTC has taken a strong stance against deceptive practices in the higher education space, particularly those targeting student loan borrowers” adding that efforts in 2024 resulted in “over $63 million in refunds for consumers and imposed significant penalties on companies engaging in misleading tactics.”

Then and now, what are some of the common deceptive practices found at some for-profit schools? According to Performline:

  • Misleading Loan Forgiveness Claims: Companies using “Biden Loan Forgiveness” scams showcase “the need for transparent communication on loan repayment options.”
  • Fake Job Placement Promises: Some inflated employment outcomes and offered fake partnerships.
  • Impersonation of Government Agencies: According to Performline, “Students should know exactly who they are dealing with to avoid falling victim to impersonation scams.”
  • Deceptive Marketing and “Urgency Tactics”: Some companies use “urgency tactics” like “FINAL NOTICE”, “Time Sensitive,” “Complete Loan Forgiveness,” and “Tax-free Loan Forgiveness” to scare people into acting without considering their options.
  • Incentivized Reviews and  Programs: Some testimonials may have been incentivized, resulting in misleading information.

The Federal Trade Commission has worked to hold bad actors in the higher education space for a long time, but in the 21st century the issues are far more complex due to the nature of online education, advertising, and digital marketing practices.

Bad Actors Held Accountable

One example of the FTC’s work to prevent education-related fraud involves a man sentenced to 19 ½ years in prison for his role running a sham HVAC trade school in Texas. As reported by MarketWatch in late September, Jonathan Dean Davis “opened” an HVAC school in 2013 and defrauded Veterans of $72 million in GI Bill benefits. He used the money to buy a mansion, a Lamborghini, and a Ferrari.

Another recent occurrence was the University of Phoenix’s agreement to pay $191 million for using deceptive ads that falsely portrayed its connections to companies like AT&T, Yahoo!, Microsoft, and Twitter. Students were led to believe that attending the UOP could land them jobs with these tech giants.

Then there’s DeVry University, which paid $100 million to settle charges that misrepresented its graduates’ employment and salary prospects.

In 2020, College Recon reported that Maryland was the first state to protect veterans from for-profit colleges. Using legislation, the Maryland General Assembly removed “any incentive for an educational institution operating in Maryland to employ deceptive practices that defraud veterans.”

Help For Veteran Students

Tools are available to service members, Veterans, and all students to report deceptive practices related to education.

If a student has a federal student loan and feels like the school misled them or broke the law, they can apply for loan forgiveness through the Department of Education. Using the DoE’s Borrower Defense to Repayment procedures could discharge some or all of your federal student loan debt.

Service members should talk with their Personal Financial Managers to get help with college-related financial issues. These counselors are usually part of the following organizations:

  • Airman & Family Readiness Center
  • Army Community Service
  • Fleet and Family Support Center
  • Marine Corps Community Services

In addition, many of these counselors can help with matters relating to the Servicemembers Civil Relief Act.

Veterans should contact the VA GI Bill Hotline (888.442.4551) to discuss questions or concerns with their school.

Know Before You Go

Before enrolling in any program at any school, for-profit or not, you should gather as much information as possible. 

List of Schools That Were Issued FTC Notice of Penalty Offenses

A school’s appearance on this list does NOT indicate that it has engaged in deceptive or unfair conduct. According to the FTC, the following is a “list of October 2021 Recipients of the FTC’s Notice of Penalty Offenses in the Higher Education Marketplace. The fact that a school is on this list is NOT an indication that it has done anything wrong.”

  • Academy of Art University Foundation
  • Alliant International University, Inc.
  • American Career College, Inc.
  • American Intercontinental University System, Inc. d/b/a American Intercontinental University
  • American Public University System, Inc.
  • American University of Antigua Inc. d/b/a American University of Antigua College of Medicine
  • American University of the Caribbean, Inc.
  • Asa College, Inc.
  • Aspen University, Inc.
  • Auguste Escoffier School of Culinary Arts
  • Aveda Institute Inc.
  • Technical Education Services d/b/a Aviation Institute of Maintenance
  • Berkeley College Foundation, Inc. d/b/a Berkeley College
  • Bryant & Stratton Business Institute, Inc. d/b/a Bryant & Stratton College
  • Capella University, LLC
  • Carrington College, Inc.
  • Chamberlain University LLC
  • Charter College LLC
  • Colorado Technical University, Inc.
  • Columbia Southern University, Inc.
  • Concorde Career Colleges, Inc.
  • DeVry University, Inc.
  • ECPI University LLC
  • Empire Beauty School
  • Empowerment Schools-Healthcare, Limited d/b/a The College of Health Care Professions
  • Fashion Institute of Design & Merchandising
  • Florida Career Institute, Inc. d/b/a Florida Career College
  • Florida National University, Inc.
  • Fortis Colleges & Institutes
  • Full Sail, LLC d/b/a Full Sail University
  • Galen Health Institutes, Inc. d/b/a Galen College of Nursing
  • Grand Canyon University, Inc.
  • Grantham University, Inc.
  • Gurnick Academy of Medical Arts, LLC
  • Jersey College, Inc.
  • Lincoln Technical Institute, Inc
  • Lincoln College of Technology
  • Los Angeles Film School, LLC
  • Mech-Tech College LLC
  • Milan Institute
  • Miller-Motte College
  • Monroe College, Ltd.
  • MyComputerCareer.edu
  • New York Film Academy Ltd.
  • NUC University
  • Paul Mitchell Advanced Education LLC d/b/a Paul Mitchell Schools
  • Post University, Inc.
  • Rasmussen College, LLC d/b/a Rasmussen University
  • Rocky Vista University, LLC
  • Ross Education, LLC d/b/a Ross Medical Education Center
  • Ross University School of Medicine
  • Ross University School of Veterinary Medicine
  • San Joaquin Valley College, Inc.
  • School of Visual Arts, LLC
  • South College
  • Southern Careers Institute
  • St. George’s University, School of Medicine, Inc.
  • Strayer University, LLC
  • The Sullivan University System, Inc. d/b/a Sullivan University
  • The University of Phoenix, Inc.
  • Tulsa Welding School
  • United Education Institute
  • Unitek College NCP, LLC
  • Universal Technical Institute, Inc.
  • University of St. Augustine for Heath Sciences, LLC
  • Vista College, LP
  • Vocational Training Institutes, Inc. d/b/a Pima Medical Institute
  • Walden University, LLC
  • Waldorf University
  • West Coast University, Inc.

(Image courtesy of andre7346rf via 123rf.com)

 

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About the author

Julie Provost
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Julie Provost is a freelance writer, and blogger. She lives in Tennessee with her National Guard husband and three boys.

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