Is the University of Phoenix is a “scam school”? That’s what an FTC commissioner insinuated after the for-profit college agreed to a $191 settlement over “deceptive advertisements.” What’s going on? Let’s dive in.
University of Phoenix Pays Big For “Deceptive” Ad Campaign
The Federal Trade Commission entered into $191 million settlement with the University of Phoenix (UOP) and its parent company, Apollo Education Group, over “deceptive advertisements” that exaggerated the school’s post-graduation employment partnerships.
The agreement represents the FTC’s largest ever truth-in-advertising fine against a for-profit school.
Student Debt Cancellation Part of University of Phoenix FTC Settlement
UOP will pay $50 million in cash. The remaining $141 million will come in the form of debt cancellation for students, who enrolled between October 1, 2012 and December 31, 2016, with outstanding debts owed directly to the school.
The FTC’s Case Against University of Phoenix: Your Ad Campaign Misled Students
Background: The University of Phoenix, a for-profit college, opened in 1976. By 2010, it had over 50 campuses, plus the largest online degree program in the country. But when other institutions started offering remote programs, University of Phoenix enrollment slipped. To stem the bleeding, UOP turned to marketing and developed the “Let’s Get to Work!” ad campaign, which ran between 2012 and 2014.
FTC’s Problem with the Ad Campaign: The “Let’s Get to Work” promotional pieces tied the University of Phoenix to companies like AT&T, Yahoo!, Microsoft, Twitter, and Adobe. Commercials and other materials insinuated that the school collaborated with these “desired brands” to “shape [its] curriculum” and “create options” for graduates.
The problem? University of Phoenix didn’t have any special partnerships with the advertised companies. Sure, the school had administrative contracts with some, but not as advertised. At one point, after seeing UOP promotional materials, a Staples executive contact the university and asked: “What is Staples doing as part of this program?” Ultimately, the FTC opened an investigation in 2015, and four years later, the parties have finally reached a settlement.
End Result of UOP “Deceptive Advertising” Case: In the end, the FTC and UOP signed the $191 million settlement. Though the company must pay a fine, forgive student debt, and promise never to misrepresent its professional relationships moving forward, it doesn’t have to admit wrongdoing.
In response to the settlement, Andrew Smith of the FTC’s Bureau of Consumer Protection said: “Students making important decisions about their education need the facts, not fantasy job opportunities that do not exist.”
Commissioner Rohit Chopra posted a tweet about “scam schools” and said that the agreement will “set the stage for canceling more student debt and terminating bad-actor access to valuable government benefits.”
The GI Bill Connection
At first thought, a for-profit university stretching the advertising truth may not seem like a big deal. But consider that the University of Phoenix tops the list of post-9/11 GI Bill beneficiaries.
Carrie Wofford of Veterans Education Success praised the FTC’s advocacy in this matter. “Enough is enough,” she said. “It’s time to stop the fleecing of America’s veterans and service members by predatory colleges.”
University of Phoenix: We Did Nothing Wrong!
As is often the case with FTC settlements, the school doesn’t have to admit any wrongdoing. For its part, UOP says it accepted the offer “to avoid any further distraction from serving students that could have resulted from protracted litigation.”
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