In a recent ruling, the California Court of Appeal largely affirmed a lower court’s decision from March 2022, finding that Ashford University (now known as University of Arizona Global Campus), an online, for-profit college, had engaged in deceptive recruitment practices vis-à-vis veterans eligible for federal GI Bill educational benefits. California Attorney General (AG) Rob Bonta initiated the action in November 2017, alleging that Ashford University had caused harm to a significant number of students, many of whom were veterans, by disseminating false and misleading statements about career outcomes, cost and financial aid, pace of degree programs, and transfer credits.
The appellate court ruled that Ashford University and its parent company, Zovio, Inc., committed 1,243,099 violations of California’s Unfair Competition Law (Bus. & Prof. Code, § 17200 et seq.) and False Advertising Law (Bus. & Prof. Code, § 17500 et seq.). Consequently, the court ordered Ashford University to pay $21 million in penalties, only a slight decrease from the $22 million figure ordered by the lower court.
In reaching its decision, the California Court of Appeal concluded there was compelling evidence of deceptive practices that misled student veterans, resulting in more than just financial loss by also depriving students of precious time and hindering their career aspirations. The court rejected the defendants’ arguments that the multimillion-dollar penalty was disproportionate, in light of the harm caused and the financial health of both the university and its parent company.
Why It Matters
Over the years, for-profit educational institutions have faced increased regulatory scrutiny due to a pattern of allegedly aggressive recruitment strategies targeting veterans, among others, coupled with high tuition fees that lead to elevated loan default rates. For example, the U.S. Department of Justice just last month filed suit in federal district court against another for-profit institution under the False Claims Act, alleging fraud in the institution’s administration of its GI Bill benefits compliance program.
The recent California ruling is the latest example of how AGs wield immense power to initiate legal actions against any educational institution to shield veterans from fraudulent and misleading practices and ensure that veterans receive the educational benefits they have been promised. Indeed, Bonta and his office played a critical role in this case by underscoring the significance of holding educational institutions true to their commitments.
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