For-Profit Educational Institution to Pay $191 Million to Settle FTC Charges of Deceptive Advertising

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A for-profit educational institution and its parent company entered into a settlement with the FTC to resolve charges that they used deceptive advertisements.  The FTC’s complaint alleged that the companies deceptively advertised the benefits of an education from the institution, making false or misleading representations about their relationships and job opportunities with high-profile corporate employers and about such entities’ involvement in developing curriculum for the institution, in violation of Section 5(a) of the FTC Act.

Section 5(a) of the FTC Act prohibits “unfair or deceptive acts or practices in or affecting commerce.”  The complaint generally alleged that, since at least 2012, the companies misrepresented the institution’s relationships with high-profile corporate employers in this manner through the use of television, radio, and internet advertisements and other marketing materials, indicating relationships and curriculum development that did not exist.  The complaint further alleged that consumers had and will continue to suffer substantial injury, and that the companies were unjustly enriched, as a result of these actions.

The stipulated order sets forth a nearly $191 million settlement with the educational institution, which will be allocated as follows: (i) $50 million to the FTC; and (ii) nearly $141 million to cancel consumer debt owed to the institution from students who were harmed by the alleged misconduct.  In addition, the companies, among other things, are permanently restrained and enjoined from misrepresenting their products and services through the use of promotional materials.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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