For profit college DeVry University sued for deceptive advertising

For Profit CollegeIn a press conference at the end of January, the FTC announced a lawsuit against for profit college DeVry University, run by DeVry Education Group, Inc., alleging it placed deceptive ads regarding both the likelihood that its graduates would find job placement in their respective fields of study and would earn more money than graduates from other colleges or universities.

FTC Alleges DeVry’s Misled Potential Students

In its complaint, the FTC claims that for profit college DeVry claims in its advertisements that 90 percent of DeVry graduates actively seeking employment obtained jobs in their respective field of study within six months after graduation are deceptive.  Additionally, the complaint alleges that another key claim made by DeVry, that its graduates had on average 15 percent higher incomes one year after graduating than graduates of all other colleges and universities, is also deceptive.

The FTC says that the “90 percent” advertisement has been used by DeVry since 2008, and the “15 percent higher income claim” began in 2013.  DeVry’s advertisements appeared across all mediums of media, including television, radio, online, print, and otherwise.

In addition to the false claims made in advertisements, the FTC alleges that DeVry counted several graduates as working “in their field” when the graduates were in fact not:

  • a graduate who majored in business administration with a specialization in health services management working as a server at a restaurant;
  • multiple graduates with majors in technical management whose employment was listed as unpaid volunteer positions at medical centers; a graduate who majored in technical management with a human resources specialization working as a rural mail carrier and another who worked as a driver delivering rain gutters for a construction company; and
  • a graduate who majored in business administration with a health care management specialization working as a car salesman.

FTC Says DeVry Counted Job-Seeking Graduates as Inactive

The FTC also alleges that DeVry excluded graduates from their count of those “seeking employment” as inactive when they were actually seeking employment.  For example, a graduate who had viewed more than 175 job openings in DeVry’s job database, interviewed for six jobs within the two months prior to the time the graduate was declared as inactive, repeatedly emailed the DeVry career services office, and attended a DeVry career fair, was not counted as “seeking employment.”

The FTC claims that DeVry had every reason to question the reliability of their claims, which relied on conclusions and information in a third-party report to DeVry.  In fact, when comparing income information that DeVry obtained from its graduates with publicly available income information, the data shows that DeVry graduates did not in fact earn “15 percent” more than other graduates.

DeVry Says It Intends to “Vigorously” Defend Against FTC Claims

In response to the FTC’s lawsuit, DeVry Education Group said in a press release that “it intends to vigorously contest a complaint filed by the Federal Trade Commission (FTC), challenging the employment and earnings outcomes of DeVry University graduates.”  Continuing on, the press release said:

DeVry Group believes that the FTC’s complaint – filed 40 years after DeVry University began publishing accurate graduate employment statistics – is without a valid legal basis.  In addition, the FTC’s complaint contains anecdotal examples that exaggerate the allegations but do not prove them.  DeVry University measures the employment and earnings results of its graduates on a sound, rational and transparent basis, and has published these results in a consistent manner over the years to provide students meaningful information.  There is no national standard for calculating employment statistics among higher education institutions, and the measures and standards used by DeVry University to support its statistics are appropriate.  Indeed, a taskforce of 39 state attorneys general and the District of Columbia recently developed a methodology very similar to the one DeVry University has had in place for years.  And while many other institutions of higher education provide employment statistics, DeVry University’s measures are more rigorous and further substantiated than most.

FTC Chair Downplays Number of Potential Vicitms

In a somewhat interesting twist to the FTC’s case, statements from FTC Chairwoman Edith Ramirez have fueled speculation that for profit college DeVry may face much lower potential penalties than the FTC’s lawsuit suggests.  The FTC’s complaint alleges that DeVry annually enrolled 29,000 to 49,000 new students from 2008 to 2014 while it was peddling its false claims. The figures suggest that as many as 300,000 students were harmed during the period.

However, on the same day the FTC filed its complaint against DeVry, Ms. Ramirez told reporters that DeVry’s alleged falsehoods harmed a much smaller pool of prospective students.  “Approximately thirty- to fifty-thousand students may have been impacted during the period during which the representations were made,” Ramirez said, minimizing the potential population of alleged victims by roughly a factor of six.

Jay Mayfield, an FTC spokesman, said Ms. Ramirez cited figures from the agency’s complaint but didn’t note that they were annual figures.  Even still, the FTC has not corrected Ms. Ramirez’s error.  Time will tell whether the FTC’s numbers cited in its complaint, or those cited by Ms. Ramirez, will bear out.

Department of Education Issues Notice to DeVry

In a related case against DeVry, the Department of Education has also announced that it will be taking action. The Department of Education has provided notice to DeVry that it will shortly require DeVry to cease certain advertising regarding the post-graduation employment outcomes of its students and to take additional steps to ensure that DeVry can substantiate the truthfulness of its post-graduation employment outcomes.

“As required by the law and expected by the public, institutions need to be accurate in their marketing and recruiting to prospective students. And we confirm this truthfulness of advertisements through the backup information schools provide upon request,” said Under Secretary of Education Ted Mitchell.  “The Department and the FTC’s related announcements today are the result of much collaboration and cooperation. We are grateful to our partners at the FTC for their hard work and dedication on this matter.”

Another Blow to the For Profit College Industry

The lawsuit against DeVry is another punch-to-the-gut for the for profit college industry.  In May 2015, in a case followed by C&J’s FTC attorneys, the FTC announced a settlement with for profit college Ashworth College.  There, the FTC had alleged that Ashworth had misled students about career training and credit transfers.

The cases against DeVry and Ashworth represent the FTC’s continued pushback against for profit colleges, which the FTC says are misleading students about the reality of employment statistics of their graduates.  However, those for profit colleges disagree, saying that no students have been harmed and that there is no national standard for calculating a school’s employment statistics.

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