WASHINGTON – The Federal Trade Commission has announced a new initiative to penalize for-profit colleges and universities for making misleading claims about their graduates’ job placement and earning prospects with sizable sanctions - leading to concerns from the industry that no actual findings of wrongdoing have been alleged.
More than 70 schools so far have been put on notice, and in doing so, the FTC has restored its Penalty Offense Authority, a measure found in Section 5 of the FTC Act, to ensure that bad actors pay a price when they break the law.
Through its sending a Notice of Penalty Offenses to some of the largest for-profit colleges and vocational schools across the nation, the FTC said that the companies operating these colleges will be made aware that they could incur severe financial penalties for engaging in certain unlawful practices.
Career Education Colleges and Universities President and CEO, Dr. Jason Altmire, worries for-profit universities are being unfairly targeted..
“The FTC announcement includes no findings of wrongdoing at any for-profit institution," he said. "Publicly announcing that it is sending warning letters to 70 of the largest for-profit institutions arbitrarily impugns the integrity of institutions that are in full compliance with FTC regulations."
Altmire says the industry is surprised that only for-profit schools will be subjected to enhanced civil monetary penalties, "while other bad actors under the FTC's jurisdiction will not be held to the same standard."
Philadelphia-based Temple University, a state educational institution, recently saw the former Dean of its Fox School of Business, Dr. Moshe Porat, indicted for wire fraud. It was alleged that Porat submitted false data to U.S. News & World Report, in an effort to promote and increase the school's ranking in the magazine's annually-published list of best colleges.
But the FTC maintained that since its jurisdiction only covers for-profit institutions, its Notice of Penalty Offenses is likewise strictly limited to schools with that designation.
“The FTC’s jurisdiction to curb deceptive and unfair practices applies only to for-profit companies. As a result, the notices we announced are targeted at for-profit colleges and vocational schools,” Jay Mayfield, FTC Senior Public Affairs Specialist, said.
Such practices outlined in the notice relate to claims made by institutions about the career outcomes of their graduates, including whether a particular career field is in demand, the percentage of graduates who get jobs in their chosen field, whether the institution can help a graduate get a job, the amount of money a graduate can expect to earn and other related practices.
The notice further stipulates that taking part in these practices could lead to civil penalties of up to $43,792 per violation.
However, the FTC also cautioned that a school’s presence on its initial notice list “does not reflect any assessment as to whether they have engaged in deceptive or unfair conduct.”
Meanwhile, the FTC states that complaints it received connected to education-related issues increased roughly 70 percent between 2018 and 2020, and that it is committed to rooting out practices that harm students and their families.
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com