Press Release Date: Wednesday, June 27, 2012
Contact Information: Shelley Catharine Johnson
Kentucky Attorney General Jack Conway announced today that QuinStreet, Inc. will turn over the website GIBill.com to the Department of Veterans Affairs and pay $2.5 million to the states involved as part of a consumer protection settlement with 20 state Attorneys General.
General Conway led the bipartisan effort, which is a result of his ongoing investigations of the recruiting and deceptive business practices of some proprietary colleges.
“This company preyed on our veterans who received educational benefits as a result of their military service to our country,” General Conway said. “The actions were unconscionable and purposefully drove veterans to for-profit colleges who were perhaps more interested in getting their hands on the federal benefits than in educating our soldiers and their families.”
The states alleged that the owner of GIBill.com, QuinStreet, Inc. violated the states’ consumer protection laws in the course of operating websites that generate leads primarily for the for-profit education industry. The states reported that several of the company’s sites targeting military servicemembers, including GIBill.com, were deceptive and misleading in giving the appearance that the sites were operated, owned or endorsed by the U.S. government or military.
The states found that the sites were misleading in giving the impression that the schools listed as “eligible GI Bill schools” were the only schools at which the veterans’ benefits could be utilized. In fact, the list only consisted of QuinStreet clients, which were primarily for-profit colleges. Consumer advocates and state Attorneys General have seen for-profit colleges intensify their recruitment of veterans since 2008 when Congress enacted the Post 9/11 GI Bill making billions of dollars in educational benefits available for veterans and their families. According to a February 2011 General Accounting Office report, $9 billion in educational benefits were provided to servicemembers and veterans in Fiscal Year 2010. Of 20 for-profit colleges analyzed by the U.S. Senate HELP Committee, total military educational benefits increased from $66.6 million in 2006 to a projected $521.2 million in 2010. That is an increase of 683 percent. Part of the reason why military members are attractive to for-profit colleges is because their benefits don’t count toward the proprietary colleges’ cap on federal Department of Education funding. The law says for-profit colleges must get 10 percent of their funding from other sources besides federal student loans or Pell Grants, but with the GI Bill loophole, they can secure 100 percent of their funding from the federal government. And, for every veteran they sign up, they can recruit nine more equivalent students who have federal student loans or grants.
“I applaud the state Attorneys General for the settlement announced today to protect servicemembers from misleading and deceptive websites that target their GI Bill benefits. These new consumer protections will help ensure that veterans looking online to learn more about the GI Bill will find accurate information about the benefits they have earned through their service and sacrifices for our country,” said Holly Petraeus, assistant director for Servicemember Affairs at the Consumer Financial Protection Bureau.
As part of the settlement, QuinStreet will relinquish ownership and control of the domain GIBill.com to the Department of Veterans Affairs, which will utilize the domain to promote the GI Bill program and educate servicemembers about the benefits available to them under the program. QuinStreet will also shut down and cease to use any domain names that include the term “GI Bill.” As part of the agreement, QuinStreet will pay the states a total of $2.5 million to settle the consumer protection claims.
“At VA, it is part of our mission to support and encourage Veterans as they seek higher education. We must ensure that they are adequately and accurately informed about their education options throughout the process,” said Department of Veterans Affairs Deputy Secretary Scott Gould. “Predatory, aggressive and deceptive marketing directly inhibits our ability to ensure they understand those options. This settlement is a positive step towards ensuring our Veterans have the education opportunities they’ve earned. VA stands with the states’ Attorneys General, and all Americans, in protecting Veterans from predatory, exploitive or deceptive marketing of any service.”
Other terms of the settlement:
The settlement filed this morning in Franklin Circuit Court in Frankfort, Ky. concludes the investigation of QuinStreet. Attorneys General will monitor sites owned by the company going forward to ensure compliance with the settlement.
The states participating in today’s settlement include: Alabama, Arizona, Arkansas, Delaware, Florida, Idaho, Illinois, Iowa, Kentucky, Massachusetts, Mississippi, Missouri, New York, Nevada, North Carolina, Ohio, Oregon, South Carolina, Tennessee, and West Virginia.