Embargoed until the FTC’s Announcement Goes Live (likely 11 a.m. December 10, 2019)
Contact: Carrie Wofford (202) 838-5050
Federal Trade Commission’s Settlement with University of Phoenix Puts Pressure on VA and DOD to Stand Up for Student Veterans
Veterans Education Success thanks the US Federal Trade Commission for its announcement today of a legal settlement with the University of Phoenix for defrauding students – especially military students and veterans. The settlement includes nearly $200 M in financial compensation for students, and also includes proscriptive terms the education company must abide by. The FTC found “UOP’s deceptive advertising and marketing materials targeted active duty servicemembers, veterans, and military spouses.”
“The FTC’s findings should shock every patriotic American. Enough is enough. It’s time to stop the fleecing of America’s veterans and servicemembers by predatory colleges,” said Carrie Wofford, President of Veterans Education Success. “We thank the FTC for its leadership and call on VA and the Defense Department to protect veterans and servicemembers.”
The FTC’s decision puts pressure on VA to adhere to a federal law which requires VA to cut off GI Bill funds from schools that engage in deceptive and misleading recruiting and advertising, something veteran and military leaders have been calling for:
- 36 Veteran and Military Organizations Ask VA for Better Oversight of GI Bill Colleges (2019)
- Twenty Three Veterans and Military Organizations Ask VA for Better Oversight of the GI Bill (2016)
VA’s failure to abide by the federal statute has been repeatedly documented:
- Veterans Education Success, VA Still Not Enforcing 1974 Ban on Schools that Engage in Deceptive Advertising and Recruiting (2019)
- Yale Law School: VA’s Failure to Protect Veterans from Deceptive College Recruiting Practices (2016)
“Education is the gateway to opportunity; it’s a terrible injustice to be cheated out of your GI Bill after serving the nation,” Wofford said. “VA and DoD should put student veterans first and disapprove predatory schools that take advantage of their hard-earned benefits.”
The Defense Department also has obligations to keep predatory college recruiters off military bases, as veterans and military organizations have previously written.
Taxpayer funds are at stake when VA and DOD fail to protect federal funds from fraud. The for-profit University of Phoenix dwarfs all other colleges in the amount of GI Bill funds it receives each year, but spends only about 15% of tuition on the student’s education – a fraction of what most colleges spend on instruction. From Fiscal Years 2009 though 2018, the University of Phoenix received more revenue from veterans and eligible family members using the Post-9/11 GI Bill than any other school—$2,127 billion. In addition, its revenue from active-duty servicemembers using the Defense Department’s Tuition Assistance program totaled $61.1 million from Fiscal Years 2014 through 2018.
During the FTC’s investigation into the University of Phoenix, which was opened in 2015, Veterans Education Success provided assistance to the FTC in the form of half a dozen recruiter whistleblowers who contacted us and were willing to speak to government and also in the form of student veteran complaints about illegal practices by the company. A public summary of the types of complaints veterans brought to us about the University of Phoenix was prepared by the Yale Law School Veterans Legal Clinic (working on behalf of Veterans Education Success): Student Veteran Complaints Alleging Illegal Practices at University of Phoenix
In 2015, the US Department of Defense put the company on probation for six months over the company’s surreptitious recruiting on military bases, which had been exposed by a PBS NewsHour expose:
- DOD Puts University of Phoenix on Probation
- Veteran Organizations Thank DOD for Enforcing its Rules against University of Phoenix
The University of Phoenix has faced multiple law enforcement investigations for fraud, summarized in our report, Law Enforcement Actions Against Predatory Colleges, including:
State Attorneys General
- 2015 investigation by California AG with a subpoena to produce documents and information regarding business and practices of University of Phoenix relating to members and former members of the U.S. military and California National Guard, including marketing, recruiting, billing, financial aid, accommodations and other services for military personnel and use of U.S. military logos in marketing. (see here) Presumably ongoing.
- 2011 investigation by Delaware AG for unfair and deceptive trade practices. (see here)
- 2011 investigation by Massachusetts AG for unfair or deceptive methods of recruitment and financing of education. (see here) Presumably ongoing.
- 2010 investigation by Florida AG for unfair and deceptive trade practices. (see here) Presumably ongoing.
U.S. Securities and Exchange Commission
- 2012 enforcement inquiry regarding insider trading. (see here) Presumably ongoing.
U.S. Education Department
- 2014 Inspector General subpoena for information regarding “marketing, recruitment, enrollment, financial aid processing, fraud prevention, student retention, personnel training, attendance, academic grading and other matters.” (see here) Presumably ongoing.
- 2004 fine and related lawsuit under False Claims Act. Resulted in 2009 $78.5 million settlement that required owner of the University of Phoenix agreed to pay $67.5 million to the federal government and another $11 million in legal fees to two former admissions officials who accused the company of illegally paying its recruiters based on how many students they (see here) Closed.
U.S. Department of Defense
- 2015 action for violating Memorandum of Understanding with U.S. Department of Defense. Resulted in being placed on probationary status and being cut off from Tuition Assistance. Status was lifted in 2016. (see here)
U.S. Federal Trade Commission
- 2015 investigation regarding deceptive or unfair practices in marketing, advertising, and sales. (see here) Settlement announced today.
- 2014 whistleblower lawsuit filed in Ohio for violating the False Claims Act by falsely certifying it was in compliance with various Higher Education Act regulations. (see here) Presumably ongoing.
- 2015 whistleblower lawsuit filed by two former military liaisons for the University of Phoenix alleging they were asked to make “substantial misrepresentations” to veterans to recruit them to attend the school. (see here) Presumably ongoing.
In 2012, the US Senate Committee on Health, Education, Labor and Pensions profiled fraud at the University of Phoenix as part of a larger investigation into for-profit colleges. The report’s chapter on the University of Phoenix is here.
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