University of Phoenix Under Investigation by the Federal Trade Commission

August 17, 2015 — One of the largest for-profit colleges still in operation, the University of Phoenix, is being investigated by the government for allegedly deceptive marketing practices. The struggling school is facing a probe by the Federal Trade Commission (FTC) as to whether it engaged in deceptive marketing practices. As part of the investigation, the school must turn over documents regarding matters that includes its marketing, billing, tuition, accreditation, and military recruitment practices as far back as 2011. In response to this demand, the school’s parent company, Apollo Education Group, said, “Apollo is evaluating the demand and intends to cooperate fully with the FTC.”

Investigation Comes at a Time When the Government is Cracking Down on For-Profit Schools

The University of Phoenix is not the first for-profit school to be scrutinized by the federal government for education fraud. These for-profit colleges have long been criticized for leaving students with mountains of debt and no real job prospects. Regulators believes that some of these In schools pray on low-income students and veterans, encouraging them to take out expensive loans, and then use abusive tactics to collect repayment. New federal rules were enacted on July 1, 2015 to hold these schools responsible for students’ return on investment of their degree programs. This new set of rules, called “the gainful employment regulations,” requires colleges to track their graduates’ debt and employment to prove their programs do not fall short of federal guidelines. Schools must now provide information on program costs, how much students earn after graduations, and how much debt they accumulate. This will let the Department of Education see which programs are saddling students with debt and leaving them with no real job prospects, and which offer affordable training that leads to gainful employment.
Department of Education Secretary Arne Duncan said the following about some of the tactics of some for-profit colleges, “There are too many [institutions that] have been morally unconscionable and what they’ve done…Too many of these guys took advantage. People have been taking out these big loans, ending up in a worse financial situation than when [they] start. Nobody signs up for that.”
Waters & Kraus has experience handling whistleblower cases against for-profit colleges. If you know of fraudulent or deceptive practices performed by any of these institutions, contact us  or call our qui tam attorneys at 800.226.9880to learn more about our practice and how we can work together to notify the government about fraudulent abuses of government-funded programs. This article was contributed by Anne Izzo one of the qui tam attorneys in the firm’s Dallas office.

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