Record $191 Million Settlement Obtained From University of Phoenix For Deceptive Advertising

WASHINGTON – The University of Phoenix and its parent company, Apollo Education Group, have agreed to settle for a record $191 million to resolve Federal Trade Commission charges that they used deceptive advertisements. The ads falsely touted their relationships and job opportunities with companies such as AT&T, Yahoo!, Microsoft, Twitter, and The American Red Cross.

According to the Federal Trade Commission (FTC), under the settlement unanimously approved by the Commission,  the University of Phoenix (UOP) will pay $50 million in cash as well as cancel $141 million in debts owed to the school by students who were harmed by the deceptive ads.

“This is the largest settlement the Commission has obtained in a case against a for-profit school,” said Andrew Smith, Director of the FTC’s Bureau of Consumer Protection. “Students making important decisions about their education need the facts, not fantasy job opportunities that do not exist.”

FTC allegations 

The FTC alleged that UOP and Apollo relied heavily on advertising to attract students, including specific ads that targeted military and Hispanic consumers. The companies’ ads featured employers such as Microsoft, Twitter, Adobe, and Yahoo!, giving the false impression that UOP worked with those companies to create job opportunities for its students and tailor its curriculum for such jobs.

n reality, these companies did not partner with UOP to provide special job opportunities for UOP students or develop curriculum. Instead, UOP and Apollo selected these companies for their advertisements as part of a marketing strategy to drive prospective student interest, the FTC alleges.

In addition to falsely touting relationships with companies, the defendants also misrepresented that companies, such as Adobe, American Red Cross, Avis, AT&T, MGM, Microsoft, Newell Rubbermaid, Sodexo, and Twitter, worked with UOP to develop its courses, according to the FTC’s complaint.

The complaint further alleges that UOP’s deceptive advertising and marketing materials targeted active duty servicemembers, veterans, and military spouses, and that the company has been the largest recipient of Post-9/11 GI Bill benefits since the program’s inception.

What the settlement means for consumers

"University of Phoenix settlement details: $191 million judgment; $50 million in consumer refunds; $141 million in debt forgiveness.The settlement requires UOP to pay $50 million to the Commission, which will be used for consumer redress, and to cancel approximately $141 million in debts owed to UOP by former students who first enrolled during the time period consumers were likely exposed to UOP’s deceptive advertising.

This settlement will not affect student borrowers’ federal or private loan obligations. Borrowers looking to lower their monthly payments on federal loans can obtain free information from the United States Department of Education about income-driven repayment plans, and those who believe they have been defrauded or deceived can apply for loan forgiveness through the Borrower Defense to Repayment procedures. Applying for these programs does not cost anything.  Student borrowers should steer clear of debt relief scams that charge thousands of dollars for services that are available for free.

The Commission vote authorizing the staff to file the complaint and stipulated final order was 4-0-1, with Commissioner Christine S. Wilson recused.

 

About ADI Staff Reporter 16957 Articles
Under the leadership of Editor-in -Chief Huey Freeman, our team of staff reporters bring accurate,timely, and complete news coverage.

3 Comments

  1. University of Phoenix gives out degrees like candy. Not impressed by anyone that graduated from there. UoP is for those that cannot get into or handle the rigor of real universities.

    • my son attended pima and found they didnt really teach anything. I graduated from UA in the 70’s and they were an indoctrination center then. My daughter graduated from UA in the late 90’s, nothing had changed from my experience. the UoP is as good as the indoctrination center, PLUS although expensive like public colleges they allow you to do your studies in the evenings etc. and allow for EMPLOYMENT while going unlike the colleges who are mainly daylight only operations. Just like me the kids have never been asked to show their ‘diplomas’ to their employers. SO declaring a diploma from anyplace is not something that really carries much weight. Thats why those wnting to impress try to go to the BIG NAME places, but in reality any college will do the same thing.

  2. WHY AREN’T SCHOOLS being held accountable for say 20% of student loan losses
    with 23% default rate – schools need to pay up for their failed tuition costs

    until then I say FORGET COLLEGE – it’s not worth dime in future
    and you’ll need lots of $100’s

Comments are closed.