FTC slaps Grand Canyon University with lawsuit for alleged deceptive ads, illegal telemarketing

Lawsuit follows $37M fine from Dept

The Federal Trade Commission (FTC) slapped Grand Canyon University (GCU) with a lawsuit last week alleging the school misled students and engaged in illegal telemarketing practices, although the school refutes the claims and claims the federal government is singling them out.

The FTC announced in a press release last Wednesday that it filed a complaint in federal court against GCU, its marketer Grand Canyon Education, Inc. (GCE) and its President and CEO Brian Mueller for allegedly misleading students about the costs of its doctoral program and its non-profit status.

The complaint also alleges that GCE violated the FTC Act and the Telemarketing Sales Rule by unlawfully contacting people who specifically asked not to be called.

“Grand Canyon misled students by posing as a nonprofit institution and misrepresenting the costs and number of courses required to earn doctoral degrees,” Samuel Levine, director of the FTC's Office of Consumer Protection, said in a statement. “We will continue to aggressively pursue those who seek to take advantage of students.”

The FTC's lawsuit comes months after the Department of Education on Oct. 31 paid the largest fine in its history against GCU, which boasts about 120,000 students and is the largest Christian university in the United States.

The department alleged that the school misrepresented the cost of its doctoral programs on its website by advertising that they cost $40,000 to $49,000 when less than 2% of graduates completed their coursework within that price range. Required “continuing courses” often added another $10,000 to $12,000 to the final cost, the department said at the time.

GCU President Brian Mueller remained defiant over the federal government's latest action against the school, which he characterized as “the height of absurdity” and part of an ongoing attempt to unfairly target his institution, according to a statement provided to The Christian Post.

GCU was founded in 1949 as a non-profit by the Southern Baptist Convention, but became a for-profit institution in 2004 amid financial struggles. The school later sought to return to its nonprofit status, a move that Mueller noted was approved by the IRS, Higher Learning Commission, State of Arizona, Arizona Private Postsecondary Board and NCAA Athletics.

“That transaction was blessed by the IRS, State of Arizona and our accrediting body (Higher Learning Commission) so of course we identified ourselves as a nonprofit because we were and are,” Mueller said.

Mueller noted that it was only after 18 months that the Department of Education rejected their status for Title IV funding in 2018, after which the school ceased to identify as one.

The department “required at the time that, moving forward, GCU not identify itself as a nonprofit institution based on unsupported speculation that students would confuse GCU's statutory nonprofit status with the department's so-called 'Title IV for-profit status,'” Mueller said. .

“We disagreed with that view, but cooperated as a gesture of good faith,” Mueller added.

“For the FTC to say now, five years later, that identifying us as a non-profit institution during that 18-month window was somehow 'deceptive advertising' is worthless and the height of absurdity,” he said.

The Department of Education rejected the nonprofit status in 2018 because it claimed GCU had not sufficiently separated itself from its publicly traded former owner, Grand Canyon Education, Inc., which continues to provide services to GCU and where Mueller continues to serve as CEO, according to Forbes. GCU later processed over the decision in 2021.

Mueller also pushed back against the accusation of “abusive” telemarketing practices, asserting that “GCE does not make cold calls to prospective students on behalf of GCU.”

“It only contacts those who have inquired about GCU's programs or otherwise expressed interest in attending the university,” he continued, noting that such practices are common among institutions of higher education and that GCE employs a telemarketing firm to ensure compliance with those concerned. laws

Mueller believes that “GCU is being singled out in a blatant example of selective enforcement by this federal agency.”

He offered that the fact that the FTC echoes accusations by the Department of Education about its doctoral program and nonprofit status “makes it clear that the two agencies are coordinating efforts and suggests that the FTC's real goal is to further burden GCU by forcing it to defend against duplicative lawsuits.”

“Unfortunately, there are no checks and balances to prevent this type of blatant and unjustified government overreach,” he added.

Mueller told CP during an interview in November that GCU is “the most transparent institution in the country,” and pushed back against any claim that the school misled its prospective doctoral students.

During a press conference in November announcing GCU's appeal of the $37.7 million fine, Mueller presented a preliminary internal GCU study examining disclosures from doctoral programs at 100 other universities and 2022. a report by the US Government Accountability Office (GAO) examining broader financial disclosures in higher education.

The GAO report found that 91% of the colleges reviewed “do not include or underestimate the net price in their aid offers,” 41% of which do not provide a net price in their offer to students.

“The purpose of sharing these studies is not to disparage other universities,” Mueller said at the time. “Rather, it highlights the department's selective enforcement in singling out GCU. We assert that not only is there nothing misleading about GCU's disclosures, but that we are providing higher levels of transparency than are observed in higher education. In short, we are taking a lead role in this matter.”

Source: www.christianpost.com

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