DeVry University Reaches $100 Million Settlement with FTC | Practical Law

DeVry University Reaches $100 Million Settlement with FTC | Practical Law

DeVry University has reached a settlement with the Federal Trade Commission (FTC) and agreed to pay $100 million to resolve claims that the university misled prospective students and violated the Federal Trade Commission Act (FTC Act).

DeVry University Reaches $100 Million Settlement with FTC

Practical Law Legal Update w-005-0620 (Approx. 4 pages)

DeVry University Reaches $100 Million Settlement with FTC

by Practical Law Commercial Transactions
Law stated as of 16 Dec 2016 • USA (National/Federal)
DeVry University has reached a settlement with the Federal Trade Commission (FTC) and agreed to pay $100 million to resolve claims that the university misled prospective students and violated the Federal Trade Commission Act (FTC Act).
On December 15, 2016, DeVry University and its parent company agreed to a $100 million settlement with the Federal Trade Commission (FTC) to settle claims that the university misled prospective students about graduates' high employment success rates and income levels. The FTC alleged that DeVry misled consumers in violation of the Federal Trade Commission Act (FTC Act) by claiming that:
  • 90 percent of graduates actively seeking employment found jobs in their field within six months of graduation.
  • On average, its graduates with bachelor's degrees had 15 percent higher incomes one year after graduation than graduates with bachelor's degrees from all other colleges or universities.
DeVry's claims ran in ads on television, radio, online, and in print and other media.
As part of this settlement. DeVry:
  • Has agreed to pay $100 million, including:
    • $49.4 million in cash to qualifying students who were harmed by the deceptive ads; and
    • $50.6 million in debt relief to former students.
  • Is prohibited from:
    • misleading consumers in the future;
    • misrepresenting the likelihood that graduates will get a job because of their degree;
    • including jobs that students obtained more than six months before graduating in its ads describing graduates' success in finding jobs near graduation; and
    • misrepresenting the compensation or compensation ranges that students or graduates have received or can expect to receive.
  • Will notify students who will receive debt relief and inform the credit bureaus and collection agencies of the debt forgiveness.
The FTC's action against and settlement with DeVry is part of a larger trend of lawsuits and actions against for-profit universities accused of misleading prospective students (see, for example, DOJ: For-Profit College Company to Pay $95.5 Million to Settle Claims of Illegal Recruiting, Consumer Fraud and Other Violations and NYAG: Statement By A.G. Schneiderman On $25 Million Settlement Agreement Reached In Trump University Case). This settlement underscores the importance of ensuring that all marketing claims are truthful, not misleading, and can be substantiated.
For more information on federal advertising standards, see Practice Note, Advertising: Overview.