University of Phoenix settles with FTC for $191 million over deceptive ads

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

Under the settlement approved by the FTC, 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 lawsuit

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.

However, these companies didn’t 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 describing 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 lawsuit.

The lawsuit also alleges that UOP’s deceptive advertising and marketing materials targeted active duty servicemembers, veterans, and military spouses.

The company has been the largest recipient of Post-9/11 GI Bill benefits since the program's inception, the FTC said.

FTC settlement

The settlement requires UOP to pay $50 million to the FTC, which will be used for consumer redress, and to cancel about $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 doesn’t affect student borrowers’ federal or private loan obligations. Borrowers looking to lower their monthly payments on federal loans can obtain information from the U.S. 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 has no cost. Student borrowers should steer clear of debt relief scams that charge thousands of dollars for services that are available for free, said Smith.

Following the Great Recession in 2008, enrollment in for-profit college climbed. However, in recent years due to government investigations, lawsuits, and fines, enrollment has been dropping. While it once claimed to have an enrollment of 500,000, UOP said its enrollment in 2018 was almost 100,000 students.

See the ConsumerAffairs website for comments from former students about UOP. It received an average rating of two star out of five in the reviews.