Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: High school “diploma mill” suspended after $11M in sales, (Sep 19, 2014)

By Greg Hammond, J.D.

The FTC has successfully obtained a temporary restraining order against a company that allegedly pocketed over $11 million from selling fake high school diplomas to consumers across the United States (FTC v. Diversified Educational Resources, LLC, File No. 132 3256, Case No. 14-cv-62116-JIC).

According to the Commission’s complaint, Diversified Educational Resources, LLC and other affiliated companies and individuals conducted business as "Jefferson High School Online" and "Enterprise High School," and advertised, marketed, distributed, or sold fake high school diplomas to consumers online. The companies allegedly claimed that consumers could become high school graduates and obtain "official" high school diplomas by enrolling in their "accredited" programs. Further, consumers were purportedly told that the diplomas could be used as valid high school equivalency credentials to enroll in college, apply for jobs, and to "receive the recognition [they] aspire for in life."

In reality, the companies’ diplomas are "virtually worthless," as the businesses did not operate an accredited online high school, and consumers were only required to pay a fee and pass an online test to obtain their "diploma," the FTC charged. "In numerous instances, consumers who attempt to enroll in college, apply for jobs, or join the military using Defendants’ diplomas learn that Defendants’ programs are unaccredited and that the diplomas are invalid," the Commission alleged. The complaint asserts that the companies violated the FTC Act, which prohibits unfair or deceptive acts or practices in or affecting commerce.

"A high school diploma is necessary for entry into college, the military, and many jobs," stated FTC Bureau of Consumer Protection Director Jessica Rich. "These defendants took students’ money but only provided a worthless credential that won’t help their future plans."

The temporary restraining order prohibits the companies and their owners from misrepresenting: (1) that consumers can successfully use any Academic Degree as a valid high school equivalency credential when applying for jobs, seeking enrollment in higher education institutions, or for other purposes; (2) that any high school, college, university, or other educational institution issuing any Academic Degree has been accredited by an independent, third-party accrediting body; or (3) any other fact material to a consumer’s decision whether to purchase any Academic Degree. In addition, the court froze the defendants’ assets and required that they take down, but preserve, their various websites. The FTC was also granted immediate access to the companies’ business premises and records.

Attorneys: Jonathan Nuechterlein, Ioana Rusu, and Miya Rahamim for the FTC.

Companies: Diversified Educational Resources, LLC

News: ConsumerProtection FederalTradeCommissionNews