Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES NEWS: Corinthian Colleges charged with misrepresenting externships, job placement rates, (Oct 28, 2014)

By Greg Hammond, J.D.

The Wisconsin Department of Justice has filed suit against Corinthian Colleges, Inc. for allegedly engaging in unfair, false, misleading, and deceptive trade practices, in violation of Wisconsin consumer protection laws. According to the Department, Corinthian persuaded hundreds of consumers to enroll in its post-secondary school, “Everest College, Milwaukee,” by making deceptive statements about critical facts regarding the availability of externships and job placement rates (State of Wisconsin v. Corinthian Colleges, Inc., Case No. 2014 CX 00006).

The complaint asserted that Corinthian offered six allied-health programs at Everest College, Milwaukee: Dental Assistant, Massage Therapy, Medical Insurance Billing and Coding, Medical Administrative Assistant, Medical Assistant, and Pharmacy Technician. As part of the programs, students would be required to complete a 200 hour externship prior to graduation, which was included in their tuition. The complaint also alleged that recruiters would tell prospective students that the school had an 80 to 90 percent employment rate.

In reality, Corinthian enrolled more students than initially projected and never provided additional resources to adequately support the school’s explosive growth, the complaint alleged. Specifically, the Department alleged that, while only a 600-person student body was projected, the school had enrolled approximately 1,600 students when it was ordered to indefinitely suspend all enrollments in June 2012.

The complaint also alleges that while the school’s enrollment numbers were breaking regional and national records for Corinthian, the student drop-rate was dangerously high and its job placement rate was exceedingly low. The Department attributed the high drop-out rate to the low number of externships available, and the enrollment of students who were “plainly incapable of meeting the educational rigors of the program in which they were being enrolled.” Additionally, job placement was much lower than reported, partially due to a lack of externships and the enrollment of students with drug or violent felony convictions who were virtually “unemployable.” Despite the advertised 80 to 90 percent job placement rate, the Milwaukee campus’ rate was far lower, falling as low as five percent.

The Department asserted that Corinthian made various fraudulent representations and misrepresentations through mail and face-to-face solicitations, in violation of Wisconsin’s consumer protection laws. Consequently, the Department sought an order: (1) requiring Corinthian to restore any pecuniary losses suffered by consumers because of the school’s acts or practices; (2) imposing civil forfeitures against Corinthian; (3) entering appropriate injunctive relief prohibiting further violations; and (4) awarding the State investigatory and attorney fees.

“Our office will prosecute post-secondary schools that use deceptive recruiting tactics to increase enrollments, leaving vulnerable, unemployed graduates with excessive federal student loan debt, underwritten by the taxpayer,” stated Wisconsin Attorney General Van Hollen.

Companies: Corinthian Colleges, Inc.

News: Advertising StateUnfairTradePractices WisconsinNews