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Education Company to Pay $30 Million to Settle Lawsuit With FTC

A for-profit higher education company has agreed to settle a lawsuit with the Federal Trade Commission alleging the former of deception and fraud.

The Illinois-based Career Education Corp. (CEC), which runs many colleges across the country, will pay $30 million in monetary relief and restitution to FTC. The company has further agreed to comply with the Federal Trade Commission Act and the Telemarketing and Consumer Fraud and Abuse Prevention Act.

The suit stemmed from an investigation started by FTC in August 2015, which alleged the company of using deceptive marketing practices to lure prospective students. It was also under investigation by the Department of Education regarding the inflation of placement rate reporting.

Earlier in January, the CEC entered into a settlement with Iowa Attorney General Tom Miller and 48 other attorneys general to forgo collecting $493.7 million in student debts and to amend its enrollment and recruitment practices.

The settlement brought to end a four-year-old investigation launched by a group of attorneys general in 2014 after receiving student complaints alleging CEC of using emotionally charged language to pressure them into enrolling and deceiving students about total enrollment costs.

As a part of the settlement posted on Securities and Exchange Commission website, both parties have agreed to enhance their current operational and compliance processes with respect to prospective student leads purchased from lead aggregators and will implement other agreed-upon compliance measures. The company will also comply with the national do not call registry.

In 2016, FTC had filed a similar lawsuit against DeVry University after a two-year investigation into its deceptive marketing scheme. According to the FTC, DeVry falsified the numbers underlying its “90 percent employment within six months” claims, by counting students already employed prior to enrolling at DeVry, as well as students underemployed outside their field of study and later settled the suit in 2017 for a reported $100 million.

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