The Federal Trade Commission (FTC) recently filed a lawsuit against Grand Canyon Education, Inc. (GCE), Grand Canyon University (GCU), and Brian Mueller, the CEO of GCE and president of GCU. The FTC alleges that the institutions and their leader engaged in deceptive practices, misleading prospective doctoral students about costs, course requirements, and the university’s nonprofit status.
The complaint filed in federal court states that GCU and GCE presented an inaccurate picture of the cost of GCU’s “accelerated” doctoral programs. They claimed the total cost was equivalent to 20 courses or 60 credits. However, it appears that most doctoral students were required to take additional “continuation courses” that significantly increased the overall cost of the program. The U.S. Department of Education reported that fewer than 2% of GCU doctoral program graduates completed their program at the advertised cost, with about 78% of these students taking five or more continuation courses.
The FTC’s charges extend beyond misrepresentation of educational costs. The commission also alleges that despite operating for the profit of GCE and its investors, the defendants deceptively marketed the school as a nonprofit institution. GCU, according to the FTC, operates for the benefit of GCE and its shareholders, contributing 60% of its revenue to GCE under an agreement that designates GCE as the exclusive provider for most university-related services. Mueller, who serves dual roles as GCU’s president and GCE’s CEO, allegedly benefits from this arrangement through his stockholder position in GCE and bonuses tied to GCE’s performance.
“Grand Canyon deceived students by holding itself out as a non-profit institution and misrepresenting the costs and number of courses required to earn doctoral degrees,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “We will continue to aggressively pursue those who seek to take advantage of students.”
The complaint also sheds light on alleged abusive telemarketing practices designed to increase enrollment at GCU. GCE is accused of using digital forms on websites and social media to gather prospective students’ contact information, which was then used by telemarketers to illegally contact people who had requested not to be called, as well as individuals on the National Do Not Call Registry.
The FTC has accused the defendants of violating the FTC Act and the Telemarketing Sales Rule. The commission seeks redress for consumers and a court order prohibiting the institution from further violations of the law. The unanimous vote by the FTC to authorize the filing of this complaint underscores the seriousness of these allegations. The lawsuit was filed in the U.S. District Court for the District of Arizona, marking a potentially landmark case in the ongoing scrutiny of for-profit education providers.
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