The Federal Trade Commission has revised its Guides for Private Vocational and Distance Education Schools, generally referred to as the “Vocational School Guides” (Guides). The Guides are intended to advise businesses that offer vocational training, either on a school’s premises or through distance education, how to avoid deceptive marketing practices. They will also be of interest to lenders providing financing to students attending these schools.  

The revisions are based largely on comments received by the FTC in response to a 2009 request for comment on the Guides stemming from the agency’s periodic review of its rules and guides. According to the FTC, of the eight commenters (which included the U.S. Department of Education (DOE), three trade associations, and two consumer advocacy groups), seven supported retention of the Guides.

The key revisions, which will be effective immediately upon publication in the Federal Register, consist of the following:

  • The “scope and application” section is revised to reference student recruitment as an area where the Guides specifically address application of Section 5 of the FTC Act.


  • The section on “misrepresentation of extent or nature of accreditation or approval” is revised to state that it is deceptive for a school to misrepresent that its courses or program satisfy a prerequisite to taking a licensing exam.


  • The section on “misrepresentations of enrollment qualifications or limitations” is revised to specify that it is a deceptive practice for a school to misrepresent a student’s likelihood of success in the school or a program (which includes misrepresenting a student’s admission test score) or the time required to complete a course or program.


  • The section on “misrepresentation of facilities, services, qualifications of staff, status, and employment prospects for students after training” is revised to specify that it is deceptive for a school to misrepresent:


    • That a private entity providing financial assistance to students is part of the federal government or that private loans have the same interest rate or repayment terms as DOE loans


    • The percentage of students who drop out or graduate


    • Security policies or crime statistics the school must maintain


    • The nature and extent of assistance provided to students overcoming language barriers or learning disabilities


    • The extent to which students will receive credit for programs or courses completed at other institutions


    • The specific type of employment available to a student after graduation


The FTC rejected the suggestion by commenters that it define the term “clearly and conspicuously” for purposes of the Guides. While the FTC also declined to expand the Guides’ scope to cover resident primary and secondary schools and institutions of higher education offering at least two-year programs of accredited college level study, it noted that any such schools within the scope of Section 5 of the FTC Act are prohibited from engaging in deceptive or unfair conduct.

Ballard Spahr’s Consumer Financial Services Group is nationally recognized for its guidance in structuring, digitizing, securing, and documenting new consumer financial services products; its experience with the full range of federal and state consumer credit laws; and its skill in litigation defense and avoidance. The Group's regulatory attorneys and litigators both counsel and defend schools subject to the Guides, as well as lenders providing financing to students attending such schools.

For more information, please contact Practice Leader Alan S. Kaplinsky at 215.864.8544 or kaplinsky@ballardspahr.com, John L. Culhane, Jr., at 215.864.8535 or culhane@ballardspahr.com, or Christopher J. Willis at 678.420.9436 or willisc@ballardspahr.com.


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This alert is a periodic publication of Ballard Spahr LLP and is intended to notify recipients of new developments in the law. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have.

 

 

 

 

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