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University of Phoenix Settles with FTC over Deceptive Advertising

The Federal Trade Commission (FTC) has reached a $191 million settlement with the University of Phoenix (UP) — its largest to-date with any for-profit school. The FTC exists to protect consumers and competitors from anticompetitive, deceptive, and unfair business practices through law enforcement, advocacy, and education. UP faced allegations of deceptive advertising. It used companies including Microsoft, Twitter, Adobe, and Yahoo in its advertising to create the false impression that they actually placed students with those employers. The FTC also claimed that UP promoted that it worked with companies to develop courses, though its investigation revealed no such partnerships.

The alleged inaccurate marketing was said to target active-duty military, veterans, and military spouses. UP benefits from being the largest beneficiary of GI Bills since the attack on 9/11. Veterans groups have been in support of federal agencies policing colleges and universities and keeping education funds out of the hands of abusers. Part of the discovery phase of the FTC investigation involved talking with whistleblowers who were former UP recruiters. Though current employees might worry about being a whistleblower due to the threat of retaliation, former employees are more comfortable providing a wealth of information.

In response to the settlement, many students who attended UP between 2012 and 2016 will have their debt to the school eliminated. This will account for $141 million of the settlement. The remaining $50 million will go directly towards student compensation. According to Andrew Smith, director of the FTC Bureau of Consumer Protection, "Students making important decisions about their education need the facts, not fantasy job opportunities that do not exist."

UP denies all of the accusations and expressed confidence about its ability to win in court. However, UP said engaging in the voluntary FTC settlement would allow it to focus on its core mission of improving students' lives through career-relevant higher education. Others might speculate that a prolonged entanglement and court battle with the FTC could do irreparable damage to UP's brand and ability to function in the for-profit, higher education market.

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