In the latest enforcement efforts by state regulators, the New York attorney general (AG) announced a settlement with a scouting and recruiting business in which the National Scouting Report Inc. (NSR) paid $20,000 and agreed to make changes to its advertising. The AG of Massachusetts reached a $455,000 deal with DeVry University.
The New York AG’s Office accused NSR of making false claims on its website and advertising touting the success of its programs, including that it was the “highest rated scouting company” and that it was “resourced by more college coaches than all other scouting services combined.” In addition to these unverifiable claims, NSR overstated its college placement rates, the AG said, by advertising that 90 percent of all prospective student athletes received offers from schools, with 25 percent going to NCAA Division I programs.
Parents paid more than $3,000 to enroll in the program, which employed “scouts” who received just one week of training covering NSR’s sales techniques, the AG alleged, despite the company’s statements that the scouts were drawn from a variety of backgrounds and were all “well-trained before hitting the ground.” Some scouts even promised the impossible, telling one family it would be “no problem to get [their son] money to play” collegiate sports, and another family that the scout was “100% sure” he could get their child “into a good school.”
To settle the charges of false advertising and deceptive business practices, Alabama-based NSR agreed to reform its advertising, training and sales practices (including the removal of any language from its website that cannot be substantiated) and pay upward of $20,000 in penalties, costs and consumer restitution.
“Preying on the hopes and aspirations of New York’s young, devoted athletes is incredibly cynical,” AG Eric T. Schneiderman said in a statement. “Students who are attempting to use their athletic promise to further their educational opportunities should not have to worry about being exploited by those seeking to make a profit, without any consideration for their success.”
In Massachusetts, DeVry University agreed to pay $455,000 to the AG’s Office for allegedly making misleading claims about the employment prospects and salaries of its graduates. Based on these claims, students were unfairly and deceptively convinced to enroll at the school and take on federal loan debt, AG Maura Healey said.
The action—the office’s first settlement with an online-only school—was based on an investigation into claims made by DeVry from 2011 through 2015 on its website and in social media, print advertisements and television commercials, as well as during telephone and in-person presentations to prospective students.
Although the school “prominently” advertised that 90 percent of its graduates who sought employment had jobs in their field of study within six months of graduating, the investigation revealed that some DeVry programs had job placement rates as low as 52 percent.
The school also excluded graduates from its statistics by classifying them as “inactive” based on their failure to fulfill certain career services requirements and included graduates who were employed in jobs that would not reasonably be considered to be in their field of study, the AG said, or who were already employed in their field prior to either enrolling in or graduating from DeVry.
Pursuant to the Assurance of Discontinuance filed in Massachusetts state court, DeVry will pay a total of $455,000 and is prohibited from misrepresenting the employment outcomes or salaries of its graduates.
To read the press release from the New York AG’s Office, click here.
To read the Assurance of Discontinuance in In the Matter of DeVry University, click here.
Why it matters: State regulators have recently stepped up their efforts by putting advertisers on notice that enforcement actions can come from many different directions. The Massachusetts suit against DeVry mirrored a settlement the school reached with the Federal Trade Commission in December, when it agreed to pay $100 million for misleading prospective students with ads that hyped high employment success rates and income levels upon graduation.