FTC Sues Largest Christian School in US Over Alleged Deception, Abusive Practices

The Jerry Colangelo Museum at Grand Canyon University is seen at at dusk in Phoenix, on Sept. 20, 2017. Matt York/AP Photo

The Federal Trade Commission (FTC) has filed a lawsuit against Grand Canyon University over claims that the largest Christian school in the United States deceived prospective doctoral students about the cost and course requirements of its doctoral programs over several years.

The legal challenge was filed in the U.S. District Court for the District of Arizona on Dec. 27.

It names Grand Canyon Education (GCE) Inc., Grand Canyon University (GCU), and Brian Mueller—the CEO of GCE and the president of GCU—as defendants.

GCE owned GCU until 2018, the lawsuit states.

According to the complaint, the Phoenix-based school—which has more than 100,000 enrolled students—told prospective students that the total cost of the university’s “accelerated” doctoral programs was equal to the cost of 20 courses, or 60 credits.

However, in reality, the school requires that almost all doctoral students take many more additional “continuation courses,” which amount to thousands of dollars in costs, the FTC alleges.

The FTC noted the U.S. Department of Education reported that fewer than 2 percent of GCU doctoral program graduates completed their program within the cost bracket advertised by GCU and that nearly 78 percent of the students have to take five or more continuation courses, the agency said in a statement.

The school has “continued their deceptive marketing of doctoral practices despite investigations by the Department of Education and the FTC,” the FTC also said in its lawsuit.

Along with claims that GCU misled students regarding the cost of its doctoral programs, the lawsuit claims the school deceptively advertised itself as a nonprofit to prospective students despite “operating the school for the profit of GCE and its investors.”

‘Deceptive, Abusive Telemarketing Practices’

“The FTC alleges that GCU has been operated for the profit of GCE and its stockholders, and pays 60 percent of its revenue to GCE pursuant to an agreement designating GCE as the exclusive provider for most university-related services,” the FTC said in a statement.

The agency further alleged that Mr. Mueller, as GCU’s president, also benefits as both CEO and a stockholder of GCE, and receives a salary, bonuses, and other compensation from both GCU and GCE, which is tied to the school’s performance.

Furthermore, the FTC claims the school engaged in “deceptive and abusive telemarketing practices,” by calling prospective students who submitted their contact information via the school’s online website, even if the prospective students had specifically requested not to be called.

School officials did so to boost enrollment at GCU, the FTC claims.

“Defendants’ marketing activities have also resulted in millions of abusive telemarketing calls to consumers who have specifically requested that Defendants not solicit them, and to individuals on the National Do Not Call Registry,” the agency alleges.

GCE also purchased information about potential students from lead generators and used that information to contact the individuals, the FTC alleged.

The lawsuit accuses GCU of violating the FTC Act, which prohibits “unfair or deceptive acts or practices in or affecting commerce” and the Telemarketing Sale Rules (TSR).

It asks the court in Arizona to issue a permanent injunction preventing the school from making future violations of the TSR and the FTC Act, and to force GCU to provide unspecified “monetary relief ” as well as “any additional relief the Court determines to be just and proper.”

The Federal Trade Commission (FTC) building is seen in Washington, on Sept. 19, 2006. Paul J. Richards/AFP via Getty Images

FTC Claims Are ‘Absurd’

“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.”

A spokesperson for GCU told The Epoch Times in an emailed statement: “The FTC’s allegations related to GCU and GCE are unfortunately yet another example of the Biden Administration weaponizing federal government agencies in a coordinated effort to target institutions to which they are ideologically opposed.”

The spokesperson added that GCU categorically denies the FTC’s “unsubstantiated allegations and will take all measures necessary to refute them.”

“Given the major problems that exist in higher education related to high tuition costs, significant student debt, poor student loan default rates, long completion times, etc., it is baffling that the federal government has chosen to target a Christian university that is addressing those issues in very positive ways,” the spokesperson said.

“No other institution in higher education is facing this level of government scrutiny, which speaks volumes about these agencies’ motivations and agenda,” the spokesperson concluded.

“This is unfortunately yet another example of the Biden Administration weaponizing federal government agencies in a coordinated effort to target institutions to which they are ideologically opposed,” he told Arizona’s KTVK/KPHO.

He asserted that the claims regarding the school’s doctoral program were refuted twice in federal courts and are “not substantiated by other objective third parties.”

The school was also certified as a nonprofit by its accreditor, the Higher Learning Commission, and the IRS in 2018, he said.

However, the Education Department took an “unprecedented step” of disregarding the IRS determination by classifying GCU as a for-profit institution, Mr. Romantic said.

He also denied the FTC’s claims regarding the school’s alleged deceptive and abusive telemarketing practices, stating the school doesn’t make calls to potential students.

The FTC’s lawsuit against GCU comes after it was fined $37.7 million by the Department of Education for allegedly misleading thousands of students about the costs of its doctoral programs, marking the largest fine of its kind ever issued by the department.

The school denied all the Education Department’s accusations at the time and said it planned to appeal the fine.