Career Step to Pay $43.5 Million for Misleading Advertising Practices

Career Step to Pay $43.5 Million for Misleading Advertising Practices

Career Step, LLC, an online career-training provider, has agreed to pay $43.5 million in cash and debt cancellation to the Federal Trade Commission (“FTC”) for deceptive advertising practices aimed at service members and their families. The settlement includes $27.8 million in student debt cancellation and $15.7 million in refunds for consumers misled by false job placement and employer partnerships claims.

The FTC’s investigation revealed that Career Step employed misleading advertising tactics, falsely claiming high employment outcomes and partnerships with well-known companies in the healthcare sector. Since at least 2019, the company has marketed its programs on various platforms, including social media and military-focused publications, employing sales representatives and AI technology to attract potential students. The advertising promoted unrealistic job placement promises, externships, and inflated claims about the duration and effectiveness of its programs.

Samuel Levine, Director of the FTC’s Bureau of Consumer Protection, stressed the significance of this action, stating that servicemembers and their families deserve accurate information when utilizing their benefits for education. He emphasized that deceptive practices undermine the hard work and sacrifices these individuals make.

According to the FTC’s complaint, Career Step’s representatives falsely assured consumers that the company would assist them in finding employment. While the company claimed to have a dedicated “career placement team,” it offered only limited support, such as resume help and links to job postings available online. The complaint also highlighted that the company’s claims regarding employment rates were based on an optional survey sent to program completers, a process that yielded minimal responses, resulting in skewed statistics.

The settlement stipulates that Career Step cannot misrepresent essential information about its educational products or services, including job prospects, externship opportunities, and the duration of its programs. Moreover, the company will be required to cancel debts owed by students who enrolled from February 2020 to February 2023.

Additionally, Career Step is prohibited from conducting deceptive advertising practices in the future, which includes making false claims about employment, partnerships, and career services. As part of the settlement, Career Step must also inform any platform displaying incentivized reviews of the FTC’s action and request the removal of such reviews, ensuring transparency regarding the legitimacy of consumer feedback.

The FTC’s action against Career Step offers crucial lessons for businesses regarding compliance and ethical marketing practices, particularly when targeting vulnerable populations such as servicemembers and their families. Here are some key takeaways:

First and foremost, companies must understand the serious consequences of making deceptive employment claims. The FTC is particularly vigilant about misleading promises related to job placement and educational outcomes, especially for those transitioning from military to civilian life. Businesses should recognize that such claims can have a profound impact on individuals seeking reliable pathways to employment, and ensuring transparency is paramount.

Next, the importance of substantiating claims cannot be overstated. The FTC’s Policy Statement on Advertising Substantiation emphasizes the need for solid evidence to back up any assertions about placement rates, student success, or other benefits. Companies should conduct surveys and research in a methodologically sound manner, ensuring that results are presented honestly and reflect the actual experiences of consumers. Attempts to manipulate statistics for more persuasive marketing can lead to severe repercussions.

Additionally, businesses must be diligent in monitoring consumer reviews and endorsements. If a company incentivizes reviews, it must clearly communicate to consumers how to disclose any benefits received in exchange for their feedback. Companies should not only provide guidance on this process but also actively oversee compliance to ensure that reviews are genuine and transparent. Familiarizing oneself with the FTC’s Endorsement Guides is essential for maintaining ethical marketing practices.

Businesses should take a proactive approach to compliance by fostering transparency, rigorously substantiating claims, and closely monitoring consumer interactions. The FTC’s focus on protecting consumers, particularly servicemembers, serves as a reminder that integrity in advertising is crucial for long-term success and trust.

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This article is for information purposes only. It is not intended to be and should not be relied on as legal advice for any particular matter.