Antitrust Lawyer Blog Commentary on Current Developments

Repeat Offenders Can No Longer Sell Academic Goods and Services

An operation that sold bogus college financial aid services was permanently banned on July 6 from selling academic goods or services for repeatedly violating court orders. The Federal Trade Commission (“FTC”) originally charged that the defendants promised better college financial aid packages than someone could find on their own, which they did not deliver.
Settlement of those charges barred the defendants from making deceptive claims and the defendants then violated the order by continuing their deceptive marketing practices. The judge found the defendants in contempt and ordered them to provide refunds to consumers. The FTC charged the defendants with contempt for a second time for failing to provide those refunds.

In 2003, the FTC accused Integrated Capital, Inc., doing business as National Student Financial Aid, and its owner Alan Wilson, of misrepresenting that if consumers bought certain academic goods and services that they would be more likely to get college financial aid than they would on their own. The court order to settle those charges prohibited them from misrepresenting information about academic goods or services and required the company and its officers to make certain disclosures when selling their products.

According to the FTC, however, the company and its new owner continued to make the misrepresentations during their sales seminars and did not make the disclosures required by the court order. The court found the defendants in contempt and ordered them to contact everyone who bought their service between August 6, 2003, and July 17, 2004, to offer a full refund to anyone who was dissatisfied.

The FTC alleged the company and its owner again violated the court order. Instead of providing refunds, they sent a “survey” asking customers to check a box to indicate whether they were “satisfied” or “dissatisfied”. The letters did not mention the refunds or the court order, and did not contain a return envelope for the surveys. After receiving refund requests totaling $350,000, the defendants claimed they were financially incapable of providing the refunds, but did not back up that claim with records. The defendants later filed for bankruptcy.

The order entered permanently bans the defendants from selling academic goods or services. In addition to the ban, the defendants are also prohibited from making various misrepresentations in connection with the sale of any good or service and are prohibited from violating the Cooling Off Rule and the Truth in Lending Act.

Authored by

Camelia C. Mazard
202-589-1837
cmazard@dbmlawgroup.com