Sollers College to Cancel $3.4 Million in Student Debt to Resolve Charges It Used Deceptive Ads to Lure Prospective Students into Illegal Contracts
FTC, New Jersey say that the for-profit school attracted consumers by falsely touting relationships with prominent employers and inflating job placement rates
October 18, 2023
Sollers College and its parent company, Sollers Inc., have been ordered to cancel $3.4 million in student debt to resolve separate charges brought by the Federal Trade Commission and the state of New Jersey that said the companies lured prospective students to enroll by falsely touting their job-placement rates and that their relationships with prominent companies would lead to jobs after students graduate.
The for-profit school also had an illegal twist to the “income share agreements” it encouraged students to take out to pay for the school, according to the FTC’s complaint. Income-share agreements require students to pay the school a percentage of their future income in exchange for covering their tuition.
“Not only did Sollers College use deceptive advertisements to attract students, it trapped them in multi-year income share agreements that broke the law by leaving out important borrower rights,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “Today’s order cancels all income-share agreements issued by the school. Companies that skirt long‑standing consumer protection laws when offering new financing products should be on notice that the FTC takes these violations seriously.”
According to the FTC’s complaint, Sollers, and its parent company, used their website, social media, and email campaigns to falsely advertise their partnerships with prominent employers in the fields of information technology, clinical research, and drug safety. Sollers falsely claimed that its partnerships with prominent employers, such as Pfizer, Weill Cornell Medicine, and Infosys, resulted in jobs for its graduates at those companies. In reality, many of the businesses featured on Sollers’ website had no partnership with the school at all.
The complaint states that, since at least 2018, Sollers advertised that the vast majority of Sollers graduates are placed in jobs. For example, the company advertised, “90% of our students are placed within 3 months of graduation,” on its website. In reality, the job placement rate for Sollers graduates is substantially lower than the 80 percent, 82 percent, 90 percent or “near perfect” rates featured prominently on its website and in its advertising campaigns. For example, the school’s own data suggests that the current job-placement rate for graduates of its Life Sciences programs remains as low as 52 percent.
In addition, the complaint notes that Sollers encouraged students to pay for their education using income-share agreements. Under the specific terms of Sollers’s contracts, students agreed to pay Sollers a fixed percentage of their future income on a monthly basis, typically for two years. Between August 2018 and April 2021, the school entered into 392 illegal agreements, none of which included certain disclosures mandated by law. Specifically, the agreements failed to include the Holder Rule notice, which protects consumers who enter certain loans or credit contracts by preserving their right to assert claims and defenses, even if the loans or contracts are assigned to a third party. Sollers later sold a portion of the agreements to third parties.
Under the stipulated order, the for-profit is prohibited from falsely advertising any educational product or service. The order also prohibits the company from denying access to diplomas or transcripts based on any debt forgiven by the proposed order.
Specifically, Sollers must:
- stop collecting debts from students on any income-share agreements it currently holds;
- re-purchase any income share agreements it sold to third parties to stop collection efforts on those agreements;
- request that consumer reporting agencies delete the debt from consumers’ credit reports;
- and provide written notification to consumers who are receiving debt forgiveness under the proposed order.
The Commission vote authorizing the staff to file the complaint and stipulated final order was 3-0. The complaint and stipulated final order will be filed in the U.S. District Court for the District of New Jersey.
The staff attorneys on this matter are Wendy Miller and Paul Mezan of the FTC’s Bureau of Consumer Protection.
Some colleges recruit but don’t tell the truth
By Ari Lazarus Consumer Education Specialist, FTC
October 18, 2023
When a college or university claims it has relationships with well-known employers, those promises may convince people to attend — even if those promises aren’t true. That’s exactly what happened with Sollers College, according to an FTC lawsuit. Read on for advice on how to spot these schools — and avoid them.
The FTC says Sollers College recruited students with promises of high (90%) placement rates within months of graduation, and said they were partnered with well-known companies. In reality, the school’s job placement rate for some programs was as low as 52%, and many of the businesses listed had no relationship with the school at all. The FTC also says, these claims weren’t only meant to get folks in the door — they were a way to encourage students to feel confident in signing up for Income Share Agreements (ISAs) — a method of tuition financing that Sollers profited from.
As part of the settlement, Sollers College has canceled all ISAs issued by the school, resulting in $3.4 million in debt relief for students. If you went to Sollers College and had an ISA that was canceled, there is nothing you need to do to “enroll” and you don’t need to pay for this cancelation – anyone who claims you do is a scammer. For more information about the canceled ISAs, go to ftc.gov/sollers.
If you’re looking at colleges, ask questions and do your own research – and don’t rely on the statements in those glossy brochures. Go to the Department of Education’s College Scorecard to find important information about schools, like what percentage of students graduate, how much debt students have, and whether students are able to repay their loans.
Zero cheers for Sollers College’s alleged deceptive practices
By Lesley Fair
October 18, 2023
Gimme an F!
Gimme an A!
Gimme an L!
Gimme an S!
Gimme an E!
What’s that spell? “False,” of course, which – along with deceptive and unsubstantiated – is how the FTC describes claims made by Sollers Education, also doing business as Sollers College. The complaint alleges the defendants lured prospective students in with inflated job placement rates and misleading representations about employment partnerships with big-name businesses. What’s more, the defendants encouraged some students pay their tuition by giving Sollers a cut of their future salary – “income share agreements” the FTC says violated the Holder Rule. Under the terms of the proposed settlement, the defendants will cancel $3.4 million in student debt and change their marketing practices going forward.
Sollers College is a for-profit school that offers courses online and at a New Jersey campus. Charging tuition ranging from $4,000 to $27,000 for short-term programs that last a few weeks or a few months, Sollers advertises certifications in fields like IT and life sciences. A centerpiece of Sollers’ marketing efforts are claims on its website and in promotions on YouTube, Instagram, and other social media emphasizing graduates’ supposed success in finding employment quickly. For example, one ad touted that “90% of our students are placed within 3 months of graduation.” Elsewhere, Sollers said, “We record an 82% placement rate within three months of graduation.” Sollers also sent emails to prospective students, claiming to have a “near perfect” success rate in placing graduates in jobs.
And it wasn’t just any old job. Sollers claimed that its partnerships with leading companies like Pfizer, Weill Cornell Medicine, and Infosys resulted in jobs for Sollers’ graduates with those businesses. The “Testimonials” and “Success Stories” pages on Sollers’ site featured the logos of more than 20 companies that Sollers described as “Our Employer Partners.”
That’s what Sollers told prospective students, but the FTC says the defendants’ actual “report card” tells a different story. According to the complaint, the defendants had “no reasonable basis for their 80%, 82%, 90%, or ‘near perfect’ job placement claims, much less that they are able to do so within 3 months of graduation.” So where do those figures come from? The FTC alleges that “Defendants inflate the number of students they claim to ‘place’ by including anyone who does not communicate with Sollers after graduating.” In fact, Sollers’ own data suggest that the current job placement rate for its Life Sciences graduates is as low as 52%.
What about those “partnerships” with the “industry-leading corporations” whose names or logos appeared on Sollers’ site? According to the FTC, many of those businesses “have no partnership with the school whatsoever, much less one that results in Sollers graduates getting jobs at those companies.” For example, in May 2022, Weill Cornell Medicine sent Sollers a cease-and-desist letter demanding the removal of its name and logo from the site because the claim it was an “employer partner” or “corporate partner” was “false and misleading.” Staffing company Aerotek sent a similar letter demanding that Sollers remove its name and logo.
But those aren’t the only illegalities Sollers allegedly inflicted on students. Sollers encouraged some students to enter into “income share agreements” (ISAs) that require students to cover the cost of tuition by paying the school a share of their future income – generally 10%-20% for two years. You’ll want to read the complaint for details, but the gist of the agreements is that the cost of tuition was converted into a debt obligation that students had to repay. Depending on the terms of their specific ISA and possible loan payment deferments, some Sollers graduates found themselves paying for as long as six years. Sollers made the failure to pay particularly costly for students, reserving the right to collect a lump-sum payment – generally around $45,000 plus fees and collection costs.
The complaint alleges that “approximately 90% of students who entered into ISAs with Sollers are either actively in repayment or defaulted on their agreements and now owe Sollers a fixed amount.” The FTC says Sollers has responded by turning over accounts of many defaulting graduates to third-party debt collectors.
A closer look at many of Sollers’ ISAs reveal that they failed to include mandatory notices required by the FTC’s Holder Rule to protect consumers. Under the Rule, consumer credit contracts must include this notice informing consumers of their right to assert claims and defenses about the seller’s misconduct – for example, that the seller made deceptive representations – against any holder of the contract:
NOTICE
ANY HOLDER OF THIS CONSUMER CREDIT CONTRACT IS SUBJECT TO ALL CLAIMS AND DEFENSES WHICH THE DEBTOR COULD ASSERT AGAINST THE SELLER OF GOODS OR SERVICES OBTAINED PURSUANT HERETO OR WITH THE PROCEEDS HEREOF. RECOVERY HEREUNDER BY THE DEBTOR SHALL NOT EXCEED AMOUNTS PAID BY THE DEBTOR HEREUNDER.
By omitting that key consumer protection requirement, the defendants violated the Holder Rule, alleges the FTC.
In addition to prohibiting misrepresentations about any educational product or service, the proposed settlement will cancel all of Sollers’ income share agreements. Under the order, Sollers also must stop collecting debts from students on ISAs it currently holds, buy back ISAs it sold to third parties, ask credit bureaus to delete the debt from consumers’ credit reports, and directly notify the consumers who will receive the $3.4 million in debt forgiveness. Sollers also can’t deny consumers access to diplomas or transcripts based on any debt forgiven by the proposed order.
If you’re familiar with cases the FTC has brought against other for-profit educational companies, the proposed order provisions about deceptive job placement rates and employer partnerships should look familiar. But the case also offers a key compliance message with implications far beyond that sector: If your company is considering a “new” type of financing product, carefully consider your obligations under long-standing consumer protection laws and rules.
发表回复