$43.5 million in redress and debt cancellation to servicemembers, military spouses, and other consumers due to multiple missteps by education provider Career Step

July is designated as Military Consumer Month, but a $43.5 million proposed FTC settlement with a company called Career Step serves as a reminder that when it comes to protecting servicemembers and their families from deceptive practices, every month is Military Consumer Month at the FTC. Even if your company doesn’t operate in that sector, this FTC action offers guidance about truth in advertising, ad substantiation, consumer reviews, and other legal fundamentals.

Georgia-based Career Step pitches online educational services to help consumers “prepare for certification, connect with employers, and advance their careers” in the healthcare industry as medical billers and coders, medical or dental assistants, pharmacy technicians, etc. Although the coursework is online, many of the programs also require in-person externships. Career Step promotes its services through online ads, email marketing, and social media, and uses both sales representatives and conversational artificial intelligence software to convince consumers to enroll.

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Career Step’s promotional efforts cast a wide net, but according to the company, its “key audience” is servicemembers and their families. For example, the company has touted its “partnerships” with various government-sponsored tuition assistance programs for servicemembers and military spouses. In addition, Career Step advertises in military-focused publications and promotes its programs at military job fairs. On its website, the company claims to have enrolled over 150,000 consumers, including “over 20,000 Soldiers, Marines, Airmen, Coasties, Sailors, and their Spouses.”

According to the complaint, Career Step promised consumers they would complete their program in less than six months and made eye-catching employment outcome representations, including claims that “most learners” and “84% of graduates get jobs in their field.” The FTC says the company doubled down on those claims in promotions that targeted military spouses, repeating that 84% representation in response to a blog post titled “Why Career Step is Perfect for Military Spouses” and in a company-sponsored article on “The Work at Home Wife” webpage.

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The FTC says Career Step also promised students it would provide job placement and reinforced that representation by touting its “Trusted Employer Network” of prominent companies in the healthcare field. For example, one company representative told a prospective enrollee that “We’re the only program that is partnered and contracted with employers.” Another salesperson claimed, “We’ll make sure that as soon as you’re done with the program that you are walking into a job in one of those facilities . . . We’ll kind of do all the groundwork for you, you just kind of have to show up and smile, show up for the interview itself.” The FTC says Career Step made similar promises to place consumers in externships: “We set up everything for you, that’s the really cool part. You don’t have to do anything. . . . You can pick and choose your schedule, you can go in and get it done whenever you want.”

In addition, people who searched for reviews of Career Step on Google, Trustpilot, or the Better Business Bureau’s site found what appeared to be laudatory endorsements by Career Step customers. 

That’s what Career Step said to prospective enrollees, but the FTC says the facts belie those promises. According to the complaint, most Career Step enrollees never completed their program, and those that did complete typically needed much longer than six months. The lawsuit alleges the average time-to-completion for Career Step students who enrolled in 2020 was more than 16 months.

What’s more, Career Step’s purported substantiation for its employment outcome claims is based entirely on an optional survey sent only to consumers who completed their program. The FTC’s initial concern is that “the percentage of Career Step consumers who completed the program was 25% or less per year.” Compounding that problem is the fact that out of the 9,330 enrollees and 2,126 people who completed the program since 2020, only 505 actually responded to the survey – in other words, 5% of enrollees. The complaint alleges that the company’s skewed stats can’t support its expansive employment claims. But even taking the survey results at face value, Career Step’s employment outcome claims would still be false. Of the consumers who answered the “Are you employed?” prompt in the survey, 66% answered “No.” Meaning about 2% of enrolled consumers or about 8% of program completers are actually employed. Not “most” and certainly not 84% even under this flawed calculation method.

The complaint alleges Career Step’s claim of job placement connections with employers is also deceptive. In reality, Career Step’s agreements with healthcare companies had nothing to do with hiring, and Career Step didn’t offer job placement to graduates. The FTC says Career Step’s externship promises were similarly empty. Even for people who met the company’s undisclosed “prequalification steps,” the complaint alleges that “most Career Step students – even of those in externship-required programs – never get an externship.”

What about those reviews from Career Step enrollees? According to the complaint, the company offered them an incentive – an extension on their training program – to get them to post reviews on Google, Trustpilot, and the BBB website. Although an email from Career Step told them to “[b]e sure to disclose within the review, the additional one-month access to the course you will receive for leaving the review, as per the FTC guidelines,” the FTC says Career Step knew that no such disclosure was included in many reviews and yet did nothing to correct the failure to disclose the material connection between the consumer and the company.

The complaint alleges the company violated the FTC Act by making multiple misrepresentations about the benefits of its programs, falsely claimed that reviews on third-party websites were independent, and failed to disclose the connection between the company and the endorser. Because Career Step made misrepresentations in the course of telemarketing, the complaint also alleges the company violated the Telemarketing Sales Rule. In addition, the FTC says Career Step violated the Gramm-Leach-Bliley Act by making “false, fictitious, or fraudulent” statements to get customer information from a financial institution. 

Under the proposed settlement, Career Step will pay $15.7 million in consumer redress and will cancel $27.8 million in debts owed by current or former students who enrolled between February 2020 and February 2023. In addition to broad injunctive provisions that will change how Career Step does business going forward, the company must notify each third-party platform that features reviews Career Step obtained through an undisclosed incentive and ask them to remove those reviews immediately.

What can other companies take from the FTC’s action against Career Step?

The FTC looks with disfavor on deceptive employment claims, especially ones targeting members of the military and their families. In recent years, the FTC has developed a solid record of taking action against companies that lure people in with misleading promises about employment prospects or other purported benefits of educational programs. Claims of that nature can be especially injurious to servicemembers preparing for civilian life and for military spouses looking for flexible work opportunities. Americans who want to do right by our defenders – including those among us who grew up in military families or who currently serve their country with honor – should know that companies that claim to “Support Our Troops” but really “Sell Short Our Troops” will remain a top law enforcement priority for the FTC. Visit our Military Consumer site for resources.

Substantiate your objective claims. The FTC’s long-standing Policy Statement Regarding Advertising Substantiation isn’t just for pills and potions. You also must have solid proof to support claims you make about placement, student success, employment, etc. Surveys might be part of your overall substantiation portfolio, but only if they’re conducted in a methodologically sound fashion and take into account how consumers are likely to understand the reported results. Avoid the temptation to fidget with the digits in an effort to craft a more persuasive claim. The complaint cites an email from Career Step’s CFO to its CEO, stating “If we send out 100 surveys and only 10 people took it and 6 people responded that they got a job with the help of our training, then placement rate = 60%.” That’s not how conscientious companies craft legally compliant marketing claims.

When it comes to consumer reviews, monitor what others are doing on your behalf and take action if they’re not following the law. In creating incentives to get consumers to write reviews, Career Step’s supposedly advised them about disclosing the benefit they received in exchange for posting. But the alleged ineffectiveness of that instruction suggest two compliance pointers. First, be clear about what consumers need to say about the compensation they receive and how they should disclose that fact. Second, monitor what they’re doing on your behalf and follow through if they aren’t complying with your instructions. Read FTC’s Endorsement Guides: What People Are Asking for advice.