FTC complaint charges Grand Canyon University with deceptive advertising and illegal telemarketing

According to a five-count complaint filed against Grand Canyon Education, Inc., Grand Canyon University, and Brian E. Mueller, the FTC alleges the defendants misrepresented Grand Canyon University as a nonprofit institution, made misleading claims about the cost and course requirements of its doctoral programs, and engaged in deceptive and abusive telemarketing practices, in violation of the FTC Act and the Telemarketing Sales Rule.

Grand Canyon University (GCU) began operating as a for-profit institution in 2004 and in 2008, Grand Canyon Education (GCE) became a publicly traded company. After some corporate transactions in 2018, the defendants began promoting GCU as a private “nonprofit” university. But as the complaint alleges, GCU has been operated for the profit of GCE and its stockholders, and pays 60% of its revenue to GCE pursuant to an agreement designating GCE as the exclusive provider for most university-related services. Despite that arrangement, the FTC says the defendants have deceptively claimed in print, online, and in social media that GCU is a nonprofit institution.

The complaint also alleges the defendants have told students interested in pursuing a doctorate that the total cost of GCU’s “accelerated” doctoral programs was equal to the cost of just 20 courses (or 60 credits). But according to the FTC, GCU “very rarely awards doctoral degrees to students upon completion of 60 credits” and, in fact, requires that almost all doctoral students take additional “continuation courses” which cost students thousands of dollar more. The complaint further alleges that “[m]ost of the students that enroll in GCU doctoral programs never receive the doctoral degree for which they enrolled” and that many of them “are thwarted because they cannot afford the additional costs and time.”

The FTC also says the defendants used illegal telemarketing tactics to try to boost enrollment at GCU. The complaint charges that the defendants made material misrepresentations about GCU and its services in telemarketing calls, called numbers on the National Do Not Call Registry, and continued to call people who had previously directed Grand Canyon not to contact them. The FTC says the defendants also made illegal calls to numbers it bought from lead generators.

The case is pending in an Arizona federal court. Even at this early stage, the action demonstrates the FTC’s commitment to protect consumers from alleged misrepresentations and illegal conduct related to education.