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Grand Canyon Education, Inc. (NASDAQ:LOPE) and Grand Canyon University (GCU) have been sued by The Federal Trade Commission for deceiving prospective doctoral students about the cost and course requirements of its programs.
The Federal Trade Commission has also filed suit against Brian Muelle - the CEO of GCE and president of GCU.
The parties were sued for being a nonprofit and engaging in deceptive and abusive telemarketing practices.
The FTC's complaint says that, despite operating the school for the profit of GCE and its investors, the defendants deceptively marketed the school as a nonprofit.
In the complaint filed in federal court, the FTC said that GCU and GCE told prospective students that the total cost of GCU's "accelerated" doctoral programs was equal to the cost of just 20 courses (or 60 credits).
In reality, the school requires that almost all doctoral students take additional "continuation courses" that add thousands of dollars in costs.
The U.S. Department of Education reported that fewer than 2% of GCU doctoral program graduates completed their program within the cost that GCU advertises, and almost 78% of these students take five or more continuation courses.
According to the complaint, the defendants also used abusive telemarketing calls to try to boost enrollment at GCU.
"Grand Canyon deceived students by holding itself out as a non-profit institution and misrepresenting the costs and number of courses required to earn doctoral degrees," said Samuel Levine, Director of the FTC's Bureau of Consumer Protection. "We will continue to aggressively pursue those who seek to take advantage of students."
The commission vote authorizing the staff to file the complaint was 3-0. The complaint was filed in the U.S. District Court for the District of Arizona.
Price Action: LOPE shares closed lower by 0.74% to $141.56 on Wednesday.
Posted In: LOPE
