FTC Sues Grand Canyon University, Alleging Deceptive Practices Targeting Doctoral Students

The Federal Trade Commission (FTC) has filed a lawsuit against Grand Canyon University, its parent company, and its CEO, accusing them of deceiving prospective doctoral students regarding program costs, requirements, and the university's tax status. The legal action claims that Grand Canyon misrepresented itself as a nonprofit institution, violating federal rules against deceptive telemarketing practices.

Deceptive Practices and Nonprofit Status Dispute

The FTC's lawsuit alleges that Grand Canyon University, despite presenting itself as a nonprofit, has been operated for the profit of Grand Canyon Education, the for-profit company providing marketing services to the university. The legal dispute also extends to the university's tax status, with ongoing challenges over its conversion to nonprofit status. The IRS recognizes Grand Canyon as a nonprofit, but the Education Department's approval is pending.

Financial Ties and Leadership Structure

The lawsuit highlights financial ties between Grand Canyon University and Grand Canyon Education. The university reportedly pays 60% of its revenue to Grand Canyon Education, and Brian Mueller, the university's president, is also the CEO and a stockholder of the for-profit company. The FTC claims that Grand Canyon University is the primary revenue source for Grand Canyon Education.

Alleged Violations and Deceptive Telemarketing

The FTC accuses both entities of violating federal rules against deceptive telemarketing practices. The alleged violations include contacting individuals on the National Do Not Call Registry and reaching out to those who requested not to be contacted by the university. The lawsuit contends that Grand Canyon University and Grand Canyon Education provided understated cost estimates for completing the university's accelerated doctoral programs.

Ongoing Legal Battles and University Response

Grand Canyon University has been embroiled in legal battles, including a current $37.7 million fine related to the advertising of doctoral program costs. In October, the Education Department accused the university of misleading over 7,500 students about program costs, stating that their degree program would range from $40,000 to $49,000. The department argued that the figures did not account for the continuation courses required to complete the dissertation program, leading to a misleading representation.

Responding to the recent FTC lawsuit, Grand Canyon University released a statement characterizing the action as another instance of the Biden administration using federal agencies to target institutions ideologically opposed to them. The university asserted its lawful recognition as a nonprofit by the IRS, the State of Arizona, and the Higher Learning Commission.

Complexities Surrounding Educational Targets and Financial Disputes

This legal development adds another layer of complexity to Grand Canyon University's ongoing disputes, encompassing its tax status, program advertising, and now allegations of deceptive practices. As the legal battles unfold, questions regarding the university's leadership structure, financial arrangements, and compliance with federal regulations come to the forefront. The outcome of these legal proceedings could have implications not only for Grand Canyon but also for how educational institutions navigate financial relationships and communicate with prospective students.

In conclusion, the intersection of legal challenges, financial intricacies, and regulatory compliance places Grand Canyon University in a spotlight that extends beyond its campus. As the FTC pursues allegations of deceptive practices, the case raises broader discussions about transparency, accountability, and the responsibilities of educational institutions to accurately represent their offerings to students. The legal outcome will likely influence the landscape of higher education, emphasizing the need for institutions to uphold ethical standards in their interactions with students and the public.