FTC sues Grand Canyon University over alleged deceptive advertising

The Federal Trade Commission (FTC) filed a lawsuit Wednesday against Grand Canyon University (GCU) and its chief executive, alleging the nation’s largest Christian university engaged in deceptive advertising and illegal telemarketing.

The complaint, filed in federal court in Arizona, names as defendants Grand Canyon Education (GCE) Inc., GCU and Brian Mueller, who is the chief executive officer of GCE and president of GCU, which is already appealing a record-setting $37.7 million fine from the Department of Education over alleged deceptive practices.

The FTC accuses the defendants of “deceiving prospective doctoral students about the cost and course requirements of its doctoral programs and about being a nonprofit, while also engaging in deceptive and abusive telemarketing practices.”

The FTC claimed the defendants violated the FTC Act and the Telemarketing Sales Rule and asked the court to “provide redress to consumers and prohibit the institution from further violations of the law.”

“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,” Samuel Levine, director of the FTC’s Bureau of Consumer Protection, said in a press release.

“We will continue to aggressively pursue those who seek to take advantage of students,” he added.

In the complaint, the FTC claimed that less than 2 percent of doctoral program graduates at GCU completed their studies within the cost that GCU advertises for the program, citing the Department of Education.

While GCU says the total cost of the “accelerated” doctoral programs was equal to the cost of 20 courses, or 60 credits, in reality, according to the FTC, students were required to take additional “continuation courses,” adding thousands of dollars to the total cost. The FTC said nearly 78 percent of the students take five or more of these continuation courses.

The complaint comes after the Department of Education last month fined the school over allegations it lied to students about the cost of the programs.

Mueller at the time called the fine “ridiculous” and questioned whether the school was being targeted on the basis of its faith. The school said it was appealing the fine and pledged to file a federal lawsuit if the appeal fails.

In the recent complaint, the FTC also claimed the school was deceptively marketed as a nonprofit, even though GCE and its investors profited off the school.

According to the FTC, the school pays 60 percent of its revenue to GCE as part of an agreement designating GCE as the exclusive provider of services related to the university. It also claims Mueller profits off the school, benefiting as CEO and stockholder of GCE and receiving bonuses tied to GCE’s performance.

To boost enrollment, according to the FTC, the defendants also urged prospective students to submit their information on digital forms and then used that information to contact them, even when the prospective students asked not to be called. The FTC alleged the defendants contacted people on the National Do Not Call Registry.

In a lengthy statement responding to the lawsuit, a media representative for GCU said the school “categorically denies these unsubstantiated allegations and will take all measures necessary to refute them.”

The statement echoed the sentiment in Mueller’s remarks last month and highlighted the school’s Christian affiliation. 

“Given the major problems that exist in higher education … it is baffling that the federal government has chosen to target a Christian university that is addressing those issues in very positive ways,” the university said in the statement. “No other institution in higher education is facing this level of government scrutiny, which speaks volumes about these agencies’ motivations and agenda.”