FTC Steps on Career Step and Alleged Inflated Promises of Employment Opportunities

In July, the Federal Trade Commission (FTC) brought a complaint against Career Step LLC for targeting servicemembers with misrepresentations concerning Career Step’s ability to match its customers with jobs in the healthcare industry.

Career Step claimed to offer career training and certification programs that will find its participants the perfect job, but the FTC alleges that the company in fact only provides résumé drafting assistance and forwards job listings that are otherwise available on the internet. The FTC alleged that among Career Step’s misrepresentations are claims that “more than 80% of its graduates” are successfully employed in their field of study. According to the FTC, such statistics are based on a survey that represents only 5% of enrollees and 24% of program completers, which the agency says it considers to be too small a pool to support such representations.

Moreover, the FTC maintained that Career Step exaggerates its partnerships in the healthcare industry and its ability to provide its customers with externships as part of its program. First, according to the FTC, Career Step allegedly misrepresented agreements with major healthcare providers, such as CVS, by implying those agreements were related to job placement opportunities for Career Step’s customers. The FTC says they were not.

Second, the FTC alleged that less than 10% of students, who specifically required externships to complete Career Step’s program, were actually placed in the required externships. According to the agency, this prevented students from completing their programs, thereby wasting the money they paid Career Step in the first place or forcing students to extend those programs for as much $999 in additional fees. For this reason, and others, the FTC said, most students were unable to complete their Career Step programs in the four months or less that the company promised on its website.

Finally, the FTC alleged that Career Step compounded the above deception by running a deceptive review incentive program that offered students free extra time to complete their programs in exchange for positive reviews. Students would leave these improperly incentivized reviews on various third-party websites, which gave the false impression that they reflect the unbiased opinions of uncompensated Career Step students.

The FTC alleged that these actions violated Section 5 of the FTC Act, the misrepresentation provisions of the Gramm-Leach-Bliley Act, and the Telemarketing Sales Rule. To settle these claims, Career Step agreed to pay $27.8 million in debt cancellation and $15.7 million in cash that will be used to provide redress to consumers who were harmed by its deceptive advertising.

Career Step will also be prohibited from making several categories of misrepresentations, including, but not limited to:

• Employment, hiring, or career prospects
• The number or percentage of consumers who obtain employment
• Whether any individual was employed, was hired, or obtained a job as a result of Career Step’s educational products or services
• Partnerships with any companies or employers

Furthermore, Career Step will be required to inform any third-party websites that display Career Step’s misleading incentivized reviews of the FTC order and have the reviews removed. For more insights into advertising law, bookmark our All About Advertising Law blog and subscribe to our monthly newsletter. To learn more about Venable’s Advertising Law services, click here or contact one of the authors. And listen to the Ad Law Tool Kit Show—a new podcast from Venable.