[Federal Register Volume 63, Number 153 (Monday, August 10, 1998)]
[Rules and Regulations]
[Pages 42570-42574]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-21296]
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FEDERAL TRADE COMMISSION
16 CFR Part 254
Guides for Private Vocational and Distance Education Schools
AGENCY: Federal Trade Commission.
ACTION: Final rule.
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SUMMARY: The Federal Trade Commission (FTC or Commission) announces
final amendments to its Guides for Private Vocational Schools to: add a
provision addressing misrepresentations regarding the availability of
employment after completion of training or the success of a school's
graduates in obtaining employment; streamline the Guides by eliminating
redundancies and provisions that do not offer guidance specific to
vocational schools; and change the title of the Guides.
EFFECTIVE DATE: This rule is effective October 9, 1998.
ADDRESSES: Requests for copies of the amended Guides should be sent to
the Consumer Response Center, Room 130, Federal Trade Commission, Sixth
St. and Pennsylvania Ave., NW, Washington, DC 20580.
FOR FURTHER INFORMATION CONTACT:
Joseph J. Koman, Jr., (202) 326-3014, Carol Jennings (202) 326-3010, or
Walter Gross III, (202) 326-3319, Federal Trade Commission, Bureau of
Consumer Protection, Sixth St. and Pennsylvania Ave., NW, Washington,
DC 20580.
SUPPLEMENTARY INFORMATION:
I. Background
The Vocational Schools Guides, adopted by the Commission in 1972,
are intended to advise proprietary businesses offering vocational
training courses, either on the school's premises or through
correspondence or another long-distance method, how to avoid unfair or
deceptive advertising and promotional claims when recruiting and
enrolling students. The Guides address claims that are descriptive of
the school, such as potentially deceptive trade or business names, and
claims about accreditation, content of curricula, teachers'
qualifications, teaching methods, affiliations with other private or
public entities, and approval by other agencies or institutions. The
Guides also address misleading representations regarding financial
assistance and program costs, as well as enrollment qualification or
limitations. Schools are cautioned to avoid using classified
advertisements that appear to be ``help-wanted'' ads, misleading
prospective students about opportunities for employment while
undergoing training, and the deceptive use of diplomas or degrees. The
Guides suggest certain affirmative disclosures prior to enrolling
students and address miscellaneous sales and debt collection practices.
These Guides, like other industry guides issued by the Commission,
are ``administrative interpretations of laws administered by the
Commission for the guidance of the public in conducting its affairs in
conformity with legal requirements.'' 16 CFR 1.5. Conduct inconsistent
with the Guides may result in corrective action by the Commission under
applicable statutory provisions.
As part of the Commission's systematic review of all of its rules
and guides, the Commission published a request for comments concerning
the Vocational Schools Guides on April 3, 1996 (61 FR 14685). The
Commission sought information about the costs and benefits of the
Guides and their regulatory and economic impact. In response to this
notice, nine comments were filed by government agencies, consumers and
consumer organizations, and industry members and trade associations.\1\
These comments indicated general support for relating the Guides,
although some industry members recommended repealing them.
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\1\ Comments were filed by the New York Regional Office of the
U.S. Department of Education Office of Postsecondary Education (two
comments); New York State Beauty Schools Association, Inc.; National
Consumer Law Center; Career College Association; Distance Education
and Training Council; Colorado Aero Tech; American Association of
Cosmetology Schools; and one individual consumer.
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On April 23, 1997, the Commission announced its decision to retain
the Guides and sought supplemental comment on some proposed
modifications (62 FR 19703). The Commission recognized that there is
some overlap between its Guides and regulations of the Department of
Education. Because the Department of Education administers student loan
and grant money for vocational training, it plays the primary role in
addressing abuses in this industry. There is a concurrent role for the
Commission, however, in monitoring and addressing deceptive promotional
practices.\2\ State licensing agencies also regulate vocational
training. Increasingly, however, vocational schools are owned by
national or regional chains; thus, a federal enforcement presence
remains important.
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\2\ For example, the Department of Education uses its
investigative and enforcement resources primarily to address
practices occurring after a student has signed up for training,
rather than advertising and promotional practices that take place
during recruitment of students.
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[[Page 42571]]
In its second Federal Register notice, the Commission also sought
comment on various proposed amendments to the Guides. In particular,
the Commission proposed adding to the Guides a provision addressing
misrepresentations about a school's placement success following
training. While the 1972 Guides addressed claims about placement
assistance and the availability of employment during training, they did
not address false or deceptive claims about employment prospects after
graduation or the success that a school's graduates have realized in
obtaining employment related to the training. The Commission believes
that such claims are important to prospective students of vocational
training and are likely to become even more important in the future.
At the same time, in order to streamline the Guides, the Commission
announced a preliminary decision to delete certain provisions that were
not specific to vocational schools and merely duplicated other general
provisions of law, as well as a section suggesting various affirmative
disclosures prior to the signing of a contract.
II. Amendments to the Guides
The Committee received comments from 39 parties, representing eight
government agencies and one association of state regulators, five
industry trade associations, an accrediting commission for cosmetology
schools, 21 vocational schools in eight states, one consumer
organization, and one individual consumer.\3\ The proposed addition to
the Guides was generally supported by the government agencies and
consumer representatives and generally opposed by the vocational
schools and industry trade associations. Oppositions to the proposal
seems to be based upon a misperception that this statement in the
Guides would somehow increase burdens on schools already subject to
regulations of the Department of Education and state agencies.\4\ The
amendment does not create new requirements, however. As explained in
the Background section, above, the Guides merely clarify the
Commission's interpretation of its existing laws.
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\3\ The comments are listed here with the number assigned to the
comment by the Office of the Secretary: (1) Career College
Association; (2) Texas Higher Education Coordinating Board,
Community and Technical Colleges Division; (3) Silicon Valley
College; (4) Microcomputer Technology Institutes; (5) Alta Colleges,
Inc.; (6) National Accrediting Commission of Cosmetology Arts &
Sciences; (7) Mr. Clifton L. Stewart; (8) Eton Technical Institute;
(9) Pittsburgh Beauty Academy; (10) Seattle Massage School; (11)
Divers Institute of Technology; (12) Pittsburgh Beauty Academy of
Charleroi; (13) International Air Academy; (14) Pittsburgh Beauty
Academy of New Kensington; (15) Private Career School Association of
New Jersey; (17) Apex Technical School; (18) Pennsylvania
Association of Private School Administrators; (19) American
Association of Cosmetology Schools; (20) Florida Association of
Postsecondary Schools and Colleges (21) Gene Juarez Academy of
Beauty; (22) and (26) National Association of State Administrators
and Supervisors of Private Schools (also attaching comments by the
Wisconsin Educational Approval Board, Florida Department of
Education, Idaho Department of Education, Washington Workforce
Training and Education Coordinating Board, Tennessee Higher
Education Commission, and Georgia Nonpublic Postsecondary Education
Commission); (23) The Chubb Institute (North Burnswick, N.J.); (24)
and (25) The Chubb Institute (Parsippany, N.J.); (27) National
Consumer Law Center; (28) Yorktowne Business Institute; (29) Laurel
Business Institute; (30) Montgomery County (MD) Department of
Housing and Community Affairs, Division of Consumer Affairs; (31)
Central Pennsylvania School of Massage; (32) Corinthian Colleges,
Inc.; (33) South Hills Business School; (34) Harris School of
Business; and (35) Technical Career Institute. These comments, as
well as the comments filed in response to the earlier notice, are on
the public record and available for inspection during business hours
at the Federal Trade Commission, Room 130, Sixth St. and
Pennsylvania Ave., NW, Washington, DC 20580.
\4\ Some comments apparently believed that if the proposed
language were adopted, they would be required to report employment
information to the Commission. The Guides do not impose any
reporting requirements, however.
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Like other Guides adopted by the Commission, the Vocational Schools
Guides provide businesses with information regarding the application of
Section 5(a)(1) of the FTC Act, 15 U.S.C. 45(a)(1), to a particular
industry or a specific type of marketing. Section 59a)(1) declares
unlawful ``unfair or deceptive acts or practices in or affecting
commerce.'' The Commission has set forth its interpretation of its
Section 5 authority in its Deception Policy Statement,\5\ its Policy
Statement Regarding Advertising Substantiating Doctrine,\6\ and its
Unfairness Policy Statement.\7\ The Commission will find an
advertisement deceptive if it contains a representation or omission of
fact that is likely to mislead consumers acting reasonably under the
circumstances, and that representation or omission is material to the
decision to purchase. In addition, objective claims about a product or
service imply that they are supported by valid evidence. It is
deceptive, therefore, to make a claim unless, at the time is made, the
marketer possess and relies upon a reasonably basis substantiating the
claim. The Commission will find an advertisement or practice unfair if
it causes, or is likely to cause, substantial consumer injury that is
not reasonably avoidable by consumers and is not outweigh
countervailing benefits to consumers or competition.
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\5\ Letter from the Commission to the Honorable John D. Dingell,
Chairman, Committee on Energy and Commerce, U.S. House of
Representatives (Oct. 14, 1983); reprinted in Cliffdale Associates,
Inc., 103 F.T.C. 110, appendix (1984).
\6\ 49 FR 30999 (1984); reprinted in Thompson Medical Co., 104
F.T.C. 648, appendix (1984).
\7\ Letter from the Commission to Senators Wendell Ford and John
Danforth (Dec. 17, 1980); reprinted in International Harvester Co.,
104 F.T.C. 949, 1070 (1984).
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Consumers considering enrolling in a vocational school are likely
to rely upon claims with regard to employment prospects upon completion
of training and the success of a schools' graduates in securing
employment relevant to the training. Generally, the prospective student
will not be in a position to verify the accuracy of the claim prior to
enrollment and must rely upon the representations of the school. As
stated in the comment of the National Consumer Law Center:
The essence of a vocational school sales presentation is the
availability of employment following graduation. Misrepresentations
of these jobs prospects are certainly material is not only the
student's decision to invest a sizable amount of money in the
schooling, but also considerable amount of the student's time.\8\
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\8\ Comment 27 at page 1.
For example, a claim that a school has a ``90% job placement'' rate
could be highly persuasive to an individual seeking training. If in
fact the placement success is significantly lower than 90%, the claim
would also be deceptive. Similarly, a claim could be deceptive if
significant information is omitted. For example, a claim that ``90% of
graduates find jobs'' could be deceptive if only a small percentage of
those who enroll in the program are able to complete it and graduate.
The claim also could be deceptive if a significant number of graduates
cannot obtain the kind of employment for which the purportedly were
trained, but have to accept other lower level positions at a lower
salary.
As noted in a number of industry comments, Department of Education
regulations also address employment claims by vocational schools. For
example, regulations setting out standards for participation in federal
student financial assistance programs state that school that advertise
job placement rates will make available to prospective students, at or
before the time of enrollment:
(i) The most recent available data concerning employment
statistics, graduation statistics, and any other information
necessary to substantiate the truthfulness of the advertisements;
and
(ii) Relevant State licensing requirements of the State in which
the institution is located for any job for which an educational
[[Page 42572]]
program offered by the institution is designed to prepare those
prospective students.\9\
\9\ 34 CFR 668.14(b)(10).
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In addition, the Department of Education ``may initiate a proceeding *
* * against an otherwise eligible [for participation in the federal
student financial assistance programs] institution for any substantial
misrepresentation * * * regarding the nature of its educational
program, its financial charges or the employability of its graduates.''
\10\ Specific examples of such misrepresentations include (but are not
limited to) ``false, erroneous of misleading statements--
\10\ 34 CFR 668.71(a).
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(a) That the institution is connected with any organization or
is an employment agency or other agency providing authorized
training leading directly to employment;
(b) That the institution maintains a placement service for
graduates or will otherwise secure or assist its graduates to obtain
employment unless it provides the student with a clear and accurate
description of the extent and nature of this service or assistance;
or
(c) Concerning government job market statistics in relation to
the potential placement of its graduates.'' \11\
\11\ 34 CFR 668.74.
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Parts (a) and (b) above are also addressed by the FTC Guides, for
example in Secs. 254.2(b)(2), 254.4(a)(7), and 254.7(a). The Guides
have not, however, until the revisions announced herein, specifically
addressed deceptive claims regarding employability after graduation or
the success a school's graduates have realized in obtaining employment
relevant to the training. In addition, the proposed language has been
modified to include misrepresentations about salaries that can be
expect upon completion of the training. The addition to the Guides of
Sec. 254.4(d) merely complements Department of Education oversight of
these schools, as it also provides industry-specific guidance with
regard to the broad proscription of Section 5 of the FTC Act.
Sections 254.8, 254.9, and 254.10 have been removed from the Guides
to streamline them, eliminate repetition, and eliminate general
principles articulated elsewhere in the CFR. Many of the areas
addressed in Sec. 254.8 are already covered by the Commission's Guides
Against Deceptive Pricing, 16 CFR 233, and Guide Concerning Use of the
Word ``Free'' and Similar Representations, 16 CFR 251. In addition,
section 254.7 of the Vocational Schools Guides, describing deceptive
sales practices, has been revised to include a provision noting that
prior to enrollment students should be informed of the total costs of
the program and the school's refund policy for students who drop out
before completion.
Section 254.9 addressed debt collection and credit practices. These
have been largely superseded by other laws. Debt collection agencies
attempting to collect on behalf of an industry member are covered by
the Fair Debt Collection Practices Act, 15 U.S.C. 1692. Moreover, under
the Commission's Rule on Preservation of Consumer Claims and Defenses
(``Holder-in-Due-Course'' Rule), 16 CFR 433, the right of a consumer to
assert seller misrepresentations in defending against a collection
action is preserved even if the credit contract is assigned to a third
party.
Section 254.10 set forth various affirmative disclosures that
should be made prior to enrollment and signing of a contract. Most of
the areas addressed by these disclosures are now covered elsewhere in
the Guides. Section 254.7(c) advises disclosure of all requirements for
successful completion of the program and the circumstances that would
constitute grounds for terminating the student's enrollment prior to
completion (formerly addressed by Sec. 254.10(a)). Disclosure of total
costs (formerly addressed in Sec. 254.10(b)) is now covered by
Sec. 254.7(b). Misrepresentations regarding the school's facilities and
equipment (formerly addressed by Sec. 254.10(c)) is covered by
Sec. 254.4(a). Misrepresentations concerning placement assistance
offered to graduates (formerly addressed by Sec. 254.10(d)) is covered
by Sec. 254.4(a)(7).
Section 254.0 has been added to explain the scope and application
of the Guides. Various editorial changes have been made to eliminate
redundancies, consolidate provisions, and make the Guides clearer and
easier to read. Finally, the title of the Guides has been changed to
reflect the fact that ``distance education'' is now the term used for
the sale of programs of study--whether offered by correspondence,
computer, or some other means--where work is completed by the student
at home (or some other location of his or her own choosing) rather than
in a school facility.
List of Subjects in 16 CFR Part 254
Advertising, Trade practices.
For the reasons set forth above, the Commission amends 16 CFR Part
254 as follows:
1. The title of Part 254 is amended to read as follows:
PART 254--GUIDES FOR PRIVATE VOCATIONAL AND DISTANCE EDUCATION
SCHOOLS
2. The authority citation for part 254 continues to read as
follows:
Authority: 38 Stat. 717, as amended; 15 U.S.C. 41-58.
3. Section 254.0 is added to read as follows:
Sec. 254.0 Scope and application.
(a) The Guides in this part apply to persons, firms, corporations,
or organizations engaged in the operation of privately owned schools
that offer resident or distance courses, training, or instruction
purporting to prepare or qualify individuals for employment in any
occupation or trade, or in work requiring mechanical, technical,
artistic, business, or clerical skills, or that is for the purpose of
enabling a person to improve his appearance, social aptitude,
personality, or other attributes. These Guides do not apply to resident
primary or secondary schools or institutions of higher education
offering at least a 2-year program of accredited college level studies
generally acceptable for credit toward a bachelor's degree.
(b) These Guides represent administrative interpretations of laws
administered by the Federal Trade Commission for the guidance of the
public in conducting its affairs in conformity with legal requirements.
These Guides specifically address the application of section 5 of the
FTC Act (15 U.S.C. 45) to the advertising, promotion, marketing, and
sale of courses or programs of instruction offered by private
vocational or distance education schools. The Guides provide the basis
for voluntary compliance with the law by members of the industry.
Practices inconsistent with these Guides may result in corrective
action by the Commission under section 5 if, after investigation, the
Commission has reason to believe that the practices fall within the
scope of conduct declared unlawful by the statute.
4. Section 254.1 is revised to read as follows:
Sec. 254.1 Definitions.
(a) Accredited. A school or course has been evaluated and found to
meet established criteria by an accrediting agency or association
recognized for such purposes by the U.S. Department of Education.
(b) Approved. A school or course has been recognized by a State or
Federal agency as meeting educational standards or other related
qualifications as prescribed by that agency for the school or course to
which the term is
[[Page 42573]]
applied. The term is not and should not be used interchangeably with
``accredited.'' The term ``approved'' is not justified by the mere
grant of a corporate charter to operate or license to do business as a
school and should not be used unless the represented ``approval'' has
been affirmatively required or authorized by State or Federal law.
(c) Industry member. Industry members are the persons, firms,
corporations, or organizations covered by these Guides, as explained in
Sec. 254.0(a).
5. Section 254.2 is revised to read as follows:
Sec. 254.2 Deceptive trade or business names.
(a) It is deceptive for an industry member to use any trade or
business name, label, insignia, or designation which misleads or
deceives prospective students as to the nature of the school, its
accreditation, programs of instruction, methods of teaching, or any
other material fact.
(b) It is deceptive for an industry member to misrepresent,
directly or indirectly, by the use of a trade or business name or in
any other manner that:
(1) It is a part of or connected with a branch, bureau, or agency
of the U.S. Government, or of any State, or civil service commission;
(2) It is an employment agency or an employment agent or authorized
training facility for any industry or business or otherwise deceptively
conceal the fact that it is a school.
(c) If an industry member conducts its instruction by
correspondence, or other form of distance education, it is deceptive to
fail to clearly and conspicuously disclose that fact in all promotional
materials.
6. Section 254.3 is revised to read as follows:
Sec. 254.3 Misrepresentation of extent or nature of accreditation or
approval.
(a) It is deceptive for an industry member to misrepresent,
directly or indirectly, the extent or nature of any approval by a State
agency or accreditation by an accrediting agency or association. For
example, an industry member should not:
(1) Represent, without qualification, that its school is accredited
unless all programs of instruction have been accredited by an
accrediting agency recognized by the U.S. Department of Education. If
an accredited school offers courses or programs of instruction that are
not accredited, all advertisements or promotional materials pertaining
to those courses or programs, and making reference to the accreditation
of the school, should clearly and conspicuously disclose that those
particular courses or programs are not accredited.
(2) Represent that its school or a course is approved, unless the
nature, extent, and purpose of that approval are disclosed.
(3) Misrepresent that students successfully completing a course or
program of instruction can transfer the credit to an accredited
institution of higher education.
(b) It is deceptive for an industry member to misrepresent that a
course of instruction has been approved by a particular industry, or
that successful completion of the course qualifies the student for
admission to a labor union or similar organization or for receiving a
State or Federal license to perform certain functions.
(c) It is deceptive for an industry member to misrepresent that its
courses are recommended by vocational counselors, high schools,
colleges, educational organizations, employment agencies, or members of
a particular industry, or that it has been the subject of unsolicited
testimonials or endorsements from former students. It is deceptive for
an industry member to use testimonials or endorsements that do not
accurately reflect current practices of the school or current
conditions or employment opportunities in the industry or occupation
for which students are being trained.
Note to paragraph (c): The Commission's Guides Concerning Use of
Endorsements and Testimonials in Advertising (part 255 of this
chapter) provide further guidance in this area.
7. Section 254.4 is revised to read as follows:
Sec. 254.4 Misrepresentation of facilities, services, qualifications
of staff, status, and employment prospects for students after training.
(a) It is deceptive for an industry member to misrepresent,
directly or indirectly, in advertising, promotional materials, or in
any other manner, the size, location, services, facilities, or
equipment of its school or the number of educational qualifications of
its faculty and other personnel. For example, an industry member should
not:
(1) Misrepresent the qualifications, credentials, experience, or
educational background of its instructors, sales representatives, or
other employees.
(2) Misrepresent, through statements or pictures, the nature of
efficacy of its courses, training devices, methods, or equipment.
(3) Misrepresent the availability of employment while the student
is undergoing instruction or the role of the school in providing or
arranging for such employment.
(4) Misrepresent the availability or nature of any financial
assistance available to students. If the cost of training is financed
in whole or in part by loans, students should be informed that loans
must be repaid whether or not they are successful in completing the
program and obtaining employment.
(5) Misrepresent the nature of any relationship between the school
or its personnel and any government agency or that students of the
school will receive preferred consideration for employment with any
government agency.
(6) Misrepresent that certain individuals or classes of individuals
are members of its faculty or advisory board; have prepared
instructional materials; or are otherwise affiliated with the school.
(7) Misrepresent the nature and extent of any personal instruction,
guidance, assistance, or other service, including placement assistance,
it will provide students either during or after completion of a course.
(b) It is deceptive for an industry member to misrepresent that it
is a nonprofit organization or to misrepresent affiliation or
connection with any public institution or private religious or
charitable organization.
(c) It is deceptive for an industry member to misrepresent that a
course has been recently revised or instructional equipment is up-to-
date, or misrepresent its ability to keep a program current and up-to-
date.
(d) It is deceptive for an industry member, in promoting any course
of training in its advertising, promotional materials, or in any other
manner, to misrepresent, directly or by implication, whether through
the use of text, images, endorsements, or by other means, the
availability of employment after graduation from a course of training,
the success that the member's graduates have realized in obtaining such
employment, or the salary that the member's graduates will receive in
such employment.
Note to paragraph (d): The Commission's Guides Concerning Use of
Endorsements and Testimonials in Advertising (part 255 of this
chapter) provide further guidance in this area.
8. Section 254.5 is revised to read as follows:
[[Page 42574]]
Sec. 254.5 Misrepresentations of enrollment qualifications or
limitations.
(a) It is deceptive for an industry member to misrepresent the
nature or extent of any prerequisites or qualifications for enrollment
in a course or program of instruction.
(b) It is deceptive for an industry member to misrepresent that the
lack of a high school education or prior training or experience is not
an impediment to successful completion of a course or obtaining
employment in the field for which the course provides training.
9. Section 254.6 is revised to read as follows:
Sec. 254.6 Deceptive use of diplomas, degrees, or certificates.
(a) It is deceptive for an industry member to issue a degree,
diploma, certificate of completion, or any similar document, that
misrepresents, directly or indirectly, the subject matter, substance,
or content of the course of study or any other material fact concerning
the course for which it was awarded or the accomplishments of the
student to whom it was awarded.
(b) It is deceptive for an industry member to offer or confer an
academic, professional, or occupational degree, if the award of such
degree has not been authorized by the appropriate State educational
agency or approved by a nationally recognized accrediting agency,
unless it clearly and conspicuously discloses, in all advertising and
promotional materials that contain a reference to such degree, that its
award has not been authorized or approved by such an agency.
(c) It is deceptive for an industry member to offer or confer a
high school diploma unless the program of instruction to which it
pertains is substantially equivalent to that offered by a resident
secondary school, and unless the student is informed, by a clear and
conspicuous disclosure in writing prior to enrollment, that the
industry member cannot guarantee or otherwise control the recognition
that will be accorded the diploma by institutions of higher education,
other schools, or prospective employers, and that such recognition is a
matter solely within the discretion of those entities.
10. Section 254.7 is revised to read as follows:
Sec. 254.7 Deceptive sales practices.
(a) It is deceptive for an industry member to use advertisements or
promotional materials that misrepresent, directly or by implication,
that employment is being offered or that a talent hunt or contest is
being conducted. For example, captions such as, ``Men/women wanted to
train for * * *,'' ``Help Wanted,'' ``Employment,'' ``Business
Opportunities,'' and words or terms of similar import, may falsely
convey that employment is being offered and therefore should be
avoided.
(b) It is deceptive for an industry member to fail to disclose to a
prospective student, prior to enrollment, the total cost of the program
and the school's refund policy if the student does not complete the
program.
(c) It is deceptive for an industry member to fail to disclose to a
prospective student, prior to enrollment, all requirements for
successfully completing the course of program and the circumstances
that would constitute grounds for terminating the student's enrollment
prior to completion of the program.
11. Section 254.8 is removed.
12. Section 254.9 is removed.
13. Section 254.10 is removed.
By direction of the Commission, Commissioner Swindle dissenting.
Donald S. Clark,
Secretary.
DISSENTING STATEMENT OF COMMISSIONER ORSON SWINDLE in Regulatory
Reform-Vocational School Guides, File No. P964220
The Commission today has issued revised Guides for Private
Vocational and Distance Schools (``Guides'') to address certain
claims that private vocational schools make to their students and
prospective students. I have voted against the Guides for two
reasons. One reason is that the Guides are not likely to promote
voluntary compliance because they do not resolve any demonstrated
uncertainly among private vocational schools over what claims are
likely to be considered deceptive. The other reason is that any need
for Commission action would be largely eliminated if other
government regulations and private oversight schemes were more
actively enforced.
The Commission has a number of weapons in its arsenal to prevent
unfair or deceptive acts and practices, each designed to be used for
a specific purpose. Guides are issued when the Commission believes
that guidance as to legal requirements ``would be beneficial in the
public interest and would serve to bring about more widespread and
equitable observance of laws administered by the Commission.''
Commission Rule of Practice 1.6. The purpose of such guidance is to
``provide the basis for voluntary and simultaneous abandonment of
unlawful practices by members of industry.'' Commission Rule of
Practice 1.5.
The Commission has successfully used guides and policy
statements to provide industry with standards that eliminate or
substantially reduce uncertainty over what the Commission is likely
to consider deceptive. See, e.g., Guides for the Use of
Environmental Marketing Claims, 16 C.F.R. Part 260; Federal Trade
Commission Enforcement Policy Statement on Food Advertising (May
1994). However, there is no reason to believe here that private
vocational schools are uncertain over what claims the Commission is
likely to consider deceptive. Indeed, the public comments we
received from schools did not reveal any such uncertainty that needs
to be resolved by the Commission to promote voluntary compliance.\1\
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\1\ The comments received from private vocational schools
overwhelmingly complained that reissuing the Guides would be
confusing, frustrating, and burdensome in light of existing
regulatory and oversight schemes--not an auspicious beginning for
fostering voluntary industry compliance.
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Perhaps a better way of combatting misrepresentations would be
for the government agencies and private bodies that directly
regulate this industry to more vigorously enforce their own
prohibitions. The Department of Education (``DOE'') can bar a
private vocational school from receiving federal financial
assistance if it makes misrepresentations in violation of DOE
regulations. 34 C.F.R. Part 668. DOE's regulatory requirements
provide a particularly powerful incentive for most private
vocational schools not to make misrepresentations, given the
critical importance to most of them of continuing to participate in
federal financial assistance programs. State licensing boards and
private accrediting bodies also can revoke the license or
accreditation of a private vocational school that make
misrepresentations.
Some private vocational schools may make misrepresentations
notwithstanding these layers of regulation and oversight. When this
occurs, DOE, state licensing boards, and private accreditation
bodies should use their authority and their standards to address
these misrepresentations in the first instance. Although Commission
law enforcement action may also be needed to address such
misrepresentations in discrete circumstances, I do not believe this
possibility justifies our issuance of the Guides.
I dissent.
[FR Doc. 98-21296 Filed 8-7-98; 8:45am]
BILLING CODE 6750-01-M
