[Federal Register Volume 62, Number 78 (Wednesday, April 23, 1997)]
[Proposed Rules]
[Pages 19703-19704]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-10530]
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FEDERAL TRADE COMMISSION
16 CFR PART 254
Request For Comments Concerning Guides For Private Vocational
Schools
AGENCY: Federal Trade Commission.
ACTION: Supplemental request for public comments.
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SUMMARY: The Federal Trade Commission (``Commission'') is requesting
public comments on a proposal to amend its Guides for Private
Vocational Schools to add a provision addressing deceptive express or
implied claims of job placement success.
DATES: Written comments will be accepted until June 23, 1997.
ADDRESSES: Comments should be directed to: Secretary, Federal Trade
Commission, Room H-159, Sixth Street and Pennsylvania Ave., NW.,
Washington, DC 20580. Comments about the Guides for Private Vocational
Schools should be identified as ``16 CFR Part 254--Comment.''
FOR FURTHER INFORMATION CONTACT:
Joseph J. Koman, Jr., (202) 326-3014, or Walter Gross III, (202) 326-
3319, Federal Trade Commission, Bureau of Consumer Protection, Sixth
Street and Pennsylvania Ave., NW., Washington, DC 20580.
SUPPLEMENTARY INFORMATION:
I. Background
As part of the Commission's systematic review of all of its rules
and guides to assess their continued need and usefulness, the Guides
for Private Vocational Schools were scheduled for review in 1996 (61 FR
1538 (Jan. 22, 1996)). These reviews seek information about the costs
and benefits of the Commission's rules and guides and their regulatory
and economic impact. The information obtained assists the Commission in
identifying rules and guides that warrant modification or recision. On
April 3, 1996, the Commission published a notice in the Federal
Register requesting public comments on the Vocational Schools Guides
(61 FR 14685). The comment period, originally scheduled to end on May
3, 1996, was subsequently extended to July 1, 1996 (61 FR 19869 (May 3,
1996)). Nine comments were filed in response to the notice. The
comments indicate that there is support in all sectors (including other
government agencies, consumer groups and the vocational schools
industry) for retaining the Guides, although some industry commenters
recommended repealing them.
II. Description of the Guides
The Guides were originally issued in May, 1972, and became
effective August 4, 1972. The are intended to advise proprietary
businesses offering vocational training courses, either on the school's
premises or through correspondence, how to avoid unfair or deceptive
advertising and promotional claims when recruiting students.
Specifically, 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 institutions, and approval by other agencies or institutions.
The Guides also address misleading representations regarding financial
assistance, program costs, and savings. Schools are cautioned to avoid
using the help-wanted sections of newspaper classified advertising for
lead generation or misleading prospective students about such matters
as opportunities for employment while undergoing training. Finally, the
Guides address appropriate disclosures as to the nature of courses or
training programs available, misleading pictorial representations, and
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.
III. The Review of the Guides
Based upon the comments received in this review, as well as its own
independent assessment of the need for these Guides, the Commission has
determined to retain the Guides for Private Vocational Schools. The
Commission recognizes 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.\1\ State
licensing agencies also regulate vocational training. Increasingly,
however, vocational schools are owned by national or regional chains;
thus, maintaining a federal enforcement presence remains important.
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\1\ It is the Commission's understanding that the Department of
Education must use its investigative and enforcement resources to
address practices primarily 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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The Commission proposes certain modifications to its Guides for
Private Vocational Schools. Some of these changes are an effort to
streamline the Guides and eliminate redundancy, while others are
substantive.
In particular, the Commission solicits written public comments
regarding its proposal to amend the Guides to add a provision
addressing misrepresentations about a school's placement success
following training. Currently, the Guides address claims about
placement assistance offered to graduates of a school. They do not,
however, address false or deceptive claims about the availability of
employment after graduation from a course of training 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
has preliminary determined to delete certain provisions that do not
offer specific guidance concerning vocational schools and merely
duplicate other provisions of law. These include Guide provisions that
address deceptive pricing (Secs. 254.8(a) and (b)); use of the word
``free'' (Sec. 254.8(c)); deceptive debt collection practices
(Sec. 254.9(a)); and assignment of contracts deceptively obtained
(Sec. 254.9(b)). For example the Fair Debt Collection Practices Act, 15
U.S.C. 1692, and the Commission's Trade Regulation Rule pertaining to
the Preservation of Consumers' Claims and Defense (the ``Holder-in-Due-
Course Rule''), 16 CFR 433, have superseded the provisions in the
Vocational Schools Guides that pertain to those areas.
In order to further streamline the Guides, the Commission also has
[[Page 19704]]
preliminarily determined to delete section 254.10, ``Affirmative
disclosures prior to enrollment.'' Subsections (a) through (d) of this
section address school policy concerning attendance, lateness, and
make-up work; additional costs a student might incur; the school's
physical facilities and equipment; and placement assistance offered by
the school. To the extent they are needed, discussion of these issues
can be folded into prior sections of the Guides dealing with
misrepresentations and deceptive practices, possibly as examples of
suggested disclosures that might prevent deception. Finally, section
254.10(e) of the Guides advises affirmative disclosure of any
``material facts [other than those specifically addressed in
subsections (a)-(d) of this section] concerning the school and the
program of instruction or course which are reasonably likely to affect
the decision of the student to enroll therein.'' Such a general
admonishment adds little to the more specific advice set out in the
remainder of the Guides. This provision merely amounts to a statement
of the law concerning failure to disclose material facts and therefore
appears unnecessary.
IV. Request for Comment
The Commission solicits public comments on the following questions:
1. Should the Guides be amended to add the following provision to
Sec. 254.4? (e) An industry member, in promoting any course of training
in its advertising, promotional materials or in any other manner,
should not misrepresent, directly or by implication, whether through
the use of text, images, endorsements,* or other means, the
availability of employment after graduation from a course of training,
or the success that the member's graduates have realized in obtaining
such employment.
*Note: The Commission's Guides Concerning Use of Endorsements
and Testimonials in Advertising (part 255 of this chapter) provide
further guidance in this area.
2. Are there currently problems in the vocational schools industry
with use of the kinds of claims addressed in the proposed addition to
the Guides? If yes, please describe.
3. Are there other issues, relevant to a prospective student's
decision to enroll in a vocational school or course of training, that
are not already covered by the Guides but should be addressed? Please
explain.
Authority: 15 U.S.C. 41-58.
List of Subjects in 16 CFR Part 254
Advertising, Trade practices.
By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 97-10530 Filed 4-22-97; 8:45 am]
BILLING CODE 6750-01-M
