U.S. Senators Dick Durbin (D-IL), Tom Harkin (D-IA), Frank Lautenberg (D-NJ) and Barbara Boxer (D-CA) today asked the Federal Trade Commission (FTC) to investigate third-party online marketing companies, so called "lead generators," that recruit for for-profit colleges often using deceptive practices. The Senators also urged the FTC to do more to protect consumers from deceptive lead generators by creating meaningful guidelines and strengthening their oversight.
"Between 2001 and 2010, federal student aid funds flowing to for-profit colleges increased from $5.4 billion to $32.2 billion, mostly due to aggressive recruiting practices," the Senators wrote. "Lead generators have become a key part of the aggressive recruiting strategy for many for-profit colleges. Search engines promise prospective students connections to admission offices of selective and well-known public and non-profit colleges. In reality, the lead generators send students' information to for-profit colleges and not the institution(s) in which the student actually expressed interest, with which the ad owners have no relationship."
In June, after a lengthy investigation, Kentucky Attorney General Jack Conway, Illinois Attorney General Lisa Madigan and 18 other state attorneys general announced they had reached a settlement with QuinnStreet Inc., a major lead generator. QuinnStreet operated sites that recruited veterans and other students on behalf of for-profit colleges and the states alleged that the company had violated consumer-protection laws by running "false, misleading, and deceptive" sites which falsely implied that they were operated or approved by the federal government. As part of the settlement, QuinnStreet agreed to pay $2.5 million and close one of its sites, GIbill.com.