Consumer rights

FTC announces settlement with for-profit medical school allegedly misleading marketing

The FTC has announced a judgment order in a lawsuit it recently filed against Saint James School of Medicine, a for-profit medical school in the Caribbean, and its operator and financiers. The $1.2 million judgment will be used for repayments and debt forgiveness for students who have funded their education over the past five years.

In its complaint, the FTC alleged that Saint James and its operators violated the FTC Law, the TSR, the Holder Rule, and the Credit Practices Rule. The FTC specifically alleged that Saint James lured “consumers with false guarantees of student success…” and made “false or unsubstantiated statements regarding the likelihood of potential students matching post-graduation residency programs. of their degree. The FTC further alleged that defendants’ “financing agreements contain language attempting to waive consumer rights under federal law and omit legally required disclosures.”

According to the FTC, Saint James misrepresented the pass rate for the medical licensing exam, claiming “96.77% PASS RATE FOR FIRST TIME USMLE STEP 1”. The FTC alleged that since 2017, only 35% of Saint James students who took the necessary coursework passed the USMLE Step 1 exam. The FTC also alleged that Saint James misrepresented the residency match rate, percentage medical school seniors who are accepted for residencies, stating that Saint James had falsely advertised their residency match rate as 83% (as of 2018, the average match rate for Saint James students has been 63%).

With respect to the Saint James financiers, the FTC alleged that the financing contracts did not include the language required by the federal government under the incumbent rule and failed to provide the co-signers with the notice to co-signer. required.

The proposed judgment also requires Saint James and his co-defendants to seek the removal of the commercial line from consumer reporting agencies for Saint James students who have funded their education through the defendant companies in the past five years. . The judgment prohibits Saint James and its funders from pursuing alleged misrepresentations and engaging in further violations of the law. In addition, the judgment prohibits and permanently prohibits defendants “from extending credit to a consumer unless the co-signer’s notice of disclosure […] was delivered to the co-signer before becoming obligated.

In response to the FTC’s announcement of the proposed judgment, the Saint James principal released a statement explaining the school’s decision to enter into a settlement despite its strong disagreement with the FTC’s approach. The director said:

[W]We didn’t want a lengthy legal process to distract us from our mission to provide quality medical education at an affordable cost. However, we have added additional language and clarification wherever USMLE pass rate and placement rates are mentioned. We are committed to being an industry leader in transparency and accountability and hope that our efforts will lead to lasting change in the for-profit education industry.