Iowa Attorney General Settles Consumer Fraud Claims With College

On June 30, 2016, the Iowa Attorney General announced a settlement with a for-profit cosmetology college to resolve alleged violations of the Iowa Consumer Fraud Act.  The settlement, which took the form of a consent judgment, settled claims that the college engaged in “deceptive, omissive, and unfair practices in marketing, enrollment, and instruction” and affects prospective, current, and former students.  For prospective students, the agreement requires the college to provide greater transparency through disclosure materials that clearly explain enrollment costs and fees, the anticipated timeline to complete the degree program, the anticipated cost of necessary materials, and a list of instructors.  For current students, the settlement requires improvements in training, instructor staffing, and leave-of-absence and refund policies.  Finally, the college will cease all collection efforts from former students, who collectively owe $2,160,000 in debt, fees, and interest to the college.  The college must notify these former students within 90 days and notify credit reporting agencies that the debts have been discharged.  The college must also make a payment of $500,000 to the state (and the two principals must pay an additional $25,000 each), largely for partial refunds to current and former students.  Oversight by an independent settlement administrator will continue for a minimum of 3 years while the settlement is in place.