Deceptive advertising… is the FTC likely to notice?

Deceptive Advertising: Without injury to consumers, the FTC won’t notice

An earlier post on using possible Pell Grant eligibility as a lead generation tool raised the question of whether or not individual schools might be held liable by the Department of Education and/or the Federal Trade Commission for third-party efforts by lead gen firms on their behalf.

After reading an advisory report prepared by the Association of Private Sector Colleges and Universities, I’m inclined to think that liability in the email Pell Grant example I wrote about is not a high probability.
Marketing that bothers the Department of Education
First, download a copy of the APSCU’s Student Recruitment Task Force Report: “The Misrepresentation Rule and Third-Party Vendors.” My conclusions after reading the report:
  • The Department of Education is most concerned about misleading advertising when it refers to outcomes such as employment promises and income earnings.
  • If advertising didn’t cause substantial harm (as in getting people to spend money based on misleading employment claims), deception itself isn’t likely to be noticed.
  • No matter the deception, an expectation that schools pre-approve of everything done by lead gen firms if done for a collection of schools is less strong than when an action is taken on behalf of an individual school. (This Pell Grant effort was done on behalf of many institutions who might have later received leads after screening.)
“Unethical or unscrupulous” violates FTC standards
The APSCU report includes an appendix on page 19, “General Marketing and Advertising Law Overview,” that links to several useful publications from the Federal Trade Commission. Yes, “unethical or unscrupulous” advertising violates consumer fairness standards. Those are somewhat vague terms, however, and it is unlikely that the FTC would bother itself with an individual case that could not link an unethical campaign with substantial harm to consumers.
The Pell Grant email campaign, and other like it, therefore is not likely to draw attention from either the DOE or the FTC. See the original email in my first blog post and decide for yourself if it was “unethical or unscrupulous.”
Reasons why this Pell Grant campaign was unethical and unscrupulous  
In my opinion, this campaign was both unethical and unscrupulous for at least two reasons:
  • I was “prequalified” for a $5,550 award only because I am a U.S. citizen. The firm sending the email had no idea of my income or my education costs at a future school. Technically accurate for some, but quite a stretch overall.
  • The call to action was to “click here” to apply for “this amazing opportunity.” But once I clicked, there was never a mention again about Pell Grants or what it took to receive one.
Would you include this Pell Grant campaign in your Annual Report?
Your opinion may differ from mine. But I suspect that few of the schools included at various points beyond the email would include this campaign as an example of their advertising efforts in an Annual Report to alumni and friends.
A resolution for 2012
Make a New Year’s resolution: if you participate in collective lead generation efforts, ask your firm to see the advertising in advance. Decide if something is ethical and scrupulous. If you’re not proud of it, why are you doing it?
That’s all for now.

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