Request For Comments Concerning Guides For Private Vocational Schools

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

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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