FTC Charges Scholarship Marketers With Misrepresentation

The Federal Trade Commission, as part of its ongoing "Project ScholarScam," has settled charges with College Resource Management Inc., (CRM) of misrepresenting their ability to obtain college financial aid for students.
According to the FTC's complaint, the defendants marketed their financial aid services through a direct-mail campaign targeted to high school students and their parents. The defendants' letter stated they had identified the student as "eligible" to enroll in their "nationally recognized college financial aid and placement assistance," and invited the student to call a toll-free number to arrange an interview. According to the FTC, the interviews, typically held at hotels, were really high-pressure sales seminars at which the defendants promoted their college planning and financial aid services.
The FTC's complaint alleges that the defendants: falsely represented that students were selected based upon their qualifications to participate in the defendants' financial aid program; falsely represented that consumers who purchased their services were likely to receive substantially more financial aid than consumers could obtain without those services; and failed to disclose, or disclose adequately, that their service agreement would be automatically renewed each year at a cost of $300 per year unless consumers wrote to cancel at least 30 days prior to the renewal date.
The FTC's scholarship scam Web site, <www.ftc.gov/scholarshipscams>, gives students and parents information about spotting and avoiding scholarship scams.
Copies of the complaint and judgment are available from the FTC's Web site at <www.ftc.gov>.