April 25, 2024 - OAKLAND — California Attorney General Rob Bonta today announced a settlement with the University of Phoenix, and its parent company Apollo Education Group, Inc (Apollo), resolving an investigation into the University of Phoenix’s use of aggressive and unlawful military student recruitment tactics from 2012 through 2015. These recruitment tactics violated California’s Unfair Competition Law (UCL) and False Advertising Law (FAL). Under the settlement, the University of Phoenix must pay $4.5 million in penalties and other monetary relief and comply with strong injunctive terms.

“The University of Phoenix used deceptive and unlawful tactics to convince service members to use their hard-earned education benefits at its own institution, in place of any number of less expensive, high-quality schools, including California’s public colleges and universities. Part of the settlement today will be distributed to military relief organizations that provide interest-free emergency loans, financial counseling, and other critical services and supports to military members and their families,” said Attorney General Bonta. “Today’s settlement sends a strong message that schools who use predatory practices to recruit servicemembers and veterans will be held to account. California takes consumer protection seriously; we will vigorously protect those who have sacrificed so much to protect us.”

Over the past decade, for-profit schools have drawn scrutiny for using abusive tactics to recruit servicemembers and veterans. Their interest in this student population was, in part, an unintended consequence of certain provisions in the Higher Education Act of 1965, which required schools to receive at least 10% of their revenue from sources other than federal student aid. Because service-related education benefits, including Department of Defense tuition assistance and Post-9/11 GI Bill funds, counted toward the 10% revenue requirement, military students were highly sought after by for-profit institutions. For each servicemember or veteran a for-profit school enrolled, it could enroll up to nine more students whose tuition would be paid with federal student aid. In 2021, Congress and the Biden administration amended the Higher Education Act to close the “90/10” loophole.

In a complaint filed with the proposed stipulated judgment, Attorney General Bonta alleges that the University of Phoenix violated California consumer protection laws as well as directives issued by the Department of Defense to reign in aggressive and deceptive recruiting of servicemembers. Among other things, these directives require schools to obtain the permission of specified military officers before accessing a military installation, and limit how and where schools can market their programs to servicemembers. To increase their access to military bases and prospective students, University of Phoenix representatives routinely sidestepped these requirements. In addition, the complaint further alleges that University of Phoenix representatives lied in order to get access to career fairs — intended to help veterans and departing servicemembers find employment — for the purpose of soliciting prospective students, that they engaged in improper solicitation at “yellow ribbon” events designed to provide critical post-deployment resources and support to returning military personnel and their families, and that the University of Phoenix unlawfully displayed official military seals on specially made “challenge coins” that it used to promote its programs within the military community. 

In addition to paying $4.5 million in penalties and other monetary relief, including funds that will support the work of the military service relief organizations — the Navy-Marine Corps Relief Society, Army Emergency Relief, the Air Force Aid Society, and Coast Guard Mutual Assistance — to support the military community, Apollo and the University of Phoenix must comply with strong injunctive terms that aim to substantially address and curb its improper military-recruitment tactics.

Under the injunctive terms, the University of Phoenix is prohibited from:

• Violating the UCL or FAL in any entry upon or activities at military installations, or in the solicitation of service members, veterans, or their family members.
• Soliciting on-base, at career and hiring fairs, at Yellow Ribbon or other pre- or post-deployment events, at Morale, Welfare, and Recreation (MWR) events, and during on-base educational office hours.
• Attending mandatory events for service members, including training sessions and orientations.
• Attending career and hiring fairs, unless the University of Phoenix representative attending such events has duties primarily relating to the hiring of employees and is attending solely for the purpose of hiring employees.
• Unauthorized base access and the unauthorized use of military credentials to access bases.
• Unauthorized use of military seals. 

Attorney General Bonta is committed to protecting California students and military personnel.

In February, Attorney General Bonta and Senator Caroline Menjivar (D-San Fernando Valley) introduced SB 1124, essential legislation seeking to protect veterans from unaccredited claims representatives. California veterans who need assistance with filing an initial claim for benefits can receive assistance at no charge from their county veteran service office or from another U.S. Department of Veterans Affairs (VA) accredited representative. 

Also in February, Attorney General Bonta celebrated the decision by the California Court of Appeal affirming a lower court’s decision which found in the state’s favor in its lawsuit against Ashford University, an online, for-profit college, and its parent company Zovio, Inc. for violating California’s unfair competition and false advertising laws by giving students, including military veterans, false or misleading information about career outcomes, cost and financial aid, pace of degree programs, and transfer credits, in order to persuade them to enroll at Ashford. 

In September 2023, Attorney General Bonta announced the sentencing of Don Azul for defrauding the relatives of veterans as part of a fraudulent veterans educational benefits scheme. In August 2023, Attorney General Bonta joined a bipartisan collation of 44 attorneys general in a letter to Congress expressing his support for federal legislation to protect veterans from financial exploitation. In September 2022, SB 1311, a bill Attorney General Bonta sponsored to protect the rights of California service members and veterans, was signed into law. 

A copy of the complaint and stipulated judgment, which remains subject to court approval, can be found here and here.
Source: CA. DOJ