The online career-training company, Career Step, LLC, is facing severe repercussions after being ordered by the Federal Trade Commission (FTC) to pay a staggering $43.5 million. This penalty, encompassing both debt cancellation and cash refunds, comes as a resolution to charges of deceptive advertising. The FTC alleged that Career Step Programs, particularly targeting servicemembers and their families, employed misleading tactics, falsely exaggerating employment outcomes, job placement services, and partnerships with reputable companies to lure in students.
Career Step is mandated to provide $27.8 million in debt cancellation and $15.7 million in cash, which will be allocated to redress consumers impacted by their deceptive advertising practices.
Samuel Levine, Director of the FTC’s Bureau of Consumer Protection, emphasized the gravity of the situation, stating, “Servicemembers and their families make sacrifices every day to protect our freedoms. We owe it to them to make sure that when they look to use their hard-earned benefits to further their education, they get facts and not fantasy.”
FTC Charges Against Career Step Programs
According to the FTC’s complaint, Career Step, operating under various names including CareerStep, CareerCert, and Carrus, has been aggressively promoting career training and certification programs in the healthcare sector. Their marketing efforts have been particularly focused on attracting servicemembers and their spouses. The complaint details that since at least 2019, Career Step has engaged in deceptive advertising across social media platforms and their website. They utilize sales representatives and AI technology to aggressively persuade potential students to enroll in their programs. Furthermore, Career Step has extended its marketing reach through military-centric publications like Military.com and participation in military-sponsored events, including job fairs. The core of the FTC’s charges revolves around Career Step’s false claims concerning job placement rates, employment outcomes, externship opportunities, purported hiring partnerships, and the actual duration of their programs. These deceptive claims were further amplified through the use of incentivized reviews designed to falsely promote their services.
The FTC’s investigation revealed several key areas where Career Step programs allegedly misled consumers:
- False Promises of Job Placement: Career Step representatives reportedly made explicit promises to students, claiming a dedicated “career placement team” would find them the “perfect job.” In reality, Career Step does not offer any genuine job placement services. Their assistance is limited to basic resume advice and providing links to publicly available job postings.
- Inflated Employment Outcome Claims: The company claimed that “most learners” and “more than 80% of its graduates” secure employment in their field of study. However, these claims were based on skewed data from optional surveys sent only to program completers. A significant majority of enrollees do not complete the programs and thus never receive these surveys. Furthermore, response rates to these surveys were extremely low, rendering the data statistically insignificant and misleading. For example, a 2020 survey showed that out of 9,330 enrollees, only 5% completed the survey, and even among program completers, only 24% responded.
- Misrepresentation of Hiring Partnerships: Career Step’s website falsely asserted partnerships with leading healthcare businesses to guarantee job opportunities for graduates. Prominent logos of companies like CVS and Walgreens were displayed as “Hiring Partners” on their homepage. Sales representatives reinforced this deception by claiming “over 50,000 partnerships” to assure students of job prospects. In truth, agreements with these companies were not related to post-graduation job placement.
- Deceptive Externship Promises: Career Step programs advertised externships as an integral part of their training. However, less than 10% of students in programs requiring externships were ever placed in one. This lack of externship placement prevented students from completing their programs, resulting in wasted time and financial investment.
- False Program Duration Claims: Career Step programs misled students by promising program completion within four months or less. The reality is that most students take considerably longer, and many never complete the programs at all. Students reported website issues, unresponsive representatives, and failure to secure required externships as significant roadblocks. Consequently, many students faced program expiration or were forced to pay extension fees, sometimes as high as $999.
- Incentivized Deceptive Reviews: Career Step implemented a program to incentivize students to post positive reviews on platforms like BBB, Google, and Trustpilot. Students were offered up to three months of free program extensions in exchange for leaving reviews and providing proof of posting. This practice led to a proliferation of potentially biased reviews that did not accurately reflect the genuine experiences of typical, uncompensated Career Step students.
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Career Step homepage example showcasing “Our Trusted Employer Network,” a key element in their deceptive marketing tactics.
Consequences for Career Step Programs: Financial Penalties and Corrective Actions
The settlement, pending federal judge approval, mandates Career Step to pay $15.7 million for consumer redress. Additionally, the company is required to cancel approximately $27.8 million in debts owed by students who enrolled between February 2020 and February 2023. The stipulated order further prohibits Career Step from engaging in deceptive advertising for any educational product or service.
Specifically, Career Step is now legally restricted from misrepresenting crucial aspects of their programs, including:
- Employment, hiring, or career prospects
- The number or percentage of consumers obtaining employment
- Whether employment is a result of Career Step programs
- Partnerships with companies or employers
- Career services offered
- The nature and availability of externship programs
- Program duration expectations
- Total program costs and terms
- The objectivity or impartiality of any content or testimonials
- Any material fact relevant to consumers regarding their services
Furthermore, Career Step must actively notify third-party platforms hosting reviews written by students who received incentives for their testimonials. They are obligated to provide these platforms with a list of all such reviews and request their removal, informing the platforms of the FTC order.
This FTC action underscores the importance of vigilance when considering career step programs and online educational opportunities, especially for servicemembers and their families who are often targeted with deceptive marketing. It serves as a critical reminder to thoroughly research and verify claims made by educational institutions before enrollment.
