The online career-training company Career Step, LLC has been mandated to provide $43.5 million in debt cancellation and cash refunds. This action comes as a resolution to charges filed by the Federal Trade Commission (FTC), which accused the company of misleading advertising. Specifically, Career Step allegedly attracted consumers, particularly servicemembers and their families, with false claims regarding job placement rates, employment outcomes, and partnerships with reputable companies for their Career Step Program.
Career Step is set to pay $27.8 million in debt cancellation and $15.7 million in cash. These funds are intended to compensate consumers who were negatively impacted by the company’s deceptive advertising practices related to their career step program offerings.
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.” This highlights the particular vulnerability of the target demographic for the career step program and the importance of truthful advertising in educational services.
According to the FTC’s complaint, Career Step, also known as CareerStep, CareerCert, and Carrus, based in Georgia, promotes career training and certification programs focused on healthcare industry jobs. Their marketing efforts, especially for the career step program, heavily targeted servicemembers and their spouses. The FTC alleges that since at least 2019, Career Step engaged in deceptive advertising across social media and their website. They utilized sales representatives and AI technology to persuade consumers to enroll in their career step program and other courses. The company also advertised through military-centric publications like Military.com and at military-sponsored events, including job fairs, to promote their career step program. The core of the FTC’s allegations revolves around false claims made by Career Step about job placement, employment outcomes after completing a career step program, externship opportunities, purported hiring partnerships, and the actual duration of their programs. These misleading claims were often amplified by deceptive incentivized reviews.
Deceptive Practices Unveiled in Career Step Program Marketing
The FTC complaint details several key areas where Career Step’s marketing of their career step program was found to be deceptive:
False Promises of Job Placement
The FTC states that Career Step representatives made explicit false promises about finding jobs for consumers after completing a career step program. For instance, representatives allegedly claimed that a “career placement team” would actively find consumers their “perfect job.” However, in reality, Career Step did not provide actual job placement services. Their so-called “job search assistance” was limited to basic help with resume drafting or sending links to publicly available job postings online, offering no tangible advantage to career step program graduates.
Inflated Employment Outcome Claims
Career Step falsely represented that “most learners” and “more than 80% of its graduates” from their career step program, or program completers, were successfully employed in their field of study. These employment outcome claims were based on flawed data collection. Career Step relied solely on an optional survey sent only to students who had completed their program. Critically, a large majority of enrollees never actually finished their career step program and therefore never received this survey. Furthermore, of those who did receive a survey, most did not respond. As an example, a 2020 survey showed that out of 9,330 enrollees and 2,126 program completers, only 5% of enrollees (or 24% of program completers) completed the survey. This tiny and self-selected sample was used to make broad claims about career step program success rates.
Misleading “Hiring Partner” Network
Career Step’s website falsely asserted partnerships with leading healthcare businesses to provide jobs for graduates of their career step program. The company prominently displayed logos of well-known companies like CVS and Walgreens on their homepage as “Hiring Partners.” Sales representatives also reinforced this deception, telling consumers, “We have over 50,000 partnerships so we’ll help you find some place to work.” In truth, Career Step’s agreements with companies like CVS and Walgreens had no connection to post-graduation job placement for career step program participants. These were merely marketing tactics to create a false impression of job security after completing a career step program.
Career Step homepage example of ‘Trusted Employer Network’ used in deceptive advertising for their career step programs, according to FTC complaint.
Externship Deception
Career Step also falsely promised students that externships were a guaranteed part of their career step program. However, the FTC found that less than 10 percent of students in programs that required externships were ever actually placed in one. The lack of externships prevented students from completing their programs, effectively wasting their time and money invested in the career step program.
Program Duration Misrepresentations
The company misled students by promising program completion within four months or less. In reality, the vast majority of Career Step students, including those in the career step program, never completed their programs. Even those who did finish typically took much longer than four months, often due to obstacles created by the company itself. Students reported frequent website issues and lack of responsiveness from Career Step representatives. Furthermore, the failure to secure promised externships often led to program expirations before completion, or students were forced to pay additional fees, sometimes as high as $999, for program extensions to complete their career step program.
Deceptive Incentivized Reviews
Career Step implemented a deceptive incentivized review program to generate positive reviews on platforms like BBB, Google, and Trustpilot. Students were offered free program extensions – up to three months of extra time – in exchange for posting reviews on each of these sites. They were required to provide proof of their reviews to Career Step. Consequently, many of these reviews falsely appeared to be genuine, unbiased opinions of satisfied career step program students, when in fact they were incentivized and potentially misleading.
Settlement Terms and Consumer Relief for Career Step Program Students
The settlement, which is pending federal judge approval, mandates Career Step to pay $15.7 million for consumer redress. The FTC will use these funds to provide refunds to affected consumers. Additionally, Career Step is required to cancel approximately $27.8 million in debts owed by current and former students who enrolled in their career step program or other courses between February 2020 and February 2023.
The stipulated order also prohibits Career Step from engaging in deceptive advertising for any educational product or service in the future.
Specifically, Career Step is now prohibited from misrepresenting key aspects of their educational offerings, including:
- Employment, hiring, or career prospects related to their career step program.
- The number or percentage of consumers who obtain employment after completing a career step program.
- Whether any individual was employed, hired, or obtained a job as a direct result of a career step program.
- Partnerships with any companies or employers concerning their career step program.
- Career services offered as part of their career step program.
- The externship program associated with their career step program.
- The typical or expected duration of a career step program.
- The total costs or terms of the career step program or service.
- The objectivity or impartiality of any content used to promote their career step program.
- Any fact material to consumers considering a career step program or any other good or service.
Furthermore, Career Step must contact each third-party platform or website hosting reviews written by consumers who received free services in exchange for those reviews. They must notify these platforms about the FTC’s action and provide a list of all such reviews, requesting their removal.
The Commission vote authorizing the filing of the complaint and stipulated final order was unanimous (5-0). The complaint and stipulated final order will be filed in the U.S. District Court for the Northern District of Georgia.
NOTE: The FTC initiates a complaint when it has “reason to believe” that defendants are violating or about to violate the law and deems a proceeding to be in the public interest. Stipulated final orders carry the force of law once approved and signed by a District Court judge.
