Federal Trade Commission

Guides for Private

Vocational and Distance

Education Schools

Part 254

As Revised August 1998
TABLE OF CONTENTS

§ 254.0 Scope And Application. ...................................1

§ 254.1 Definitions...................................................2

§ 254.2 Deceptive Trade Or Business Names ...................3

§ 254.3 Misrepresetation Of Extent Or Nature Of

Accreditation Or Approval................................4

§ 254.4 Misrepresentation Of Facilities, Services,

Qualifications Of Staff, Status, And Employment

Prospects For Students After Training ..................6

§ 254.5 Misrepresentations Of Enrollment Qualifications

Or Limitations ..............................................8

§ 254.6 Deceptive Use Of Diplomas, Degrees, Or

Certificates ..................................................9

§ 254.7 Deceptive Sales Practices................................10
 1

PART 254

GUIDES FOR PRIVATE VOCATIONAL

AND DISTANCE EDUCATION SCHOOLS

(as revised August 1998)

§ 254.0 Scope and application.

(a) These Guides apply to persons, firms, corporations, or organizations engaged in the operation of privately owned schools that

offer resident or distance courses, training, or instruction purporting to prepare or qualify individuals for employment in any

occupation or trade, or in work requiring mechanical, technical,

artistic, business, or clerical skills, or that is for the purpose of

enabling a person to improve his appearance, social aptitude,

personality, or other attributes. These Guides do not apply to

resident primary or secondary schools or institutions of higher

education offering at least a 2-year program of accredited college level studies generally acceptable for credit toward a

bachelors degree.

(b) These Guides represent administrative interpretations of laws

administered by the Federal Trade Commission for the guidance

of the public in conducting its affairs in conformity with legal

requirements. These Guides specifically address the application

of section 5 of the FTC Act (15 U.S.C. 45) to the advertising,

promotion, marketing, and sale of courses or programs of instruction offered by private vocational or distance education

schools. The Guides provide the basis for voluntary compliance

with the law by members of the industry. Practices inconsistent

with these Guides may result in corrective action by the Commission under section 5 if, after investigation, the Commission

has reason to believe that the practices fall within the scope of

conduct declared unlawful by the statute.
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§ 254.1 Definitions.

(a) Accredited.

A school or course has been evaluated and found to meet established criteria by an accrediting agency or association recognized

for such purposes by the U.S. Department of Education.

(b) Approved.

A school or course has been recognized by a State or Federal

agency as meeting educational standards or other related qualifications as prescribed by that agency for the school or course to which

the term is applied. The term is not and should not be used interchangeably with accredited. The term approved is not justified

by the mere grant of a corporate charter to operate or license to do

business as a school and should not be used unless the represented

approval has been affirmatively required or authorized by State

or Federal law.

(c) Industry member.

Industry members are the persons, firms, corporations, or organizations covered by these Guides, as explained in § 254.0(a).
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§ 254.2 Deceptive trade or business names.

(a) It is deceptive for an industry member to use any trade or

business name, label, insignia, or designation which misleads or

deceives prospective students as to the nature of the school, its

accreditation, programs of instruction, methods of teaching, or

any other material fact.

(b) It is deceptive for an industry member to misrepresent, directly

or indirectly by the use of a trade or business name or in any

other manner that:

(1) It is a part of or connected with a branch, bureau, or agency

of the U.S. Government, or of any State, or civil service

commission;

(2) It is an employment agency or an employment agent or

authorized training facility for any industry or business or

otherwise deceptively conceal the fact that it is a school.

(c) If an industry member conducts its instruction by correspondence, or other form of distance education, it is deceptive to fail

to clearly and conspicuously disclose that fact in allpromotional

materials.
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§ 254.3 Misrepresentation of extent or nature of

accreditation or approval.

(a) It is deceptive for an industry member to misrepresent, directly

or indirectly, the extent or nature of any approval by a State

agency or accreditation by an accrediting agency or association.

For example, an industry member should not:

(1) Represent, without qualification, that its school is accredited

unless all programs of instruction have been accredited by an

accrediting agency recognized by the U.S. Department of

Education. If an accredited school offers courses or programs

of instruction that are not accredited, all advertisements or

promotional materials pertaining to those courses or programs, and making reference to the accreditation of the

school, should clearly and conspicuously disclose that those

particular courses or programs are not accredited.

(2) Represent that its school or a course is approved, unless the

nature, extent, and purpose of that approval are disclosed.

(3) Misrepresent that students successfully completing a course

or program of instruction can transfer the credit to an accredited institution of higher education.

(b) It is deceptive for an industry member to misrepresent that a

course of instruction has been approved by a particular industry,

or that successful completion of the course qualifies the student

for admission to a labor union or similar organization or for

receiving a State or Federal license to perform certain functions.
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(c) It is deceptive for an industry member to misrepresent that its

courses are recommended by vocational counselors, high

schools, colleges, educational organizations, employment agencies, or members of a particular industry, or that it has been

the subject of unsolicited testimonials or endorsements* from

former students. It is deceptive for an industry member to use

testimonials or endorsements that do not accurately reflect current practices of the school or current conditions or employment

opportunities in the industry or occupation for which students

are being trained.

*Note: The Commissions Guides Concerning Use of Endorsements and Testimonials in Advertising (part 255 of this chapter)

provide further guidance in this area.
§ 254.4 Misrepresentation of facilities, services,

qualifications of staff, status, and

employment prospects for students after

training.

(a) It is deceptive for an industry member to misrepresent, directly

or indirectly, in advertising, promotional materials, or in any other

manner, the size, location, services, facilities, or equipment of its

school or the number or educational qualifications of its faculty and

other personnel. For example, an industry member should not:

(1) Misrepresent the qualifications, credentials, experience, or

educational background of its instructors, sales representatives, or other employees.

(2) Misrepresent, through statements or pictures, the nature or

efficacy of its courses, training devices, methods, or equipment.

(3) Misrepresent the availability of employment while the student is undergoing instruction or the role of the school in

providing or arranging for such employment.

(4) Misrepresent the availability or nature of any financial

assistance available to students. If the cost of training is

financed in whole or in part by loans, students should be in

formed that loans must be repaid whether or not they are

successful in completing the program and obtaining employment.

(5) Misrepresent the nature of any relationship between the

school or its personnel and any government agency or that

students of the school will receive preferred consideration for

employment with any government agency.

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(6) Misrepresent that certain individuals or classes of individuals are members of its faculty or advisory board; have prepared instructional materials; or are otherwise affiliated with

the school.

(7) Misrepresent the nature and extent of any personal instruction, guidance, assistance, or other service, including placement assistance, it will provide students either during or after

completion of a course.

(b) It is deceptive for an industry member to misrepresent that it is

a nonprofit organization or to misrepresent affiliation or connection with any public institution or private religious or charitable

organization.

(c) It is deceptive for an industry member to misrepresent that a

course has been recently revised or instructional equipment is

up-to-date, or misrepresent its ability to keep a program current

and up-to-date.

(d) It is deceptive for an industry member, in promoting any course

of training in its advertising, promotional materials, or in any

other manner, to misrepresent, directly or by implication,

whether through the use of text, images, endorsements,* or by

other means, the availability of employment after graduation

from a course of training, the success that the members graduates have realized in obtaining such employment, or the salary

that the members graduates will receive in such employment.

*Note: The Commissions Guides Concerning Use of Endorse-

 ments and Testimonials in Advertising (part 255 of this chapter)

 provide further guidance in this area.

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§ 254.5 Misrepresentations of enrollment

qualifications or limitations.

(a) It is deceptive for an industry member to misrepresent the

nature or extent of any prerequisites or qualifications for enrollment in a course or program of instruction.

(b) It is deceptive for an industry member to misrepresent that the

lack of a high school education or prior training or experience is

not an impediment to successful completion of a course or obtaining employment in the field for which the course provides

training.

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§ 254.6 Deceptive use of diplomas, degrees, or

certificates.

(a) It is deceptive for an industry member to issue a degree, diploma, certificate of completion, or any similar document, that

misrepresents, directly or indirectly, the subject matter, substance, or content of the course of study or any other material

fact concerning the course for which it was awarded or the

accomplishments of the student to whom it was awarded.

(b) It is deceptive for an industry member to offer or confer an

academic, professional, or occupational degree, if the award of

such degree has not been authorized by the appropriate State

educational agency or approved by a nationally recognized

accrediting agency, unless it clearly and conspicuously discloses, in all advertising and promotional materials that contain

a reference to such degree, that its award has not been authorized or approved by such an agency.

(c) It is deceptive for an industry member to offer or confer a high

school diploma unless the program of instruction to which it

pertains is substantially equivalent to that offered by a resident

secondary school, and unless the student is informed, by a clear

and conspicuous disclosure in writing prior to enrollment, that

the industry member cannot guarantee or otherwise control the

recognition that will be accorded the diploma by institutions of

higher education, other schools, or prospective employers, and

that such recognition is a matter solely within the discretion of

those entities.

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§ 254.7 Deceptive sales practices.

(a) It is deceptive for an industry member to use advertisements or

promotional materials that misrepresent, directly or by implication, that employment is being offered or that a talent hunt or

contest is being conducted. For example, captions such as,

Men/women wanted to train for * * *, Help Wanted, Employment, Business Opportunities, and words or terms of

similar import, may falsely convey that employment is being

offered and therefore should be avoided.

(b) It is deceptive for an industry member to fail to disclose to a

prospective student, prior to enrollment, the total cost of the

program and the schools refund policy if the student does not

complete the program.

(c) It is deceptive for an industry member to fail to disclose to a

prospective student, prior to enrollment, all requirements for

successfully completing the course or program and the circumstances that would constitute grounds for terminating the

students enrollment prior to completion of the program.

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PUB-21

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