U.S. agency sues Grand Canyon University alleging deceptive advertising

The Federal Trade Commission on Wednesday sued Grand Canyon University in federal court, alleging that the institution, its parent company and its CEO deceived prospective doctoral students about the price and requirements of its programs and its tax status.

“Grand Canyon deceived students by holding itself out as a non-profit institution and misrepresenting the costs and number of courses required to earn doctoral degrees,” Samuel Levine, director of the trade commission’s Bureau of Consumer Protection, said in a news release about the lawsuit.

Grand Canyon and the Biden administration have been locked in a years-long battle over the Christian university’s tax status, including the university’s 2021 lawsuit challenging the Education Department’s rejection of its conversion to being a nonprofit institution. Grand Canyon has been recognized as a nonprofit by the Internal Revenue Service, but it can’t market itself that way until the Education Department approves the conversion. The university has asserted that the department, along with the FTC and the Department of Veterans Affairs have been coordinating their efforts to “unjustly target GCU in what appears to be retaliation for the university filing an ongoing lawsuit against ED regarding its nonprofit status.”

In the lawsuit, the FTC states that Grand Canyon University “deceptively marketed the school as a nonprofit,” even though, the agency alleges, it “has been operated for the profit” of Grand Canyon Education, the for-profit company that provides marketing and other services to the university.

The university pays 60 percent of its revenue to Grand Canyon Education, and Brian Mueller, president of Grand Canyon University, is also CEO and a stockholder of Grand Canyon Education, the trade commission’s lawsuit asserts. Per the lawsuit, Grand Canyon University is the most significant source of revenue for Grand Canyon Education.

The FTC accused Grand Canyon Education and Grand Canyon University of violating federal rules prohibiting abusive and deceptive telemarketing acts or practices. Alleged violations include calling people on the National Do Not Call Registry or who requested that GCU not contact them.

Grand Canyon could not be reached immediately for comment on the FTC lawsuit.

The lawsuit also alleges that the university and the services company understated the cost of completing Grand Canyon’s “accelerated” doctoral programs; just 2 percent of doctoral program graduates complete their program within the cost that Grand Canyon advertises, the complaint alleges.

Grand Canyon University is already fighting a $37.7 million fine in connection to how it advertised the cost of doctoral degree programs.

In October, the Education Department accused the university of misleading more than 7,500 students by saying their degree program would cost between $40,000 and $49,000. That figure was based on completing a program within 60 credit hours and failed to account for the continuation courses needed to complete the dissertation program, the department said. Students on average need nearly 10 continuation courses to earn their degree.

This is a developing story.