[Federal Register Volume 62, Number 78 (Wednesday, April 23, 1997)]
[Proposed Rules]
[Pages 19703-19704]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-10530]


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FEDERAL TRADE COMMISSION

16 CFR PART 254


Request For Comments Concerning Guides For Private Vocational 
Schools

AGENCY: Federal Trade Commission.

ACTION: Supplemental request for public comments.

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SUMMARY: The Federal Trade Commission (``Commission'') is requesting 
public comments on a proposal to amend its Guides for Private 
Vocational Schools to add a provision addressing deceptive express or 
implied claims of job placement success.

DATES: Written comments will be accepted until June 23, 1997.

ADDRESSES: Comments should be directed to: Secretary, Federal Trade 
Commission, Room H-159, Sixth Street and Pennsylvania Ave., NW., 
Washington, DC 20580. Comments about the Guides for Private Vocational 
Schools should be identified as ``16 CFR Part 254--Comment.''

FOR FURTHER INFORMATION CONTACT:
Joseph J. Koman, Jr., (202) 326-3014, or Walter Gross III, (202) 326-
3319, Federal Trade Commission, Bureau of Consumer Protection, Sixth 
Street and Pennsylvania Ave., NW., Washington, DC 20580.

SUPPLEMENTARY INFORMATION:

I. Background

    As part of the Commission's systematic review of all of its rules 
and guides to assess their continued need and usefulness, the Guides 
for Private Vocational Schools were scheduled for review in 1996 (61 FR 
1538 (Jan. 22, 1996)). These reviews seek information about the costs 
and benefits of the Commission's rules and guides and their regulatory 
and economic impact. The information obtained assists the Commission in 
identifying rules and guides that warrant modification or recision. On 
April 3, 1996, the Commission published a notice in the Federal 
Register requesting public comments on the Vocational Schools Guides 
(61 FR 14685). The comment period, originally scheduled to end on May 
3, 1996, was subsequently extended to July 1, 1996 (61 FR 19869 (May 3, 
1996)). Nine comments were filed in response to the notice. The 
comments indicate that there is support in all sectors (including other 
government agencies, consumer groups and the vocational schools 
industry) for retaining the Guides, although some industry commenters 
recommended repealing them.

II. Description of the Guides

    The Guides were originally issued in May, 1972, and became 
effective August 4, 1972. The are intended to advise proprietary 
businesses offering vocational training courses, either on the school's 
premises or through correspondence, how to avoid unfair or deceptive 
advertising and promotional claims when recruiting students. 
Specifically, the Guides address claims that are descriptive of the 
school, such as potentially deceptive trade or business names, and 
claims about accreditation, content of curricula, teachers' 
qualifications, teaching methods, affiliations with other private or 
public institutions, and approval by other agencies or institutions. 
The Guides also address misleading representations regarding financial 
assistance, program costs, and savings. Schools are cautioned to avoid 
using the help-wanted sections of newspaper classified advertising for 
lead generation or misleading prospective students about such matters 
as opportunities for employment while undergoing training. Finally, the 
Guides address appropriate disclosures as to the nature of courses or 
training programs available, misleading pictorial representations, and 
sales and debt collection practices.
    These Guides, like other industry guides issued by the Commission, 
``are administrative interpretations of laws administered by the 
Commission for the guidance of the public in conducting its affairs in 
conformity with legal requirements.'' 16 CFR 1.5. Conduct inconsistent 
with the Guides may result in corrective action by the Commission under 
applicable statutory provisions.

III. The Review of the Guides

    Based upon the comments received in this review, as well as its own 
independent assessment of the need for these Guides, the Commission has 
determined to retain the Guides for Private Vocational Schools. The 
Commission recognizes that there is some overlap between its Guides and 
regulations of the Department of Education. Because the Department of 
Education administers student loan and grant money for vocational 
training, it plays the primary role in addressing abuses in this 
industry. There is a concurrent role for the Commission, however, in 
monitoring and addressing deceptive promotional practices.\1\ State 
licensing agencies also regulate vocational training. Increasingly, 
however, vocational schools are owned by national or regional chains; 
thus, maintaining a federal enforcement presence remains important.
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    \1\ It is the Commission's understanding that the Department of 
Education must use its investigative and enforcement resources to 
address practices primarily occurring after a student has signed up 
for training, rather than advertising and promotional practices that 
take place during recruitment of students.
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    The Commission proposes certain modifications to its Guides for 
Private Vocational Schools. Some of these changes are an effort to 
streamline the Guides and eliminate redundancy, while others are 
substantive.
    In particular, the Commission solicits written public comments 
regarding its proposal to amend the Guides to add a provision 
addressing misrepresentations about a school's placement success 
following training. Currently, the Guides address claims about 
placement assistance offered to graduates of a school. They do not, 
however, address false or deceptive claims about the availability of 
employment after graduation from a course of training or the success 
that a school's graduates have realized in obtaining employment related 
to the training. The Commission believes that such claims are important 
to prospective students of vocational training and are likely to become 
even more important in the future.
    At the same time, in order to streamline the Guides, the Commission 
has preliminary determined to delete certain provisions that do not 
offer specific guidance concerning vocational schools and merely 
duplicate other provisions of law. These include Guide provisions that 
address deceptive pricing (Secs. 254.8(a) and (b)); use of the word 
``free'' (Sec. 254.8(c)); deceptive debt collection practices 
(Sec. 254.9(a)); and assignment of contracts deceptively obtained 
(Sec. 254.9(b)). For example the Fair Debt Collection Practices Act, 15 
U.S.C. 1692, and the Commission's Trade Regulation Rule pertaining to 
the Preservation of Consumers' Claims and Defense (the ``Holder-in-Due-
Course Rule''), 16 CFR 433, have superseded the provisions in the 
Vocational Schools Guides that pertain to those areas.
    In order to further streamline the Guides, the Commission also has

[[Page 19704]]

preliminarily determined to delete section 254.10, ``Affirmative 
disclosures prior to enrollment.'' Subsections (a) through (d) of this 
section address school policy concerning attendance, lateness, and 
make-up work; additional costs a student might incur; the school's 
physical facilities and equipment; and placement assistance offered by 
the school. To the extent they are needed, discussion of these issues 
can be folded into prior sections of the Guides dealing with 
misrepresentations and deceptive practices, possibly as examples of 
suggested disclosures that might prevent deception. Finally, section 
254.10(e) of the Guides advises affirmative disclosure of any 
``material facts [other than those specifically addressed in 
subsections (a)-(d) of this section] concerning the school and the 
program of instruction or course which are reasonably likely to affect 
the decision of the student to enroll therein.'' Such a general 
admonishment adds little to the more specific advice set out in the 
remainder of the Guides. This provision merely amounts to a statement 
of the law concerning failure to disclose material facts and therefore 
appears unnecessary.

IV. Request for Comment

    The Commission solicits public comments on the following questions:
    1. Should the Guides be amended to add the following provision to 
Sec. 254.4? (e) An industry member, in promoting any course of training 
in its advertising, promotional materials or in any other manner, 
should not misrepresent, directly or by implication, whether through 
the use of text, images, endorsements,* or other means, the 
availability of employment after graduation from a course of training, 
or the success that the member's graduates have realized in obtaining 
such employment.

    *Note: The Commission's Guides Concerning Use of Endorsements 
and Testimonials in Advertising (part 255 of this chapter) provide 
further guidance in this area.

    2. Are there currently problems in the vocational schools industry 
with use of the kinds of claims addressed in the proposed addition to 
the Guides? If yes, please describe.
    3. Are there other issues, relevant to a prospective student's 
decision to enroll in a vocational school or course of training, that 
are not already covered by the Guides but should be addressed? Please 
explain.

    Authority: 15 U.S.C. 41-58.

List of Subjects in 16 CFR Part 254

    Advertising, Trade practices.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 97-10530 Filed 4-22-97; 8:45 am]
BILLING CODE 6750-01-M