An online marketing company that recruits veterans and other students on behalf of mostly for-profit colleges has agreed to pay $2.5-million and shut down one of its sites to resolve allegations of predatory practices.
The settlement between QuinStreet Inc. and 20 state attorneys general was announced Wednesday by Attorney General Jack Conway of Kentucky, who had been leading an investigation into how the company was marketing to veterans.
The states alleged that QuinStreet had violated consumer-protection laws by running "false, misleading, and deceptive" Web sites, like GIBill.com, that singled out veterans and military-service members for their educational benefits.
Under the terms of the settlement, QuinStreet will transfer ownership and control of the GIBill.com domain to the Department of Veterans Affairs within the next 10 days. The VA said it would redirect traffic from that site to its home page.
The company's Web sites, state officials said, falsely implied that they were operated or approved by the federal government. In addition, the states said the company created the misleading impression that the educational institutions listed on its sites were the only places where veterans could use their educational benefits. In fact, those lists comprised only QuinStreet's client institutions, most of which were for-profit colleges, the attorneys general said.
QuinStreet denies the allegations. In a statement, the company said it did not believe its Web sites were misleading, but it had entered into the settlement to avoid "a potentially longer, more costly and distracting process." QuinStreet does not admit to any wrongdoing in the agreement.
The settlement also requires the company to post a number of new disclosures on the approximately 700 military- and education-related sites that it operates, according to Mr. Conway. For instance, QuinStreet will have to make clear that its military-related sites are not government-affiliated and that colleges pay the company to appear in its listings.
At a news conference Wednesday, Mr. Conway said that he could not discuss what, if any, action would be taken against the educational institutions that hired QuinStreet to "generate leads" and direct prospective students to them.
Mr. Conway has been leading a multistate, coordinated investigation into the for-profit education industry. Last month, 21 attorneys general urged Congress to change the "90/10" rule, so that GI Bill and other educational benefits for veterans are included in the 90-percent limit on how much revenue for-profit colleges can receive from federal student-aid programs.
Democratic Sen. Richard Durbin of Illinois, who has introduced legislation to modify the "90/10" rule, said Wednesday that the attorneys general have taken action to curb predatory practices in ways that Congress "has been unable or unwilling to."
Congressional action to further regulate the for-profit education industry at the federal level is challenging, Mr. Durbin said, because the sector owns "every lobbyist in this town."
Other Democratic senators present at a news conference Wednesday praised the settlement but said Congress needs to do more do more to clamp down on for-profit colleges' aggressive recruitment of military students and veterans.
Sen. Kay Hagen of North Carolina said that the QuinStreet settlement was an example of why Congress needed to pass a bill she introduced that would prohibit colleges and universities from using any federal student-aid money for advertising and marketing activities.
The other states that signed on to the settlement are Alabama, Arizona, Arkansas, Delaware, Florida, Idaho, Illinois, Iowa, Massachusetts, Mississippi, Missouri, New York, Nevada, North Carolina, Ohio, Oregon, South Carolina, Tennessee, and West Virginia.