Misleading Ads And Crazy Schemes

The problems are as old as time.  People making misleading statements to secure people's money, and people trying to get people's money with crazy or ill advised ventures and opportunities.  A patchwork of laws regulate this conduct, but not terribly effectively.

Who are some of the most recent offenders that have assaulted my ears and eyes?

* Recent radio advertisements for programs claiming to teach you how to fix and flip houses, and how to profit from investments in property tax liens, are grossly misleading or outright false, dramatically overestimating likely returns, and underestimating the risks and investments of time and talent that are required.  If they were selling the investments themselves, these advertisements would constitute illegal and actionable securities fraud, but because they are merely selling overpriced educational programs instead, they aren't "securities" and can get away with making these false claims (although these advertisements are still probably "deceptive trade practices" which are actionable under the Colorado Consumer Protection Act).

* Western International University, which is a for profit private educational higher educational institution targeted at working, non-traditional students, mostly in a remote education format, based in Phoenix, Arizona, is currently running a radio campaign lauding the benefits of faculty led 10 minute classes which argue that adults have trouble retaining anything longer.  I would suggest that people who can't retain information from a presentation longer than 10 minutes really shouldn't be seeking degrees at all.  It's classes are eight weeks long.

Most of the higher educational institutions that advertise on the radio are for profit institutions that, while accredited, have high tuition, low retention and graduate rates, poor rates of career success for graduates, and poor reputations.  They minimize professor pay, spend a great deal of their revenues on marketing and sales functions, generally don't have tenured faculty, and rely on federal Pell Grants and federally subsidized student loans for the bulk of the funds that they receive to bring in revenues.  Default rates on the student loans incurred at these institutions are generally much higher than public and non-profit higher educational institutions.

For example, in the 2011-2012 year, Western International University had 4,696 students enrolled (89% online), but only 98 were first time, full time students enrolled in bachelor's degree programs.  Only 21 of those were still enrolled a year later (a 78.6% dropout rate in the first year alone), and only 4% of first-time, full time students graduate in 3 years for associate degree programs or 6 years for bachelor's degree programs.  None of the 50 students who were black, Hispanic, Native American, or identified with "two or more races", or non-resident aliens graduated, 5% of white students graduated (3 out of 61), and 2 out of 12 students who declined to identify their race or ethnicity graduated.  There were no Asian or Pacific Islander students enrolled there on a first time, full time basis.  Apparently, about 10% of part-time or not first-time students earn a certificate or degree of some kind each year although the website isn't very forthcoming on this point.

Online tuition is $6,072 per year for undergraduates and $8,592 for graduate students, and is $11,112 per year for undergraduates and $15,336 a year for the small number of "ground campus" students.

Like the institution where I was a professor for a while, the College For Financial Planning, it is a sister college of the University of Phoenix and is owned by the Apollo Group (whose Horatio Alger story billionaire founder died in his 90s this week).

* College America's pitch is the abundance of big scholarships that they offer, more of less indiscriminately, which is simply a matter of offering everyone or almost everyone a scholarship and inflating its tuition by the same amount.  Like Western International University and most other for profit colleges, however, they are a very poor value.  A state college or community college is almost always a better value, and community colleges and some state colleges, like Metro in Denver, admit pretty much anyone who has completed high school or a GED and has the slightest prayer of not flunking out when faced with college level material.

* Radio campaigns (often for hair products or skin products) that claim that free offers are available only if you call in an order within the next ten minutes or half an hour, when in reality, the company has no idea when the radio ads will air and there is no such time limitation, are another scam that I despise.

* While merely misleading and not actually false, I despise advertisements in the newspaper by automobile dealers that show a huge colored print price of a vehicle than is not of various discounts from manufacturer's suggested retail price in much smaller black print that include several thousand dollars of "your cash".  I'm sorry, "your cash" is part of the price of the car.  An advertisement like that screams out to the reader that the dealer is hell bent on cheating you in your negotiations to buy the car and can't be trusted.

* Multilevel marketing campaigns, often euphemized as "direct marketing" are another huge swindle.  If these industries could be regulated or taxed to the point where the industry ceased to exist entirely, the world would be a better place.

* It is amazing how many illegitimate "college preparation" counselor and test preparation and special programs advertise and make cold calls in a way designed to make them seem official or to have a prior relationship with you, when they have neither.

* "No call lists" seem to have made great inroads in stopping telemarketing, although a few persist claiming thin "prior relationships" or because they are marketing for non-profits.  In the many months before I killed my land line this month, perhaps 95% plus of calls had become junk calls, and some of the rest were robocalls (e.g. from the library reminding you of overdue books).

I have no tolerance for receiving a robocall with no one on the other side of the line when I pick up for a few moments.  It is one thing to call an automated service, and another to receive calls from them.  When I get a call like that, I immediately hang up.

* I am also offended by insincere astroturf political campaigns such as the No on 68 campaign in Colorado right now (funded by casinos to protect their turf, despite its anti-casino rhetoric), and the big dollar pro-fracking campaign of a few months ago funded by big oil companies.

Regulating these kinds of commercial and political speech and business ventures without offending the First Amendment's free speech guarantees isn't easy.  But, I do think that we could do a better job of it than we do.  Neither freedom of conscience, nor a healthy economy, require that we tolerate whole industries whose very business model depends upon deceiving and exploiting consumers and investors, although the free speed issues associated with misleading political speech are more challenging.