College Resource Management Inc. has settled Federal Trade Commission charges that it made misrepresentations in its direct mail campaign to market a college scholarship and financial aid finding service.
The company agreed to pay $40,000, to abide by a set of marketing restrictions designed to prevent further misrepresentations and to provide increased disclosures in its marketing material, according to the FTC.
The FTC charged College Resource Management, Grand Prairie, TX, with misrepresenting its ability to obtain scholarships and financial aid for college students. In its mailers sent to students, the company stated that the students had been identified as eligible to be enrolled in a nationally recognized financial-aid placement service and could call a toll-free number to set up an interview.
The interviews were held at hotels and were in fact marketing seminars in which high-pressure sales tactics were used, the FTC said. Students and their parents paid $995 to $1,068 for the service, according to the FTC.
The company promised to professionally analyze the students' financial situations and prepare a personalized report, when in fact all the students ever received was general information, the FTC said. The reports typically only contained information submitted by the student and broad strategies not personalized to the students' needs, according to the charges.
College Resource Management also recommended financial strategies that typically are not feasible for college students, such as prepaying a mortgage or having a parent enroll in college, the FTC said.
In addition, the company failed to disclose that the service would be renewed for $300 a year unless consumers canceled within 30 days prior to the renewal date, and it falsely guaranteed that consumers who did not receive $2,500 in aid would receive refunds, the FTC said.