For-profit colleges apparently prefer lawsuits to increased regulation

When the Obama administration announced stricter regulations on for-profit trade schools, the lucrative industry went on the offensive, hiring the best lobbyists money could buy. “Best,” of course, means most effective and should not be confused with doing what is right.

The heavy investment paid off, as this report in The New York Times explains. The for-profit trade school industry succeeded in diluting the regulations that would have set real standards for these programs.

Consumer advocates should be outraged. But of course, the U.S. Supreme Court believes that corporations are people, too, at least when it comes to spending gobs of money on political advocacy. So outrage is probably wasted. Instead, I’m going with cynicism.

See, there is a certain level of irony here. Strong consumer protection regulations set standards. When businesses follow strong rules, consumers can purchase what businesses sell. Businesses make money. The market economy works.

But when there are thin rules or no rules at all, temptation and greed lead businesses down the wrong path. This era of deregulation has created a consumer fraud monster. Banking practices, mortgage scams, and trade school fraud are not coincidence. They are the result of the triumph of deregulation.

When corporate actors go too far and rip off too many for too much, those of us who dare to represent consumers can fight back. But that seems like a lousy way for our system to run. I hear a lot of carping from certain politicians about lawsuits. But isn’t that what corporations choose when they fight meaningful regulations?

They don’t, really, as many members of the plutocracy believe they are entitled to both no regulation and no exposure to lawsuits for misconduct. I only hope there is a special place in Hell for those miscreants.

I’m spending my Sunday preparing for more depositions in our ongoing trade school fraud case against Western Culinary Institute/Le Cordon Bleu Portland and its parent, Career Education Corp. My guess is that no real rules means many more of these cases in the future. I suppose I should not complain about regulatory failure because it means more business for me. In reality, I would be just as happy if I never saw another for-profit trade school fraud problem again. That’s clearly not in the cards. So be it.

Phil says

That's because they've all written arbitration provisions into their contracts. You think they are worried about a couple arbitrations here and there? Just the cost of doing business.

That was a pretty disgusting article. Goes to show what a well connected/funded lobbying effort will do.

David Sugerman says

Thanks Phil. Actually, their early generation arbitration clauses are mostly unconscionable, even in the post-Concepcion era. We beat the arbitration clause in our class action against Career Ed Corp recently. But yes, you are correct that for-profit trade schools are resorting to arbitration clauses and that will mean more barriers to consumers. Your disgust is completely warranted, especially when you look at the players who sold out consumers. Even so, we fight on. What other choice is there?

imps says

Love this article, very informative. I am also involved in a lawsuit in state court TX against a for profit medical school, which had a recruiting office in NY state and is actually headquartered in Mexico. These for profit med schools are committing the same types of consumer fraud as their domestic counterparts, with even less regulation and scrutiny at the state and federal level

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