APSCU Misrepresentation Guidance: Datamark’s View

On October 11, APSCU published guidance for its membership on “The Misrepresentation Rule and Third-Party Vendors.” We congratulate APSCU on the publication of this very comprehensive treatment of a very complex topic, particularly its holistic review of the federal and state regulatory issues beyond “Substantial Misrepresentation” that education marketers must consider. We view the publication of this document as an important step in helping us all achieve our common objective – honest, open and effective communication of the benefits of education to prospective students.

Short of ending all promotional activities, it is difficult to proscribe a specific set of practices to adopt or actions to take that will, with certainty, remove all risk of non-compliance.

As APSCU’s paper mentions, the Substantial Misrepresentation rule is both highly specific in some areas, and extremely broad in others. To our knowledge, it has not yet been interpreted in an administrative or judicial proceeding. We have found wide variance among our clients and prospective clients in both interpretation of the rules, and the costs they are able or willing to bear to mitigate misrepresentation-related risk. Further, we recognize that how individual colleges and vendor partners apportion risk in their contractual relationships is a function of a multitude of factors unique to each pair of parties.

In short, Datamark’s view is that APSCU’s guidance provides a comprehensive set of potential actions that each member college should consider in the context of its existing compliance activities, marketing objectives, risk tolerance, market power and channel strategies. Some suggested actions, such as formalization of policies, will be appropriate to almost all colleges. Others will be appropriate or realistic to consider for a very few colleges with unique vendor relationships. We encourage our clients to review the APSCU guidance in the context of their unique objectives and context, and, as always, encourage them to seek guidance from counsel where appropriate in considering additional investments in compliance.