Indiana AG sues The College Network of Indy, alleging abuse and deception

The College Network, an Indianapolis company investigated last year by The Indianapolis Star, was sued by Indiana's attorney general, who accuses the company of "unfair and abusive practices" in the sale of study materials for college equivalency exams.

Indiana became the second state to sue The College Network, which operates out of a Northside office and promotes relationships with Indiana State University and Purdue University.

New York's attorney general sued the company earlier this month, alleging "false and deceptive business practices." That complaint names a collection agency owned by Gary Eyler, who's also owner of The College Network, and a credit union that provided personal loans to TCN customers.

Indiana's complaint names only The College Network. It said the personal loans for customers, with payments starting immediately, are at high interest rates and that relatively few people actually complete TCN's program and earn a college degree. The state has received 492 written complaints against TCN since 2011.

TCN is not a school, but the lawsuit says it tries to give customers that impression. The attorney general alleges that TCN does not make it clear that students still must "apply, be admitted, take classes, and graduate from an actual college or university to obtain a degree."

The Indiana lawsuit seeks the cancellation of TCN's "unlawful contracts," restitution for customers and civil penalties of up to $5,000 per violation. The Indiana lawsuit cites numerous alleged violations in the contract used by the company to extend credit to customers.

"The College Network has taken advantage of honest people looking to better themselves and obtain a college degree," Indiana attorney general Greg Zoeller said in a statement. "This deceit is unconscionable, and has left hundreds of Hoosiers in debt with nothing to show for it. People should be very wary of companies like this that claim to offer short-cuts to earning a college degree."

A statement from TCN said the company "will vigorously defend against what it considers to be unfair piling on with repetitive allegations which have no merit. ... We are proud of our legacy. For more than 20 years, we have helped over 200,000 people pursue their educational goals."

The company has also denied the allegations in the New York attorney general's lawsuit.

In a story last August, The Star reported customer allegations of deception or outright fraud by TCN salesmen, and high-pressure sales tactics to entice people, often nursing students, to sign for purchases up to $10,000. Customers typically commit to entire programs up front. Many said that by the time they realized the program was of little value to them, the cancellation period had passed.

The story noted that the customers were often people of limited means trying to better themselves. One court document described them as "already insecure, just trying so hard to do the right thing to get an RN."

New York attorney general Eric Schneiderman said many of them were "single moms and immigrants ... duped into buying expensive, inadequate study materials and access to 'academic advisors' who were falsely touted as experts."

The Star's story also noted that Eyler and his national truck driving school were sued by the federal government in 1988 for $366 million on allegations of fraud and poor training. The school's students had a very high default rate on government-backed student loans. The company later settled — for $50,000, TCN said — but went bankrupt and closed.

Since its story, The Star has received about 75 emails and phone calls from TCN customers from around the country, recounting negative experiences with the company.

"I was almost in tears when I read this article because, word for word, what these people went through was me," said Sherri Watts, a former TCN customer who lives in Florida.

Two former "program advisers," or salespeople, said that after The Star's story, TCN convened a national conference call of program advisers, about half of which was devoted to dealing with The Star's article. They said they were told to emphasize to potential customers it was a relatively small number of people complaining — and not to click on the article, hoping it would rank low in search engine results.

TCN, incorporated in 1995, attracted the attention of Indiana's attorney general in 2004. The company signed an "assurance of voluntary compliance" outlining detailed requirements for notifying customers in Indiana about when and how they can cancel and how soon refunds must be delivered. It mandated contract cancellations and refunds for two people.

The Star found that Indiana's attorney general received more than 200 consumer complaints about TCN from December 2012 to July 2014. In Texas, Florida and Ohio, attorneys general also received complaints.

The lawsuits in Indiana and New York note the bundling of equivalency exam fees in the financing of TCN's program and customers having to wait for months for the money to be issued when they're ready to take the exam.

The Star's story found that the trademarks and names of Indiana State and Purdue were included in TCN videos. Both schools profit from contracts with TCN. Purdue's contract led to revenue of $2.53 million from 2010 to 2014. Indiana State's contract led to revenue of $1.36 million from 2006 to 2014.

Purdue's relationship involves the Lean Six Sigma certificate program, for improving business processes. Purdue was not mentioned in any of the complaints reviewed for the story.

Indiana State developed materials that TCN sells to customers. The university had been named in at least two lawsuits with TCN since 2011. The school was dismissed from both of those lawsuits.

Katie Butwin, Indiana State general counsel, said Friday the school terminated its relationship with TCN last month and that it is "reviewing the litigation with interest."

TCN's website, however, still listed Indiana State among its four "University Partners" on Friday.

"ISU and TCN are not partners," Butwin said. "ISU has previously asked TCN to remove all references to a 'partnership' with ISU. ... We continue to monitor the situation with TCN and expect that the TCN website will soon be updated to remove reference to ISU."

A Purdue spokesman said school officials haven't yet had a chance to review the Indiana attorney general's complaint. But he said Purdue's relationship with TCN is in "limited scope" and is not related to any undergraduate degree credit.

The Federal Trade Commission started an investigation of TCN last year, but it's unclear where that stands. A spokeswoman said the FTC does not comment on the status of investigations except for publishing official decisions.

Contact Mark Alesia at (317) 444-6311. Follow him on Twitter: @markalesia.



