A Georgia company that provides online career training will wipe out $27.8 million in student debt and pay $15.7 million in consumer refunds to settle a complaint alleging that it duped thousands of military service members and their families with false advertising.
CareerStep agreed to the $43.5 million settlement with the Federal Trade Commission, which asked a Georgia federal judge to approve the deal on Monday. CareerStep’s principal office is in Norcross, according to corporate registration records with the Georgia Secretary of State’s Office. On its website, CareerStep lists a headquarters in Utah.
The FTC said CareerStep, focused primarily on the health care sector, falsely touted inflated employment outcomes, job placements and partnerships with prominent companies including CVS and Walgreens. CareerStep, which advertises to service members and their families, also misrepresented how quickly students would become certified and offered free services in exchange for favorable reviews, the FTC alleged.
“Since at least 2019, CareerStep has lured service members with deceptive advertising on social media and on its website, where it markets its programs, using sales representatives and (artificial intelligence) technology to persuade consumers to enroll,” the commission said in a news release.
Service members who leave the military often encounter challenges entering private sector employment. Sometimes military credentials do not match the needs of the private sector, for instance. In a 2023 survey of 1,000 U.S. military veterans, a third of respondents said finding a job is the biggest hurdle in the transition to civilian life, according to the nonprofit veterans service organization Veterans of Foreign Wars.
On its website, CareerStep states that most of its training programs are eligible for military education grants. The FTC said CareerStep advertises in military-focused publications and periodically attends events sponsored by the military, including job fairs.
FTC Commissioner Melissa Holyoak said service members are too often the target of scams. In 2023, the FTC received nearly 200,000 complaints of all types from military consumers, who reported fraud losses totaling $477 million, Holyoak said.
“Our action will help to restore what consumers lost as a result of CareerStep’s allegedly unlawful practices and stop ongoing harms from accumulated debt and compromised credit,” she said Tuesday.
CareerStep responded to questions about the FTC allegations with a statement that said it has provided practical and affordable career training services to more than 170,000 learners nationwide over three decades. It said its programs fill critical gaps in the health care workforce.
“In recent years, we have put in place a new, experienced leadership team and enhanced our policies and procedures to ensure our people and business practices are responsible and compliant,” the company said. “We are committed to operating with the utmost integrity while delivering accessible, effective training that our learners, partners, and the health care industry need and value.”
Programs offered through CareerStep include medical billing and coding, medical and dental assistance and pharmacy technician training.
The FTC complaint was filed in federal court Monday, the same day the agency asked the judge to approve the settlement. In its complaint, the FTC sought to block CareerStep from making future misrepresentations. The FTC said CareerStep changed some of its marketing in 2023 in response to the FTC’s investigation. The complaint does not state when the FTC began investigating CareerStep.
The FTC said CareerStep frequently fails to place students in the externships required to complete its programs, forcing students to pay as much as $999 for course extensions or forgo qualifications. The vast majority of CareerStep students do not complete the programs they pay for, despite being promised a certification within four months, the FTC said.
“Of those who do complete them, most take much longer than four months because of roadblocks from the company,” the commission said. “For example, consumers report frequent issues with the website and difficulty getting any response from CareerStep representatives.”
CareerStep also does business as CareerCert and Carrus, the FTC said. As part of the settlement, the company must try to remove the online reviews written by students for whom it provided free services.
The company claimed that more than 80% of its graduates obtained jobs in their field of study, court records show. The FTC said that figure was derived from survey responses by less than a quarter of graduates. It said CareerStep’s annual program completion rate was 25% or less.
Fewer than 10% of eligible students enrolled in programs requiring an externship were placed in externships, the FTC said. It said CareerStep’s agreements with companies like CVS and Walgreens “have nothing to do with job placement after graduation.”
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