Tuesday, May 9, 2023

Student Class Action Lawsuit Against USC For Reporting False Data To US News To Boost Its Ranking Withdrew To Federal Court

Follow up on my previous posts (links below): Law.com, Class Action Lawsuit Alleging USC Fraudulently Inflated US News Rankings Moved to Federal Court:

The University of Southern California and educational consultancy 2U Inc. withdrew a class action lawsuit alleging fraud in federal court on Wednesday, the second lawsuit filed against USC after the first filed in December. …

In March 2022, USC surprised many when it removed its Rossier School of Education from the world-renowned US News & World Report ranking of graduate schools in education. The ranking is widely known as the “most referenced single source of school prestige and academic standing that prospective students consult when selecting a school,” according to the complaint.

USC allegedly took advantage of this platform by inflating its ranking to draw more attention to its graduate program, to its and 2U’s financial benefit. An internal investigation by USC attorney Jones Day revealed the extent of the “mutual aid and complicity” of the two companies in this alleged scheme.

The defendants together “aggressively publicized USC Rossier’s fraudulent rankings to increase enrollment in the school’s online programs,” according to plaintiffs Iola Favell, Sue Zarnowski and Mariah Cummings, who argue they relied heavily on USC Rossier’s rankings. US News from the school to decide to apply. …

According to the complaint, USC hired 2U to conduct advertising and recruiting for its online graduate programs. 2U would reportedly receive 60% of all tuition revenue, while USC received 40%, according to the complaint.

“This arrangement may be illegal; In most circumstances, federal regulations prohibit institutions from compensating recruiters based on enrollment, in recognition of the fraud that often occurs when financial motivation

TaxProf Blog Coverage:

https://taxprof.typepad.com/taxprof_blog/2023/05/student-class-action-usc-for-reporting-false-data-to-us-news-to-goose-its-ranking-removed-to- federal-court.html

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