DISSENTING STATEMENT OF COMMISSIONER ORSON SWINDLE
in Regulatory Reform-Vocational School Guides, File No. P964220

The Commission today has issued revised Guides for Private Vocational and Distance Schools (‘‘Guides’’) to address certain claims that private vocational schools make to their students and prospective students. I have voted against the Guides for two reasons. One reason is that the Guides are not likely to promote voluntary compliance because they do not resolve any demonstrated uncertainly among private vocational schools over what claims are likely to be considered deceptive. The other reason is that any need for Commission action would be largely eliminated if other government regulations and private oversight schemes were more actively enforced.

The Commission has a number of weapons in its arsenal to prevent unfair or deceptive acts and practices, each designed to be used for a specific purpose. Guides are issued when the Commission believes that guidance as to legal requirements ‘‘would be beneficial in the public interest and would serve to bring about more widespread and equitable observance of laws administered by the Commission.’’ Commission Rule of Practice 1.6. The purpose of such guidance is to ‘‘provide the basis for voluntary and simultaneous abandonment of unlawful practices by members of industry.’’ Commission Rule of Practice 1.5.

The Commission has successfully used guides and policy statements to provide industry with standards that eliminate or substantially reduce uncertainty over what the Commission is likely to consider deceptive. See, e.g., Guides for the Use of Environmental Marketing Claims, 16 C.F.R. Part 260; Federal Trade Commission Enforcement Policy Statement on Food Advertising (May 1994). However, there is no reason to believe here that private vocational schools are uncertain over what claims the Commission is likely to consider deceptive. Indeed, the public comments we received from schools did not reveal any such uncertainty that needs to be resolved by the Commission to promote voluntary compliance.1

Perhaps a better way of combatting misrepresentations would be for the government agencies and private bodies that directly regulate this industry to more vigorously enforce their own prohibitions. The Department of Education (‘‘DOE’’) can bar a private vocational school from receiving federal financial assistance if it makes misrepresentations in violation of DOE regulations. 34 C.F.R. Part 668. DOE’s regulatory requirements provide a particularly powerful incentive for most private vocational schools not to make misrepresentations, given the critical importance to most of them of continuing to participate in federal financial assistance programs. State licensing boards and private accrediting bodies also can revoke the license or accreditation of a private vocational school that make misrepresentations.

Some private vocational schools may make misrepresentations notwithstanding these layers of regulation and oversight. When this occurs, DOE, state licensing boards, and private accreditation bodies should use their authority and their standards to address these misrepresentations in the first instance. Although Commission law enforcement action may also be needed to address such misrepresentations in discrete circumstances, I do not believe this possibility justifies our issuance of the Guides.