Notice of interpretation regarding misrepresentations by third-party service providers engaged by an institution of higher education
Description
The guidance reminds institutions that federal misrepresentation rules apply not only to their own communications but also to statements made by third-party service providers, such as Online Program Managers (OPMs). Institutions may be held liable for misleading claims by these providers, including presenting external staff as institutional employees, labeling recruiters as “advisors” or “counselors,” or stating that an online program is identical to its on-campus counterpart when substantive differences exist. The Department indicated that three types of statements if made by an institution or external service provider could “under certain circumstances” qualify as misrepresentation. The guidance underscores that violations can lead to penalties such as fines or loss of Title IV eligibility.
Additionally, the Department reaffirmed that bundled services agreements remain permissible if they comply with the incentive compensation ban and leave enrollment decisions under institutional control. Institutions are expected to closely monitor and manage their external partnerships to prevent misrepresentation.
Action to be taken
When working with external contactors institutions should consider the following:
- Review all third-party contracts for compliance clauses and misrepresentation prohibitions.
- Monitor all student-facing communications from third parties (ads, scripts, websites, brochures).
- Train institutional and third-party staff on misrepresentation rules and prohibited claims.
- Approve or audit marketing and recruitment materials before use.
- Establish oversight processes for ongoing review and documentation.
- Correct and document any misleading information promptly.
- Verify that third-party payment structures comply with incentive compensation rules.
Publication Date
- January 16, 2025