Indianapolis test preparation company sued by state of New York

An Indianapolis college test preparation company, the subject of an investigative report last year by The Indianapolis Star, was sued Thursday by New York's attorney general for "false and deceptive business practices."

The College Network — which operates out of a Northside office and advertises relationships with Indiana State University and Purdue University on its website — also must make changes to its business practices after the Albany County Supreme Court granted a temporary injunction.

American Credit Exchange and Southeast Financial Credit Union are also named in the lawsuit. American Credit Exchange is a collection agency owned by Gary Eyler, who's also owner of The College Network, or TCN. Southeast Financial Credit Union provided personal loans to TCN customers for up to $10,000.

TCN denied the charges in a statement. It said New York attorney general Eric T. Schneiderman's "bloviating statements are the real false advertising in this case. The law is clear and we have done nothing unlawful. ... The College Network has proved to be a valuable resource to help people pursue their dreams of becoming nurses and health care providers."

The company said it filed a complaint to the New York State Joint Commission on Public Ethics regarding "the conduct of certain individuals employed by Mr. Schneiderman."

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 thousands of dollars in upfront purchases financed by personal loans with payments starting immediately — not student loans with deferred payments and lower interest.

TCN is not a school. It sells study guides that the attorney general said "many consumers found difficult to understand and that, contrary to the company's representations, did not prepare them" for college credit exams.

The Star's story quoted a woman from Greenwood whose complaint, contained in court records previous to the New York lawsuit, said she "spent $3,000 for nothing, and that they sold her materials for exams she didn't need."

The story detailed another allegation that is part of the lawsuit — creating the false impression that TCN was affiliated with Excelsior College, an accredited school in New York.

A statement from the New York attorney general's office said TCN "preyed on as many as 2,000" New York residents.

"Hard-working New Yorkers — many of them single moms and immigrants — were duped into buying expensive, inadequate study materials and access to 'academic advisors' who were falsely touted as experts," Schneiderman said in a statement.

"Businesses that take advantage of people seeking to better their lives and communities deserve especially tough attention from law enforcement, and we will continue working to crack down on this kind of abuse in the education sector."

Since The Star's story was published, at least 50 former TCN customers, plus former employees of the company, came forward to recount 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 advisors," or salespeople, said that after the Star's story, TCN convened a national conference call of program advisors, 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.

The lawsuit seeks to permanently bar TCN from advertising or selling its nursing materials in New York and permanently prohibit Southeast Financial Credit Union and American Credit Exchange from attempting to collect debts connected to the alleged misconduct. It also seeks an end to consumers' contracts with TCN and restitution for people who were harmed.

A temporary restraining order — to which TCN consented, according to the attorney general — requires the company to "clearly and conspicuously" disclose on contracts that it is not affiliated with Excelsior College and is not a degree-granting school. TCN must also stop including third-party testing fees in its financing and must send New York customers their test fee checks within seven days.

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.

Terry Tolliver, deputy director of the consumer protection division of the Indiana attorney general's office, told The Star last August that he was "concerned about the volume of complaints."

A spokeswoman for the Indiana attorney general's office said Thursday that TCN "is still under investigation." She said the attorney general has received 80 consumer complaints this year about the company. There were 206 complaints last year.

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 made $2.53 million from 2010 to 2014. Indiana State made $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 material 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.

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.

A class-action lawsuit filed in Ohio last year against TCN was dismissed. A spokesman for TCN said Thursday "the company expects a similar result in (the New York) case."

Attorney Michael Berler, who filed the class-action lawsuit, said TCN contracts included an arbitration clause that "prevents aggrieved victims from taking their cases into court."

"Not a week goes by when I don't get three or four calls from TCN victims from around the country who tell me stories about how they have been ripped off and how it has affected their lives," Berler said. "I have to turn them all away and tell them there is nothing I can do. All they can do is complain to their state's attorney general and the Indiana attorney general."

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