AG files suit against Daymar College for consumer protection violations

07/27/2011 06:33 PM

Attorney General Jack Conway filed suit today in Daviess County against the owners of and operators of Daymar College over allegations the for-profit school violated Kentucky’s Consumer Protection Act.

The lawsuit alleges that Daymar and its president, Mark Gabis, violated the Consumer Protection Act by engaging in unfair, false, misleading and deceptive trade practices.

Conway’s office received information in 2008 that Daymar College was preventing students from buying textbooks and supplies cheaper from other sources.

The allegation prompted the Attorney General’s office to issue subpoenas and civil investigative demands to Daymar College in 2009 and 2010.

The investigation concluded that Daymar had been engaged in a sophisticated practice of deceiving and misleading students about their textbooks and financial aid.

The suit alleges tudents would be forced into purchasing books and supplies from the college at prices higher than other vendors. The complaint alleges that the defendants’ actions also amount to an unlawful restraint on trade.

The Attorney General alleges that the defendants also provided false and misleading information to students about the transferability of credits earned at DaymarCollege.

In addition to telling students their credits would transfer, the complaint alleges that written information provided by Daymar college about the transferability of credits omits the material information that credits are not likely to transfer to other schools.

The complaint goes on to allege that some programs offered at Daymar do not meets the standards of its institutional accrediting organization and that Daymar has enrolled students who do not meet the school’s criteria for admission to career colleges.

This practice increases the likelihood that a student will withdraw from the school, be unable to pay the debt they incurred while attending Daymar and be unable to get a job in their career field, according to the suit.

Conway says that it’s too early to speculate on what damages he’ll be seeking.

He estimates that as many as 5,000 students were involved in the problem with the text books.

Under consumer protection law, there could be penalties of up to $2000 per violation.

According to information from the U.S. Department of Education, Daymar Learning, Inc., has the second highest default rate of any Kentucky-based school.

The Attorney General’s investigation of Daymar College predates the announced investigation into six other for-profit colleges in December of 2010.

Conway is leading a national bipartisan effort , which now includes 19 states, to examine potential abuses within the industry.

Daymar campuses and learning sites in Kentucky are located in Albany, Bellevue, Bowling Green, Clinton, Louisville, Madisonville, Owensboro, Paducah, Russellville and Scottsville. The school also has an online program.

Reporting by Don Weber

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