The agency has asked a U. S. District Court to cite the defendants for contempt of court, and order full redress to consumers in the amount of at least $1,938,277. The agency also has asked the court to modify the existing settlement to bar the defendants permanently from selling any academic goods or services.

In August 2003, the FTC filed suit charging the defendants with making misrepresentations in connection with the marketing and sale of their college financial aid services. NSFA sent high school students and their parents letters inviting them to a free financial aid seminar. According to the FTC, the interviews, typically held in local hotels, were sales seminars at which NSFA promoted its college planning and financial aid services. These services ranged in price from $795 to $1,200, and purportedly helped consumers receive substantially more financial aid than they could get on their own. The FTC’s complaint alleged that NSFA misrepresented that: (1) students were selected based on their qualifications to participate in the defendants’ financial aid and admissions program; and (2) consumers who purchased their services were likely to receive substantially more financial aid than consumers could get on their own. The complaint also alleged that between October 1997 and October 1999, NSFA falsely represented that they would refund their fees to consumers who did not obtain $2,500 in financial aid to attend a state college, or $3,000 to attend a private college.

NSFA agreed to settle the case-- the settlement required the defendants to make certain affirmative disclosures in their oral sales presentations, including that: (1) purchasing NSFA’s services did not guarantee that a consumer will get financial aid or get more financial aid than the consumer otherwise could have obtained without purchasing NSFA’s services; (2) purchasing NSFA’s services did not guarantee that a consumer’s child will be accepted by any college or university; (3) NSFA provided no services until it received a completed questionnaire, that certain services had to specifically requested, and that failure to utilize any services did not entitle consumers to a refund; (4) consumers might not realize the full benefit of NSFA’s services if their children were within six months of graduating high school, had not made reasonable efforts to complete necessary paperwork for admissions and financial aid, or were only considering attending community college; and (5) consumers who were not U.S. citizens might not be eligible for federal or state financial aid.

The present contempt action began on July 22, 2004, when papers were filed with the court. In those pleadings, the FTC alleges that NSFA and its principal, Alan Wilson, are engaged in the same misleading and illegal practices they were charged with in 2003 and that they had agreed to cease. “In an effort to persuade consumers seeking college financial aid to pay at least $1,000 they can ill-afford to spend, NSFA’s sales personnel continue to misrepresent the efficacy of NSFA’s services and the amount of effort required by consumers to implement those services,” the brief in support of the FTC’s motion says.

The FTC charges that NSFA and Wilson continue to:

• misrepresent that consumers are likely to receive substantially more financial aid using NSFA’s services than they could otherwise obtain on their own;
• misrepresent that consumers purchasing NSFA’s services are likely to receive a specified amount of financial aid or an increase in financial aid eligibility; and
• misrepresent the extent to which consumers will be required to incur additional expense or partake in any activities in order to use NSFA’s services.

In addition, the agency alleges that NSFA and Alan Wilson have failed to make the required affirmative disclosures during NSFA’s oral sales presentations.

To remedy the defendants contemptuous behavior, the FTC has asked the court to rescind all consumer contracts entered into since August 2003 and to refund all monies consumers paid to NSFA during the contempt period. The agency also has asked the Court to modify the settlement to ban NSFA and Wilson permanently from the marketing and sale of academic goods and services.