The Federal Trade Commission has fined the Saint James Medical School (SJMS) $830,000 with the proceeds returned to students. They found the school guilty of illegally misleading students about their chances of success on the United States Medical Licensing Examination (USMLE) Step 1 Exam and in finding a residency.
SJMS is a for-profit medical school that operates in the Caribbean and whose corporate offices are in Park Ridge, Illinois. Both SJMS and the lender who finances its student loans are jointly owned and share office space.
As described in the complaint, telemarketers at SJMS used high-pressure sales tactics to induce potential customers to pay the application fee and reserve spots at the school. They are then paid bonuses for how many customers they recruit.
In calls and in other promotional materials, SJMS touted that they offered a USMLE step 1 pass guarantee and promoted more than 94% of their students passing, while knowing that their first-time pass rate was 35%. 97% of students at US and Canadian schools pass the same exam on the first try.
The school further promoted that SJMS students had an 85–90% match rate at residency programs around the country, when in fact only 63% of their students ended up at the residency programs they wished, court documents state.
The FTC also alleged that SJMS’ lender provided illegal contracts to borrows. Specifically, they did not include required text notifying borrowers of their right to sue or required text notifying guarantors of their responsibilities. In fact, these contracts illegally attempted to waive borrowers’ right to sue.
In the final order with the FTC, SJMS and its operators were ordered to pay money towards refunds and cancel certain debts for students harmed by their deceptive marketing materials. They were further banned from promoting their false test pass rate and residency match rate statistics or making any other unsubstantiated claims, and were required to notify borrowers of any canceled debts and refunds.