USC Hit with Rankings Fraud Class Action After Pulling Rossier Grad School from U.S. News & World Report List
Favell et al. v. University of Southern California et al.
Filed: December 20, 2022 ◆§ 22STCV39350
The University of Southern California faces a class action after its decision to pull its Rossier School of Education from the annual U.S. News & World Report grad school rankings.
California Business and Professions Code California Unfair Competition Law California Consumers Legal Remedies Act
The University of Southern California faces a proposed class action in the wake of its March 2022 decision to pull its Rossier School of Education from the annual U.S. News & World Report (USNWR) graduate school rankings.
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The 54-page lawsuit, filed by three current or former students, says USC withdrew Rossier from the prestigious USNWR rankings, which are relied upon by prospective college students nationwide, after an internal investigation revealed that the university, in concert with higher-ed tech firm 2U, had submitted “erroneous data” to inflate the graduate school of education’s rankings “for years.”
According to the suit, the “scheme” between USC and 2U paid off as Rossier’s U.S. News ranking has stayed “comfortably in the top 20” out of hundreds of schools.
The lawsuit, filed on December 20, 2022, centers in particular on “the way in which USC … [and 2U] aggressively advertised USC Rossier’s fraudulent rankings to grow enrollment in the school’s online programs.” According to the case, USC hired 2U, which provides platforms for online educational programs, not only to provide tech support but “to run the advertising and recruiting for those online programs.”
As the case tells it, USC and 2U “agreed to split the profits,” with 2U getting roughly 60 percent of all tuition revenues while USC, the “ostensible instructor,” received only about 40 percent.
“This arrangement may be illegal,” the lawsuit posits, alleging that “under most circumstances,” federal law, in light of fraud concerns, prohibits institutions from paying recruiters based on enrollment.
“And fraud is exactly what happened here,” the complaint charges.
When 2U was first up and running in 2008, online schools were not as trusted by the public as they are today, “and certainly not seen as the province of elite institutions,” the case shares. The lawsuit says that USC “risked reputational damage” to Rossier and the university as a whole in rolling out an online program with a for-profit partner such as 2U, whose only customer at the time was USC.
“When the relationship was forged,” the filing reads, “USC Rossier ranked #38 in the US News annual ‘Best Graduate Schools of Education,’ … and Defendants knew that preserving or bettering that ranking was key to growing USC Rossier’s online program while furthering their reputational and financial interests.”
Around when the pact between USC and 2U was finalized, the suit says, USC submitted its first batch of faulty data to USNWR. Specifically, the case alleges, USC “cherry-picked” from Rossier’s admissions data and, for the information used to determine student selectivity, submitted only the data from the school’s highly selective in-person doctoral program while leaving out data from its “significantly less-competitive EdD programs,” which were also offered online after 2015.
“Because USC Rossier’s EdD programs are less selective, USC Rossier would have been lower ranked if data from those programs had been included in the school’s survey submissions to US News,” the lawsuit reads.
The complaint says this essentially is “a game [USC] would play” until it was caught red-handed in 2021.
“The fraud paid off: between 2008 and 2009, USC Rossier vaulted from #38 to #22. In the years that followed, USC Rossier jumped even further, consistently landing in the top 20, ultimately soaring to an inflated high of #10 in 2018—all while USC Rossier’s online offerings and enrollment expanded.”
In 2013, amid increasingly fierce competition between USC and 2U and other online schools and program management companies, USNWR released its first edition of rankings for the best online education graduate programs, a list on which USC Rossier ranked 44th, the lawsuit continues. The following year, when USC was one of just five 2U clients and the largest source of revenue for the company, USC Rossier did not participate in the USNWR rankings, the filing says.
“2U went public that same year , and there is no public record of the school’s participation in that less publicized specialty ranking since,” the suit says, claiming the defendants’ marketing going forward instead relied solely on USC’s “doctored ranking” in the better-known list of Best Education Schools.
According to the complaint, the defendants never disclosed to those interested in USC’s online programs that the university’s USNWR ranking relied on data that measured “only a select portion” of Rossier’s in-person degree programs and was not a reflection of the quality of its online programs. This was by design, the case claims, as 2U’s contract with USC required the school to promote online degree programs in a manner comparable to its promotion of in-person degree programs while including certain language to ensure consistent messaging.
Knowing that USC Rossier’s ranking would fall, the school, in the wake of the uncovering of the alleged USNWR fraud, pulled itself from the 2022 edition of the publication’s Best Education Schools, “rather than reveal its true selectivity numbers,” the lawsuit charges. Last month, the dean of Rossier announced that the school had voluntarily removed itself from future editions of the rankings, the case adds.
“Rather than accept the financial and reputational ruin that would follow from the submission of accurate data, particularly about its online students, Defendants chose to keep the truth hidden,” the suit claims.
The case shares that 2U’s work with USC has helped rocket the company into a $2 billion “publicly traded education industry juggernaut.” The foundation of the company’s success, however, was built on fraud and misleading numbers, the suit alleges.
Per the case, the defendants’ conduct has caused Rossier’s students to pay a premium price for an online graduate program that, in truth, was not as highly ranked as they were led to believe.
The lawsuit looks to cover all students who were enrolled in an online graduate degree program at USC Rossier at any time from April 1, 2009 through April 27, 2022.
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