by Robert E. Toone and Catherine C. Deneke
While the value of a college education used to be (pardon the expression) a no-brainer, some have begun to question it. College graduates have generally fared better in the Great Recession than others, but unemployment remains high and many have had to take jobs that traditionally did not require a college degree. Student loan debt obligations now exceed $1 trillion and continue to burden the economy by making it harder for Millennials to buy homes, start businesses, and invest for retirement.
Some students, dissatisfied with the financial value of their education, have turned to the courts for relief. Perhaps not surprisingly, law students have led the way, filing a variety of claims against their alma maters. Other students have sued colleges and universities for, among other things, making misleading claims about job placement or earned qualifications, program accreditation, failure to describe admission standards, and grade disputes. In many of these lawsuits, students have asserted consumer protection claims, on the theory that they are consumers of the institutions they are suing.
In addition to having a celebrated and diverse collection of colleges and universities, Massachusetts has one of the most powerful consumer protection laws in the nation, Chapter 93A. Enacted in 1967 and amended several times since, the statute gives the Attorney General broad authority to implement regulations, investigate potential violations, and file enforcement actions. It also establishes a cause of action for consumers who have been subjected to unfair or deceptive acts or practices. Prevailing plaintiffs may obtain injunctive relief, and recover compensatory damages, multiple damages in the event of a willful and knowing violation, and reasonable attorneys’ fees and costs.
Over the years, a variety of consumer-fraud lawsuits have been brought against Massachusetts colleges and universities. The resulting decisions show that even though liability under 93A is generally expansive, it has significant limits in higher education. It remains to be seen whether a shifting perception of consumerism in the college setting will change this area of the law.
Scope of Chapter 93A’s Application
The most frequently litigated limitation on Chapter 93A’s scope involves its requirement that challenged acts and practices occur in the conduct of “trade or commerce.” In applying this requirement, courts ask whether a challenged act or practice occurred “in a business context,” a fact-specific inquiry that involves the character, activities, and motivations of the parties involved. See Kraft Power Corp. v. Merrill, 464 Mass. 145, 155-56, 981 N.E.2d 671, 682-83 (2013). While considerable attention has been paid in recent years to the experience of students at “for profit” colleges, it is a mistake to assume that an institution’s charitable status under the tax code will shield it from liability under Chapter 93A. In fact, a number of nonprofit colleges and universities have been successfully sued under this statute.
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