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June 30, 2016

La’ James International College to Forgive $2.1M in Student Debts, Change Business Practices through Consumer Fraud Settlement

Iowa-based cosmetology school to submit to outside oversight; company and principals to pay state $550,000

DES MOINES – Fort Dodge-based cosmetology school La’ James International College will forgive $2.1 million in student debts, significantly change its business practices, submit to outside oversight, and pay $550,000, through a settlement with Attorney General Tom Miller.

The settlement, through a consent judgment, resolves a consumer fraud lawsuit filed in Polk County District Court in 2014, alleging La’ James engaged in deceptive, omissive, and unfair practices in marketing, enrollment, and instruction. The settlement affects prospective and current students, as well as former students who owe debts to La’ James.

“This settlement addresses certain past practices by La’ James’ that we allege were simply unfair to many of its students,” Miller said. “We heard from students who tried in good faith to better themselves by enrolling in La’ James’ programs, and found the programs didn’t always match the promises,” Miller added. “Looking forward, this agreement will help level the playing field for current and future students, and it puts in place an outside monitor to help ensure future fairness and compliance.”

Prospective Student Transparency
The agreement requires the school to substantially bolster transparency to prospective students, including a one-page disclosure form:

  • La’ James must clearly disclose costs and fees associated with enrollment and tuition on a one-page disclosure form.
  • The form will include an expected timeline for completing the program, and the percentage of students who successfully completed it within the past three years.
  • The form must disclose items and materials the school expects students to purchase. The school will allow students to buy required items elsewhere, a change from past practices.
  • La’ James is required to provide a list of current instructors and their qualifications to prospective students who request one.

The school must also provide prospective and current students with a handbook that clearly discloses detailed program requirements, policies, and expectations. The handbook must include the total number of hours the school requires for students to complete the program, attendance and leave of absence policies, and how the school assigns customers at its salons.

Current Students
The agreement will affect student training, instructor staffing, leave-of-absence policies, and refunds:

  • La’ James will change how it allows students to complete their required practical training. The school will no longer require students to recruit customers to receive credit or pay the school for clients. Through the agreement, La’ James will allow students to fulfill half of their skills requirements through non-paying customers. The school agrees to provide customers for the remaining half, or allow students to complete remaining skills requirements through non-paying customers or mannequins.
  • The school agrees not to require students to perform janitorial or sanitation services beyond Iowa Board of Cosmetology Arts & Sciences or Iowa Board of Massage Therapy minimum requirements.
  • La’ James agrees to staff classes with qualified, licensed instructors.
  • La’ James may not remove a student’s completed program hours unless allowed by a written policy.
  • La’ James must establish a leave of absence policy that permits extended absences for justifiable reasons, including medical leaves or financial hardships.
  • If a student withdraws within two weeks of enrolling, La’ James must provide a full refund, except for the $50 application fee.

Debt Forgiveness for Former Students
La’ James will cease attempting to collect $2,160,000 in debt, fees, and interest from former students who owe money to the school. La’ James must notify affected former students within 90 days, and also notify credit reporting agencies.

La’ James, Principals Pay $550,000
La’ James will pay the state $500,000, and principals Cynthia and Travis Becher each will pay an additional $25,000. The payments will largely go toward partial refunds to current and former students.

Consumer Protection Division to Contact Students Eligible for Partial Refunds
The division will contact eligible current and former students about partial refunds. Current and former students do not need to contact the Consumer Protection Division to be eligible.

Oversight & Duration
Former U.S. Attorney Nicholas Klinefeldt will serve as an independent settlement administrator, at La’ James’ expense, with authority to oversee La’ James’ settlement compliance. Klinefeldt will serve for a minimum of three years, and the settlement agreement is in place for at least four years.

La’ James International College operates schools in Cedar Falls, Cedar Rapids, Davenport, Fort Dodge, Iowa City, and Johnston, and one location each in Illinois and Nebraska. It is not affiliated with La’James College in Mason City.

La’ James and its parent company principals, Cynthia and Travis Becher, admit no wrongdoing in the settlement.

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