Trump University was a for-profit educational institution founded by Donald Trump in 2005, but it was shut down in 2010 due to numerous lawsuits and a lack of accreditation.
The university promised students that they would learn the secrets of success from Trump himself, but in reality, many students were left with little more than empty promises and hefty debt.
Trump University's business model was built on the idea of selling expensive seminars and courses to students, often with false promises of guaranteed success.
The university's marketing tactics were often deceptive, with ads claiming that students would learn from Trump's "handpicked" instructors, but in reality, many of these instructors were unqualified or even fake.
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Controversy and Lawsuits
Trump University was plagued by controversy and lawsuits from its inception.
The first lawsuit was filed in April 2010 by six students who claimed that Trump University was more like an infomercial than a legitimate educational institution.
Trump University was accused of using false advertising and high-pressure sales techniques to lure students into expensive seminars.
A federal court approved a $25 million settlement with students who claimed they were duped by Trump University.
The settlement was the result of a class action suit filed by students who claimed they were promised access to Donald Trump's real estate secrets, but instead were sold expensive seminars and told they would be mentored by real estate gurus.
A "one-year apprenticeship" at the educational institute cost $1,495, while a "membership" cost over $10,000, and "Gold Elite" classes ran $35,000.
New York state Attorney General Eric Schneiderman alleged that Trump and his associates engaged in "deceptive acts and practices and false advertising" about the educational program.
Trump University promised students that they would "recoup the cost of the courses in a few months with 'insider' access to special financing and close mentoring by Trump instructors", but this was not the case.
The materials for the course were created by a third-party organization, not Trump.
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Trump netted about $5 million in profit from the fees students paid, despite claiming that he would not profit from the fees.
A New York court ruled that the suit against Trump would still have to go to trial, even though Schneiderman had asked the court for a ruling based on the evidence already presented.
A trial date has not been set, but it will likely take place this fall.
Here is a list of some of the lawsuits filed against Trump University:
Financial Impact
Trump personally made $5 million off of Trump University. This is according to documents and testimony in the court file that indicate Trump collected approximately $5 million in profit in a series of wire transfers and checks written to him personally by the university—and signed on behalf of the university by Trump.
The state Education Department slammed the tycoon for calling the cyber-school a university and demanded he stop using the term. This was stated in a strongly worded letter obtained by the Daily News, which wrote that the use of the word 'university' by Trump's corporation is misleading and violates New York Education Law and the Rules of the Board of Regents.
A New York appeals court allowed a lawsuit brought by the state attorney general to go forward. The lawsuit claims that Trump University, later known as the Trump Entrepreneur Initiative, misrepresented itself and bilked students individually of thousands of dollars and collectively of $40 million.
Perception and Rating
Trump University's BBB rating was a topic of debate during the 2016 Republican debate. Trump claimed it had an "A" rating, but Marco Rubio countered that it had a "D" minus.
The Better Business Bureau (BBB) released a statement correcting Trump's claim. Trump University does not currently have an "A" rating with the BBB.
Here's a breakdown of the BBB's rating history:
- Trump University's BBB rating fluctuated between D- and A+ before being removed in September 2015.
- The company's rating went to an A in July 2014 and then to an A+ in January 2015, but this was due to the automatic removal of old complaints.
- The BBB received multiple customer complaints about Trump University, affecting its rating, which was as low as D- in 2010.
Hard to See as Anything but a Scam
It's hard to see Trump University as anything but a scam. This perception is fueled by the fact that Trump is on the witness list for the case, meaning he'll have to defend himself in court.
The trial could begin in May, at the end of the GOP nominating process. This timing suggests that the case may have significant implications for Trump's presidential campaign.
Everyone who paid thousands or tens of thousands of dollars to attend Trump University is a potential victim of this perceived scam. This is a staggering amount of money for many people, and it's clear that they were promised a lot in return for their investment.
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BBB Rating
The Better Business Bureau (BBB) rating can be a crucial factor in determining a company's reputation. However, it's essential to understand how BBB ratings work and what they truly represent.
Trump University's BBB rating was a topic of discussion during the 2016 Republican debate. Trump claimed the university had a 98% approval rating and an "A" from the BBB, but Rubio countered that the BBB gave it a "D" minus.
The BBB later released a statement correcting these inaccurate reports. According to the statement, Trump University did not have an "A" rating with the BBB. In fact, the company's BBB rating fluctuated between D- and A+ prior to September 2015, when it became "No Rating."
The BBB also clarified that Trump University was never an Accredited Business, which means it didn't meet the BBB's standards for trust and ethics. This distinction is important, as being an Accredited Business requires a company to meet certain standards for customer service, advertising, and other areas.
Here are some key takeaways about the BBB rating:
- Trump University's BBB rating was "No Rating" since September 2015.
- The company's rating fluctuated between D- and A+ prior to September 2015.
- Trump University was never an Accredited Business with the BBB.
History and Background
Trump University was founded in 2004 by Donald Trump, Michael Sexton, and Jonathan Spitalny.
The company was initially incorporated as a New York limited liability company and Trump owned 93% of the company.
Trump University formally launched its education program on May 23, 2005, with an introductory seminar in a rented hotel ballroom.
In its early days, the company focused on online education but quickly expanded to include live, in-person instruction on real estate investing.
At the introductory seminar, students were urged to sign up for additional classes, ranging from $1,495 seminars to a $35,000 "Gold Elite" program.
Approximately 6,000 tickets were sold for a $1,500 3-day course and 1,000 tickets were sold for silver, gold or elite mentored courses ranging in price from $10,000 to $35,000.
Trump claimed that students gave 98% favorable reviews to the program, but some former students reported being pressured to offer favorable reviews.
The company's original business plan focused on online education, with students completing assignments and submitting their work to classmates for a peer review.
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Trump University promised to provide students with clickable videos of the professors, including Trump himself, offering words of wisdom, and periodic live online Q&A sessions with Trump.
In an ad, Trump said, "In just 90 minutes, my hand-picked instructors will share my techniques, which took my entire career to develop."
In 2005, New York's Department of Education notified Trump University that it was violating state law by claiming to be an educational institution.
Advertising
Trump University's advertising tactics were quite aggressive, and they used testimonials to make their program look appealing.
One of the ads featured former students praising their experience in Trump's program, claiming they were "overwhelmingly satisfied" with Trump University.
The students in the ad had some interesting connections to Trump, though - one of them, Casey Hoban, even had a product stocked at some of Trump's golf courses and restaurants.
Another student, Michelle Gunn, had a self-help book endorsed by Trump, and her teenage son even got to take a photo with Trump in his office.
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In one ad, Trump himself read reviews from two men who had previously spoken negatively about Trump University. He said they gave the school "excellent" and "5+" ratings, and even claimed that 98% of students approved of the courses.
Here are some key facts about Trump University's advertising:
- 98% of students reportedly approved of the courses.
- Trump University had an A rating from the Better Business Bureau.
- Some students in ads had ties to Trump, including Casey Hoban and Michelle Gunn.
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