Stevens, Smucker, Torres Small, Van Drew Urge Federal Trade Commission to Investigate Misleading Application for Emergency Aid Funds

WASHINGTON — U.S. Representatives Haley Stevens (MI-11), Lloyd Smucker (R-PA-11), Xochitl Torres Small (D-NM-02), and Jeff Van Drew (R-NJ-02) sent a letter to Federal Trade Commission Chairman Joseph J. Simmons last month, urging the Federal Trade Commission to investigate a private company that appears to be using a misleading application for federal emergency aid funds to mine and exploit students’ data for profit during the COVID-19 pandemic.

Recent reports indicate that a private company, Frank, is advertising an application for students to access Higher Education Emergency Relief (HEER) emergency aid funds through the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). These funds are distributed by individual institutions, making it impossible to provide a legitimate, uniform application for this funding. More than 100,000 students have already completed the form, which invites students to apply for up to $5,000 in federal emergency aid.

“By creating this application, we are concerned that Frank is creating false hope and confusion for students while contributing to unnecessary extra work for financial aid administrators,” the lawmakers wrote. “We further suspect that the company may be using the data collected from misled students to make a profit by selling data to third party advertisers. Accordingly, we request that you immediately work to seek a temporary restraining order against Frank to put a stop to these deceptive practices. […] This tool does not make it any easier for students to get relief funds and appears instead to be a way for Frank to mine and exploit students’ data for profit. As such, the Federal Trade Commission must take swift action to investigate this practice and ensure students are protected.”

The full text of the letter can be found attached or below.

“Dear Chairman Simmons,

We are writing regarding reports that a private company, Frank, has created and is advertising an application for students to access Higher Education Emergency Relief (HEER) emergency aid funds. These funds are distributed by and at discretion of individual institutions and, thus, it is impossible to provide a legitimate, uniform application for this funding. Nevertheless, within the first five days of the application’s launch, more than 100,000 students completed the form. This is particularly concerning given that Frank’s online application mispresents the details of the emergency aid program in stating that aid is “first come first served” and that students can get “up to $5,000.” By creating this application, we are concerned that Frank is creating false hope and confusion for students while contributing to unnecessary extra work for financial aid administrators.  We further suspect that the company may be using the data collected from misled students to make a profit by selling data to third party advertisers. Accordingly, we request that you immediately work to seek a temporary restraining order against Frank to put a stop to these deceptive practices.

As a part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) Congress set aside over $14 billion for HEER emergency aid to students and institutions of higher education (institutions). Under the CARES Act, institutions are required to spend no less than 50 percent of the HEER funding received to provide direct emergency financial aid grants to students.

Most notably however, “students cannot apply for assistance directly from the U.S. Department of Education” and institutions have sole responsibility in determining, “how grants will be distributed to students, how the amount of each student grant is calculated, and the development of any instructions or directions that are provided to students about the grant.” Moreover, according to a survey conducted in early May, 96 percent of financial aid offices have distributed some CARES Act funding, and more than half of those have distributed between 75 and 100 percent of their allocated funds.

Despite prompting students to “Apply Now” and “Apply for up to $5,000”, Frank’s tool does not provide any actual application.  Instead, filling out the form on Frank’s website only generates an email with a letter that students are told to give to their schools. This does not assist students in receiving emergency aid funds and ultimately creates additional work for financial aid offices that receive unprompted letters that do not align with the application process established by the institution for CARES emergency grants. Given that each institution has its own application, eligibility requirements, and available funding, students would be far better served contacting their institutions directly.  The Frank website further presents a list of eligibility requirements that are not representative of the eligibility criteria institutions may be using in distributing emergency aid funds, further misrepresenting the availability and details of CARES-funded emergency aid and misleading students who are in desperate need of support.

In short, this tool does not make it any easier for students to get relief funds and appears instead to be a way for Frank to mine and exploit students’ data for profit. As such, the Federal Trade Commission must take swift action to investigate this practice and ensure students are protected.

Thank you for your consideration of this request.”

###