Colorado’s second-highest court upheld a $3 million penalty against a defunct for-profit college on Wednesday, agreeing the state had proven multiple violations of its consumer protection law.

The Court of Appeals’ decision against CollegeAmerica followed a trial judge’s order in 2020, an appellate decision in 2021, a state Supreme Court opinion in 2023 and a different trial judge’s order earlier this year. The Dec. 24 decision from a three-judge appeals panel largely focused on one outstanding issue: Had the state proven that CollegeAmerica’s deception had a “significant public impact” under the Colorado Consumer Protection Act?

By advertising national wage data clearly divorced from CollegeAmerica’s outcomes, by leading students into an unsustainable loan program and by misrepresenting its program offerings, the answer was yes.

“In each situation, CollegeAmerica advertised a program would lead to a specified result, despite knowledge to the contrary that it would not,” wrote Judge Steve Bernard. “CollegeAmerica learned of these problems in various ways: from misled students who were confused and who filed complaints, from faculty members, and from reports issued by the Accrediting Commission. Yet CollegeAmerica continued to distribute the same misinformation.”

The Colorado Attorney General’s Office originally filed the case in 2014 against CollegeAmerica, two of its executives and the related nonprofit Center for Higher Education, Inc., alleging they employed deceptive advertising about their offerings and outcomes. The school also reportedly offered “unconscionable” loans to students who, for the most part, were unable to repay them.

A four-week trial before then-Denver District Court Judge Ross B.H. Buchanan revealed that CollegeAmerica touted that students would make “more money sooner” and earn “up to $1 million more” with a degree, notwithstanding data showing that graduates experienced notably poorer outcomes.

Admissions officers enrolled students who they believed would “really struggle in school,” including a man with a learning disability who ended up getting his blood drawn for extra credit and returned to his restaurant job after working on his degree. Further, CollegeAmerica dramatically overstated its successful outcomes to its accreditor. Half of the graduates surveyed reported being worse off financially for attending CollegeAmerica, and some even declared bankruptcy.

Buchanan ultimately found that CollegeAmerica had deceived its students and made unconscionable loans to some of those who enrolled. He imposed the maximum consumer penalty of $3 million. However, Buchanan mistakenly believed the attorney general’s office did not need to prove CollegeAmerica’s actions had a significant public impact. In August 2021, a three-judge panel for the Court of Appeals reversed the judgment based on Buchanan’s error.

Under that incorrect reading of the law, “the parties lacked the incentive to present evidence, rebut evidence, and develop a record on this issue,” wrote Bernard, directing a new trial for all of the consumer protection claims.

After the Supreme Court heard the appeal, it was unconvinced the mistake had actually harmed CollegeAmerica’s ability to defend itself. Instead, it directed the Court of Appeals to look at the evidence the parties presented to determine if the litigants had a “full and fair opportunity” to litigate the issue.

The same appellate panel heard from the parties and returned the case to a new district judge, Andrew J. Luxen. After CollegeAmerica and the state determined they did not require a new trial, Luxen heard arguments and issued an order in February agreeing the attorney general’s office had proven a significant public impact.

“CollegeAmerica’s misrepresentations affected many thousands of Colorado consumers,” he wrote. “A single mail campaign reached 13,000-14,000 households. Additionally, the same misleading information was presented in various formats to at least 10,879 students who enrolled at CollegeAmerica and to thousands of other prospective students.”

Luxen added that, under Supreme Court precedent, the state was not required to prove any actual harm to a consumer. Instead, CollegeAmerica’s deceptive conduct had to be “likely to injure the public.”

“No consumers were ‘directly affected’ by the advertising. Persons who ‘merely read’ an advertisement are not ‘directly affected’ by it,” argued Sean Connelly, an attorney for CollegeAmerica, in appealing Luxen’s decision.

“Adopting CollegeAmerica’s position,” countered the attorney general’s office, “would mean not only that the Attorney General has to wait to bring a CCPA (consumer protection act) claim until consumers are injured but also must wait until enough consumers are injured to prove a significant public impact. Nothing in the CCPA supports such a laissez faire attitude toward deceptive business practices.”

The Court of Appeals panel agreed with the government.

“Requiring proof of actual injury to a consumer before a Consumer Act claim can be brought would force the Attorney General to wait on the sidelines for consumers to become victims before the Attorney General could act,” wrote Bernard.

The panel concluded CollegeAmerica knowingly engaged in deceptive practices that negatively affected students financially and professionally. It upheld the outcome of the trial.

Although Bernard and Judge Ted C. Tow III also sat on the panel that decided the original appeal, Chief Judge Gilbert M. Román replaced Judge Craig R. Welling as the third member for reasons the court did not disclose.

The case is Colorado v. Center for Excellence in Higher Education, Inc. et al.