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Princeton Review's Advertising Prompts Lawsuit

By Carina Fung

In a battle between two test preparation giants, Kaplan Educational Centers filed suit against its chief rival, The Princeton Review, charging that the company had made various false claims in advertising its products and services to students preparing for the Graduate Management Admission Test.

In a separate move, the test's sponsor, the Graduate Management Admission Council, sued Princeton Review for the same alleged infractions.

Starting in October, the GMAT will be offered exclusively as a computer-adaptive test, which modifies the test to the ability of the test-taker. Questions get harder if a student answers previous ones correctly and easier if he or she does not.

Current test materials produced by Kaplan and Princeton Review come in either paper-based versions, or in paper-based versions accompanied by simulated computer-adaptive tests on CD-ROM.

Kaplan claims that the cover of Princeton Review's book Cracking the GMAT CAT - 1998 Edition states in three places that the book contains "four computer-adaptive tests on CD-ROM," when in reality, the book contains only one full test on CD-ROM.

Kaplan filed suit last Tuesday under the federal Lanham Act in the United States District Court for the Southern District of New York alleging that Princeton Review is using false promotional claims to sell books and software. Kaplan is seeking immediate injunctive relief requiring Princeton Review to stop using the claims.

Andy Rosen, Kaplan's chief operating officer, said that legal proceedings began after Princeton Review refused to heed complaints from Kaplan and customers.

Kaplan is seeking immediate injunctive relief requiring Princeton Review to stop using the claims. Other parties named in the suit include Princeton Review's two business partners: Random House, Inc. which publishes Princeton Review test-preparation books, and Mindscape, Inc. which publishes Princeton Review test-preparation software.

Princeton Review responds

Paul Cohen, spokesman for Princeton Review, admitted that there was indeed only one full simulated GMAT CAT in the package. He also explained that the series of Cracking review books, for other various standardized tests such as the Medical College Admissions Test and the Law School Admission Test, all have the same statement on their covers.

"These books really do contain four complete tests on one CD-ROM, however with the new GMAT CAT, only one full test could fit on the CD-ROM," Cohen said. There are actually the equivalent number of questions on the CD-ROMas four full GMATs, but since the new computerized version is modified as the student takes it, a larger pool of questions must be created per test, he said.

John Katzman, president of The Princeton Review, called the charges "laughable Their software simply doesn't sell enough to rank as one of our competitors," Katzman said.

Kaplan claims that in addition to deceiving students, Princeton Review has compromised booksellers in its effort to promote faulty books. "This puts booksellers and software retailers in the incredibly uncomfortable position of marketing a product that blatantly misleads the customer," Rosen said.

"This lawsuit is a pathetic misuse of the courts to stem the wildly successful sales of our products, which are not only the market leaders but which have won every competitive review," Katzman said.

Kaplan notified

"We were first alerted to this problem of false advertisement when students called us," Rosen said. Some students who had bought the book and had found the missing tests called Kaplan asking if they had better preparation materials.

Other students who were fooled by by Princeton Review were angry and called Kaplan to see if Kaplan had lied about its test-preparation materials as well, Rosen added.

"We [Kaplan] do not want to be undermined by those who make false claims," Rosen said.

Kaplan said that they complained to Princeton Review about the misleading statements, but it refused to take corrective measures.

The Princeton Review claimed that it took measures to correct the mistakes as soon as they were discovered, long before being contacted by Kaplan. It also said that it had informed Kaplan of this before Kaplan sued, making litigation unnecessary.

The Princeton Review also called Kaplan's claim that it had disregarded customer complaints blatantly untrue. The Princeton Review knows of only one customer who has complained, and that individual has been offered a full refund and a copy of the new software package to come out in several weeks.

"It's one thing to make a mistake, but another to knowingly and intentionally deceive customers," Rosen said. "It would have been better if they had addressed the problem instead of forcing us to sue them."

Initial court hearing last Friday

Kaplan went into court last Friday on a motion for a temporary restraining order to stop Princeton Review from making these allegedly false claims. Rosen said that in a letter to the court and at the hearing last Friday, lawyers representing Princeton Review, Random House, Inc., and Mindscape, Inc. acknowledged that the statements Kaplan identified were false, and said that their clients agreed to stop shipping products with the offending statements.

Cohen said that at the hearing last Friday, Kaplan asked for a temporary restraining order on Princeton Review's GMAT test-preparation materials, but the judge rejected it. Following this, Princeton Review made a statement that they had already stopped the shipment and printing of the products with the erroneous statements, he said.

With temporary relief secured, the court scheduled a full hearing on the merits of the case for today at 9:30 a.m. The judge will determine what kind of remedy is appropriate for the products already in stores and warehouses.

In their letter to the court, Princeton Review's attorneys stated that the "defendants [Princeton Review, Random House, and Mindscape] have confirmed to us that effective yesterday [last Thursday] Random House has taken steps to change the book cover and will not print or ship any more books with the cover in questions."

GMAC also files lawsuit

The GMAC has also filed suit against Princeton Review in federal district court in Virginia for falsely claiming that Cracking the GMAT CAT, 1998 Edition has "two authentic computer-adaptive GMAT tests inside." In reality, authentic GMATs are only available from GMAC and the Educational Testing Service, who writes the exam.

Cohen said that the use of the word "authentic" was not intended to deceive customers.

Wilson said that in addition to Princeton Review's erroneous use of the word "authentic" on its book cover, there are in fact no computer- adaptive GMAT tests in the test-preparation material in question. The book only contains paper-based versions of the test, without even one simulated GMAT CAT.

GMAC decided not to pursue the false advertisement of the presence of two computer-adaptive GMAT tests in Princeton Review's materials. "We decided to limit ourselves to something that was clearly in our domain. In pursuing the other false advertisement claim, we would have to follow different arguments and seek different restitutions," Wilson said.

Princeton Review agreed to cover up the word "authentic" with stickers on all existing copies within 45 days, if GMAC would drop the lawsuit, Wilson said. GMAC did indeed drop the lawsuit, and the paperwork for the settlement was completed Tuesday night.