Kaplan settles lawsuit against Princeton Review over claims

The Harvard Crimson (U-WIRE) CAMBRIDGE, Mass. -- Just 10 days after Kaplan Educational Centers filed a lawsuit against Princeton Review for using false promotional claims to sell books and software, the two parties reached a settlement after a day-long hearing. The settlement, reached yesterday and effective immediately, mandates that Princeton Review immediately send all distributors and book retailers corrective stickers, to be placed over all false claims, as well as a letter acknowledging the misstatements. There are two items which need to be corrected by sticker. The cover of Princeton Review's book Cracking the GMAT CAT 1998 Edition with CD-ROM trumpets -- in three places -- that the CD-ROM contains four complete computer adapted practice tests. In reality, the book contains only one test on CD-ROM. The second misstatement is on the box of Princeton Review's Inside the SAT & ACT 1998 Deluxe Edition Software, which promises two new special features: "Video Feedback that tracks your progress on practice test," as well as the ability to "print the 'Hit Parade' list of the 300 most commonly tested words on the SAT." In actuality, neither feature is included in the product. "These were clearly not innocent mistakes," said Andy Rosen, chief operating officer for Kaplan Educational Centers. According to court testimony, although Princeton Review discovered false claims on the cover of its book at the beginning of August, it still decided to continue shipping the remaining half of the inventory to booksellers and distributors. Similarly, misstatements on the software box were discovered in mid-August, and shipment continued until Kaplan filed the law suit. Reed Talada, executive director of Princeton Review of Boston, defended his company yesterday. "The errors were discovered six weeks ago," he said, referring to a phone call from a customer which brought the misstatement to their attention. "We had actually taken steps to correct the error[s] when the lawsuit hit the streets. "When we received notification from Kaplan, we were not surprised, because we were in the process of fixing them," he added. According to Talada, part of the Princeton Review's solution was to send out stickers to bookstores and software distributors to correct errors. Nonetheless, Kaplan said it remains firm in its belief that the Princeton Review did not make a good-faith effort until Kaplan filed a lawsuit. Kaplan contacted Princeton Review by letter on September 9, shortly after discovering the false claims, said Seppy Basili, Kaplan's educational program director. Following the letter, the two companies corresponded via telephone, all to no avail. On September 16, Kaplan filed suit. Princeton Review spokesperson Paul Cohen said "[this suit] is nothing more than a public relations ploy to stem sales of Princeton Review products." Kaplan's Basili strongly rejected this claim, noting that lawsuits are costly and time-consuming. "They take a lot of time, so we wouldn't want to do this," he said. "It's a distraction from what we're really here to do," adding that the lawsuit was filed to protect customers. Kaplan and Princeton Review are the two largest educational test preparation companies in the U.S., and lawsuits between the two are nothing new. Princeton Review has sued Kaplan several times in the 1990s. Most suits between them center around false advertising, and all of them usually get settled outside of court, Basili said. Regardless of Kaplan's motives for filing this suit, Princeton Review officials said they're happy with the settlement reached. "I'm feeling great," Cohen said. "The settlement puts this silly lawsuit behind us. The settlement did not involve any product recall or liability."