Kaplan Sues Princeton Review in False Advertising Claim

* Defendants claim mislabeling was an honest mistake

Two of the largest providers of admissions testing books and software could face each other in court as soon as tomorrow.

Kaplan Educational Centers has filed suit against the Princeton Review-which controls 50 percent of the SAT software market, according to a spokesperson-in U.S. District Court, alleging false advertising on software and books.

Kaplan is also requesting a temporary restraining order to force Princeton Review to cease sales on two of its products. The two companies offer highly popular test preparation courses for Harvard students.

Kaplan's suit centers around two of Princeton Review's products: its 1998 edition of the book, "Cracking the GMAT CAT," and the deluxe version of its software, "Inside the SAT and ACT."

According to a Kaplan press release issued yesterday, the book cover advertises "four computer-adaptive tests (CATs) on CD-ROM" when it only has one such test.

Kaplan-whose own GMAT book advertises and has three CATs-said that Princeton Review's misleading covers are taking away its customers because they want the product with the most tests.

The press release also states that the box for the SAT/ACT software falsely claims to have two features: the ability to print 300 commonly used vocabulary words and video feedback.

"They're willing to have a product with their name on it which is misleading, and they're not doing anything about it," said Kaplan's Chief Operating Officer Andy Rosen during a phone interview last night.

"This was so blatant that we felt we had to sue," Rosen added.

According to a press release issued by Kaplan yesterday, Princeton Review ignored Kaplan and customer complaints about false promotional claims to sell its products.

But in a phone interview yesterday, Princeton Review Spokesperson Paul Cohen said, "The lawsuit is laughable. It's completely unwarranted."

According to Rosen, Kaplan noticed the mislabeled products last week when it received calls from Princeton Review customers who wanted to know if Kaplan offered any more features.

Friday, Kaplan's chief executive officer called Princeton Review's president and complained, demanding to know what action the company planned to take.

According to Rosen, Princeton Review said that although it recognized the problem, it did not intend to take action to fix it. Rosen said that, "in effect," Princeton Review's response to the allegations was: "So sue us."

But representatives from the Princeton Review said that the error had been discovered four weeks ago and it was being fixed before Kaplan even called it to their attention. The Princeton Review said it has corrected versions of the book and software at the printers and they should be on shelves by next month.

"As to their allegations that we ignored complaints, those are patently false," Cohen said. "We certainly had no intention to mislead anyone. Kaplan's software just doesn't sell enough to be competitive with ours."

Cohen added that the lawsuit was filed at about the same time that Kaplan released its own GMAT book.

"[This suit] is nothing more than a public relations ploy to stem sales of Princeton Review Products," he said.

Kaplan, however, insists that its concerns are for misled consumers.

"What do you do with the 40,000 products that are out there right now?" Rosen said.

In fact, Princeton Review does not plan to recall the mislabeled products. Instead, it will offer a refund to those who want one or send them an updated version of the software.

But Kaplan is not the only party with a bone to pick with the Princeton Review.

The Graduate Management Admission Council (GMAC)-the group that writes the GMAT-also field suit against the Princeton Review with allegations of copyright infringement and false claims of an "authentic" computer-adaptive test.

GMAC and the Educational Testing Service are the only providers of authentic GMATs.

However, Cohen said that as of last night Princeton Review was awaiting signatures on a settlement with GMAC.

The settlement will involve changing the word "authentic" to "simulated" and modifying a graphic in the 1999 edition.

Hostility between Kaplan and Princeton Review is nothing new, according to others in the industry. The President of Peterson's-a company that makes admissions test guides-said he first heard about the lawsuit yesterday morning.

"We've been in the business long enough to know that [they] have been threatening each other for years, but nothing ever happened until now," said President and CEO Peter Hegener. "We all have a responsibility not to exaggerate our advertising. We are trying to convince the public that what we have is a good product and shouldn't misrepresent anything.