The ACCC and the Commonwealth (for the Department of Education and Training) have instituted proceedings in the Federal Court against Cornerstone Investment Aust Pty Ltd, trading as Empower Institute (‘Empower’). It is alleged that since at least March 2014, Empower engaged in false or misleading representations and engaged in misleading or deceptive and unconscionable conduct when marketing and selling VET FEE-HELP funded diploma courses to vulnerable consumers. The case is interesting in that the ACCC and Commonwealth are using the one set of proceedings to seek redress for consumers along with a wide range of pecuniary, declarative and injunctive relief.

It is clear that the Commission intends to focus on the VET sector into the new year. The proceedings come following a joint investigation by the ACCC and NSW Fair Trading into the conduct of private colleges. Empower is among four private colleges to have been targeted since October, with proceedings instituted by the ACCC and Commonwealth against other VET FEE-HELP diploma course suppliers, Phoenix InstituteUnique International College (‘Unique’) and Acquire Learning.

Following the announcement that proceedings had been instituted against Unique, ACCC Chairman Rod Sims said, “We are particularly concerned that unscrupulous door-to-door marketing practices previously used in the energy sector are now appearing in the education sector. The joint investigation illustrates how seriously both agencies view these allegations. The ACCC and NSW Fair Trading are continuing to investigate the conduct of private colleges in the education sector”. 

Empower markets and sells VET FEE-Help diploma courses costing approximately $15,000 through face-to-face marketing, including door-to-door sales. Empower enrolled over 10,000 students in its Diploma courses between March 2014 and October 2015, and was paid over $90million in tuition fees through the federal government’s VET FEE-HELP scheme.

The ACCC alleges that in the course of marketing and selling courses, Empower offered inducements to prospective students to enrol in a course, including a free laptop and cash incentives. Further, in the course of recruiting students, Empower allegedly made false or misleading representations including that the courses were free, or were free if the consumer did not earn more than approximately $50,000 per annum. In fact, the consumers incurred a VET FEE-HELP debt payable to the Commonwealth Government where repayment commences if the students earned more than a specified amount in a financial year ($53,345 in the 2014-2015 income year).

It is also alleged that Empower engaged in unconscionable conduct in marketing to vulnerable consumers, including consumers from remote areas, low socio-economic backgrounds and consumers with very poor literacy and numeracy skills. Some enrolled consumers could not use a computer nor had access to the internet, rendering completion rates of the online course low.

The ACCC is seeking redress for affected consumers through the cancellation of their VET FEE-HELP debts, as well as pecuniary penalties, corrective notices and orders requiring the implementation of a consumer law compliance program. Further, the ACCC and the Commonwealth are jointly seeking declarations, injunctions and orders for the repayment of course fees paid by the Commonwealth to Empower in respect of any VET FEE-HELP loans cancelled by court order.

The matter is listed for a directions hearing on 17 December.