myTime Learning is a private vocational education training provider in NSW operated by Phoenix Institute of Australia Pty Ltd. myTime’s business model was apparently to sign up eligible students to online courses funded by the Commonwealth’s VET FEE-HELP student loan scheme. Students were allegedly signed up by face-to-face marketing including door-to-door sales. Once the VET FEE-HELP funding was approved, the fees would be paid to myTime by the Commonwealth, and the student would be left with a debt to the Commonwealth.
Through its successful sign up process, myTime was able to generate over $100 million in VET FEE-HELP fees from the Commonwealth. However, the course commencement rates were extremely low.
After a joint investigation by the ACCC and NSW Fair Trading, the ACCC and the Commonwealth have brought proceedings in the Federal Court of Australia against myTime alleging that it made false or misleading representations and engaged in unconscionable conduct in its recruitment activities. In particular, it is alleged that myTime targeted some of the most vulnerable groups with misleading promises of free iPads and misleading statements to the effect that courses were “free”.
Among other relief being sought against myTime, the Commonwealth is asking the Federal Court to order myTime to repay course fees to the Commonwealth and that the VET FEE-HELP loans be cancelled. In announcing the commencement of the action against myTime, NSW Fair Trading Commissioner Rod Stowe said:
“This is another reminder to colleges that they need to be upfront and clear with prospective students. Prospective students need to know that by signing up for a course they do not get a free laptop, they incur a lifetime debt”
Where recruitment activities involve heavy marketing and/or what might be regarded as aggressive sales tactics, the line between recruitment conduct that is lawful and conduct that breaches the Australian Consumer Law can be difficult to draw. The myTime case is a salient reminder to vocational education providers that they can expect continued and specific regulatory scrutiny of their recruitment tactics.