The Federal Court has found training college Cornerstone Investments Aust Pty Ltd, trading as Empower Institute (Empower), engaged in unconscionable and misleading or deceptive conduct, and made false or misleading representations when enrolling consumers into diploma courses.
Between March 2014 and October 2015, Empower enrolled more than 6,000 new students in its courses. Many of these students were vulnerable consumers and were signed up using incentives such as free laptops and cash, unaware they were incurring a significant debt.
"Empower misled vulnerable and disadvantaged consumers into enrolling in courses they would likely be unable to complete. Many consumers it enrolled had poor literacy and numeracy skills. Some who enrolled in online courses could not even use a computer and did not have access to the internet," ACCC Chair Rod Sims said.
"Empower also failed to provide clear and accurate information about the price of the courses and the nature of the VET FEE-HELP loan."
"The court held that in all the circumstances, Empower’s conduct was unconscionable," Mr Sims said.
"Empower was paid more than $64 million by the Government under the VET FEE-HELP scheme for enrolling students using these appalling tactics, while the students were left with large debts."
The ACCC will now seek remedies from Empower, including redress for affected consumers and pecuniary penalties.
The ACCC has taken action against a number of private colleges and can seek remedies from the court in those cases, but cannot itself, cancel the debts of affected consumers.
Background
The ACCC and the Federal Government Department of Education and Training commenced proceedings against Empower in December 2015 following a joint ACCC and NSW Fair Trading investigation.
Empower was a provider of VET FEE-HELP Diploma courses which cost up to $15,000 per course. It marketed and sold these courses using face-to-face marketing, including door-to-door sales. Courses marketed to consumers included Diploma of Management, Diploma of Business and Diploma of Early Childhood Education and Care.
Empower marketed and sold VET FEE-HELP funded courses to consumers in remote communities and low socio-economic areas, including Indigenous communities, in New South Wales, Western Australia, Victoria, Queensland and South Australia.
Empower ceased trading and in April 2017 resolved to enter into voluntary liquidation.
The ACCC is continuing proceedings against the following private colleges:
- AIPE (which has received $210 million from the Commonwealth), which is being heard in the Federal Court this week, and
- Phoenix and Community Training Initiatives (which received $106 million from the Commonwealth)
