Record $26.5m penalty and $56m repayment ordered against training college Empower Institute

The Federal Court has ordered $26.5 million in penalties against Cornerstone Investments Aust Pty Ltd, trading as Empower Institute (in liquidation) (Empower), the highest total penalties ever imposed for breaches of the Australian Consumer Law (ACL).

The Court also ordered Empower to repay more than $56 million to the Commonwealth for funding it had received to provide the courses

Empower ceased trading and in April 2017 entered into voluntary liquidation.

The Court found that Empower had engaged in a system of unconscionable conduct when it enrolled consumers in VET FEE-HELP funded courses, by marketing courses to consumers in remote communities, indigenous communities and low socio-economic areas, making false or misleading representations, using recruiters who were practically untrained and in some cases offering inducements such as free Google Chromebooks.

“Between June 2014 and December 2014, Empower enrolled more than 4,000 students, often using these appalling tactics,” ACCC Chair Rod Sims said.

“Empower misled many vulnerable and disadvantaged consumers who had poor English language literacy or numeracy skills, and others who could not even use a computer and did not have access to the internet.”

“It should have been clear that these consumers were not likely to complete Empower’s courses, but would still be saddled with significant lifetime student debt,” Mr Sims said.

The Court described Empower’s conduct as involving a “callous indifference” to consumer protection, including signing up consumers for courses which meant they took on large VET-FEE HELP debts, for Empower’s financial gain.

“We welcome the record breaking Australian Consumer Law penalties of $26.5 million imposed by the Court, which reflect the seriousness of the conduct,” Mr Sims said.

“The magnitude of these penalties and the $56 million ordered to be repaid to the Commonwealth should serve as a serious warning to the vocational education sector, and all other Australian businesses, that engaging in unconscionable behaviour has very significant consequences.”

Based on the Court’s findings and using the new VET FEE-HELP Student Redress measures, the Commonwealth has decided to cancel the debts of over 6000 consumers enrolled in courses with Empower in 2014 and 2015.

“The ACCC welcomes the Commonwealth’s decision to cancel these student debts. It is important that victims are not saddled with a debt burden because they signed up to these courses as a result of Empower’s egregious conduct,” Mr Sims said.

Notes to Editors

VET FEE-HELP Student Redress Measures

The VET FEE-HELP Student Redress Measures came into effect on 1 January 2019. The new measures provide a remedy for eligible students who, due to the inappropriate conduct of their VET provider, incurred debts under the VET FEE-HELP loan scheme.

If you were affected, contact the VET Student Loans Ombudsman (part of the Office of the Commonwealth Ombudsman) who will assess and investigate your complaint (http://www.ombudsman.gov.au/How-we-can-help/vslo).

If it’s confirmed that you incurred your debt because of inappropriate behaviour by your provider, the Ombudsman may make recommendations to the Department of Employment, Skills, Small and Family Business to cancel your VET FEE-HELP debts.

Background

The ACCC and the Commonwealth 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 entered into voluntary liquidation.

In September 2018, the Federal Court handed down judgment on liability, which found that Empower engaged in unconscionable conduct, misleading or deceptive conduct and breached the unsolicited consumer agreement provisions of the Australian Consumer Law.

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