ACCC Alleges False Misrepresentation on Part of Empower Institute
Wednesday 13 January 2016 @ 12.13 p.m. | Trade & Commerce
The Australian Consumer and Competition Comission (ACCC) conducted a joint investigation with NSW Fair Trading into the conduct of private colleges in 2015. As a consequence of the investigation, the ACCC and the Commonwealth Department of Education have brought proceedings against Cornerstone Investment Aust Pty Ltd (Empower).
Background
Empower is an education organisation providing VET FEE-HELP Diploma courses. Empower markets and sells these courses using face-to-face marketing, including door-to-door sales. Empower enrolled over 10,000 students between March 2014 and October 2015. The ACCC alleged, late last year, that Empower had made false representations towards its students and engaged in unconscionable conduct.
Allegations
ACCC alleges that Empower breached the Australian Consumer Law (contained in Schedule 2 to the Competition and Consumer Act 2010 (Cth)) when marketing and selling their VET FEE-HELP funded courses to consumers in remote communities. Empower offered inducements to prospective students including a free laptop and cash incentives. But the crux of the allegation is the way Empower had false misrepresented to students that the course(s) were free or were free if consumers did not earn approximately more than $50,000 p.a.
The claim is false as consumers would incur a VET FEE-HELP debt payable to the Commonwealth Government. Repayment of this item would commence if the student earns more than a specified amount in a financial year ($53,345 in the 2014-2015 income year).
ACCC Chairman Rod Sims said:
“We allege Empower engaged in unconscionable conduct when it marketed to some of the most vulnerable and disadvantaged groups in the Australian community, including consumers from remote areas, low socio-economic backgrounds and consumers with very poor literacy and numeracy skills. Further, for these online courses, some enrolled consumers could not use a computer and did not have access to the internet. Not surprisingly, course completion rates were low.”
NSW Fair Trading Commissioner Rod Stowe further added:
“It is alleged that the sales process used by Empower, which included offering free laptops and cash incentives, using unfair tactics, and failing to provide clear and accurate information about the price of the courses and the nature of the VET FEE-HELP loan, was in all the circumstances unconscionable…”
The ACCC and the Commonwealth are seeking declarations, injunctions, 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, as well as costs.
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