Recruiters for a private training college continued to promote its courses to a man who said his father had just died and then falsified his signature, the consumer watchdog has alleged in court documents.
The startling claims emerged as the Australian Competition and Consumer Commission confirmed on Wednesday it had launched its third “unconscionable conduct” case stemming from the marketing practices of vocational education and training (VET) colleges.
Cornerstone Investment, trading as the Empower Institute, received about $90m from the federal government after enrolling about 10,000 students in its online education courses covered by the VET sector’s loan scheme between March 2014 and October 2015, the ACCC’s statement of claim said.
Empower is accused of breaching consumer law by engaging in unconscionable conduct and making misleading or deceptive claims, as part of attempts to maximise the number of people enrolled in courses for which it received VET Fee-Help payments.
It is said to have entered into contracts with at least 23 sales companies to recruit customers. Marketers allegedly received a commission for each student they recruited of between $1,000 and $3,700 but were not provided with adequate training in complying with consumer law.
The marketers engaged a further 131 brokers to promote Empower’s courses and recruit customers, according to the statement, filed in the federal court on Tuesday.
“During the period, the recruiters targeted particular locations, including rural and remote towns and Indigenous communities and areas with significant populations of low socioeconomic status,” the statement said.
“The recruiters conducted face-to-face marketing by calling on consumers at their homes, approaching consumers at Centrelink offices, conducting group marketing sessions at public venues including public clubs and bars and in consumers’ homes, each for the purpose of recruiting consumers to enrol in Empower’s courses. The recruiters also paid Aboriginal persons to assist in recruiting Aboriginal consumers to enrol in courses.”
The recruiters are accused of making false or misleading representations to potential customers, including that the courses were free. They are accused of failing to adequately explain that students would incur a debt to the federal government that would have to be repaid once they were earning about $50,000.
The statement of claim outlines several examples of the alleged marketing and enrolment processes, including the approach made to a man at his home in Emerton in New South Wales in April. The man was juggling three jobs at the time.
“The recruiter told Consumer D that the courses he was offering were free,” the statement said. “Consumer D informed the recruiter that his father had died that day but the recruiter continued marketing a course. The recruiter filled out some forms on behalf of Consumer D, but did not provide him with copies. Consumer D did not sign anything.
“The recruiter did not explain the VET Fee-Help scheme to Consumer D, or that he would incur a debt for signing up to a course, or that he had in fact signed up to two courses. The recruiter did not have regard to whether Consumer D was capable of completing the course. Consumer D’s signature was falsified by the recruiter on a form acknowledging that the VET Fee-Help scheme was explained to him.”
In a separate example outlined in the statement of claim, recruiters allegedly promoted a course to an Indigenous man from Bourke in NSW who left school in year 7, had limited reading and writing abilities, did not have a computer or internet connection at home and did not know how to use a computer.
“In October 2014, Consumer A attended a public bar after being told there were people handing out $50 cash and free laptops there,” the statement said.
“The recruiters said the course would cost him nothing. The recruiters did not ask him whether he could use or had access to the internet, and did not inquire of his literacy and numeracy skills. Consumer A signed up to a course and was given $50 by a local Aboriginal man paid by the recruiters. He later also received a laptop.”
The ACCC and the federal government – which have jointly launched the proceedings – argued the recruiters were acting as agents of Empower and therefore their conduct could be taken to have been engaged by Empower.
They argued Empower had taken advantage of its superior bargaining position over vulnerable consumers, had used unfair tactics including inducements, had failed to adequately disclose information to potential students and had enrolled people in courses for which they were ill suited.
In a media release, the ACCC chairman, Rod Sims, said the low course completion rates were not surprising. The NSW fair trading commissioner, Rod Stowe, whose agency was part of the investigation into private colleges, said the VET Fee-Help loans incurred by students were lifetime debts.
The ACCC wants the court to cancel VET Fee-Help debts and fine Empower. The consumer watchdog and the federal government are also seeking orders for the company to repay the course fees to the commonwealth.
A directions hearing is expected to be held in Sydney on 17 December. Comment has been sought from Empower.
Regulators have increased their focus on private colleges amid growing concerns about vulnerable students incurring debts after being persuaded to sign up to VET courses for which they are ill-suited.
The ACCC has launched two other cases in the past two months: one against Unique International College and another against the Phoenix Institute of Australia.
Last week the federal government announced all private training colleges would have their VET Fee-Help funding frozen at current levels next year while ministers considered an overhaul of the loan scheme from 2017.
