Training Providers and Marketers on Notice

 Australian Consumer Law regulators including NSW Fair Trading have put the training industry on notice after a two year national compliance and education project targeting misleading, deceptive and unconscionable conduct by training providers and marketers revealed a number of unethical business practices.

While many of the activities under that project have now been undertaken, ACL regulators will continue to work together to pursue resulting investigations and actions.

NSW Fair Trading Commissioner Rod Stowe said low-income and vulnerable consumers had been seduced by a number of unscrupulous businesses into signing up for diploma courses they did not need and were unlikely to complete.

"Some consumers called Fair Trading after being given free ipads," he said. They had the sense to know that if something seems too good to be true it usually is.

"Others were duped by bait incentives such as cash and laptop computers and high pressure sales tactics during door-to-door marketing and approaches outside Centrelink offices."

Courses are funded by student loans through the Commonwealth Government’s VET FEE-HELP scheme. Students pay back their course debt through the tax system when they meet specified thresholds.

Some consumers were enrolled despite being unable to complete diploma courses because of circumstances explained to the marketers, including disabilities, limited literacy or no internet access for online courses. Many consumers ended up with multiple enrolments and loans worth tens of thousands of dollars each, without their knowledge.

As part of a series of investigations, including joint investigations with NSW Fair Trading, the Australian Competition and Consumer Commission (in some cases with the Commonwealth) has to date taken Federal Court action against five groups of training providers, brokers and marketers.

The ACCC is seeking: to overturn VET FEE-HELP debts of consumers who were misled or subject to unconscionable conduct; for training providers to repay course fees paid by the Commonwealth to the Commonwealth; and, penalties for training providers and brokers who acted unconscionably when signing up vulnerable consumers.

Businesses found to be acting unconscionably in their dealings with vulnerable consumers can be penalised under the Australian Consumer Law - up to $1.1m per contravention for corporations and $220,000 for other businesses.

The businesses currently involved in Federal Court proceedings are:

  •  Acquire Learning & Careers Pty Ltd
  •  Cornerstone Investment Aust Pty Ltd, trading as Empower Institute
  •  Phoenix Institute of Australia Pty Ltd and Community Training Initiatives Pty Ltd
  •  Unique International College Pty Ltd
  •  Australian Institute of Professional Education Pty Ltd

Details of the ACCC actions can be obtained from its website (www.accc.gov.au).

Consumer regulators across Australia are investigating other training providers and marketers, with further enforcement action expected in the near future.

Regulators have been warning consumers about unethical marketing and are negotiating to cancel enrolments and loans. As well as warning businesses about their obligations under the Australian Consumer Law, regulators have also been working with community service providers to help vulnerable consumers.

Consumers, family members and community service providers should report any illegal or unethical marketing of products and services by lodging a complaint with NSW Fair Trading at http://www.fairtrading.nsw.gov.au/ or at any Service NSW Centre.

Factsheet available here.