The consumer watchdog's crackdown on dodgy education providers continues, with Federal Court proceedings launched against a western Sydney training institute accused of mis-selling courses to vulnerable students.
The Cornerstone Investment-owned Empower Institute may have to repay some of the $90 million it received in government funding after an investigation by the Australian Competition and Consumer Commission and NSW Fair Trading concluded that it "engaged in misleading or deceptive and unconscionable conduct" when it targeted remote and disadvantaged communities.
Empower enrolled more than 10,000 new students, some of whom had very poor literacy and numeracy skills, between March 2014 and October 2015.
The ACCC says Empower used door-to-door selling to offer vulnerable students incentives including a free laptop and even cash if they signed up.
"We allege Empower engaged in unconscionable conduct when it marketed to some of the most vulnerable and disadvantaged groups in the Australian community," ACCC chairman Rod Sims said on Wednesday.
"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."
The ACCC last month instituted proceedings against the Australian Careers Network-run Phoenix Institute on similar grounds.
The ACCC said Empower made false or misleading claims including that its courses, which cost about $15,000, were either free or would be free if the student did not earn more than $50,000 per year.
Students instead incurred a VET FEE-HELP debt, which is similar to the university HECS system, payable to the federal government that they had to start repaying if they earned that amount.
The ACCC wants the students' debts cancelled, as well as fines, corrective notices and an order for the repayment of Commonwealth funding for Empower.
"It is important that colleges are up-front with prospective students and clearly explain the price of the courses they are offering," NSW Fair Trading commissioner Rod Stowe said.
"The VET FEE-HELP loan incurred by students is a lifetime debt."
The matter is listed for a directions hearing in Sydney on December 17.
