A private college will face action in the Federal Court over allegations it used misleading information and unconscionable conduct in signing up students for courses that saddled them with Commonwealth government debts.
The Australian Competition and Consumer Commission (ACCC) and the Commonwealth government have alleged Australian Institute of Professional Education Pty Ltd (AIPE) marketed courses to "some of the most vulnerable and disadvantaged groups in the Australian community".
Among the claims from the regulator is that AIPE allegedly promised students a free laptop or tablet to sign up to courses costing up to $19,600, when the computers were in fact on loan.
The watchdog also alleges that AIPE breached consumer laws by making false or misleading representations and engaging in unconscionable conduct by marketing VET FEE-HELP loan scheme-funded courses.
The college used door-to-door sales, face-to-face marketing and telemarketing to sell courses in NSW, Queensland and Western Australia, the ACCC said.
ACCC chairman Rod Sims said the watchdog alleged AIPE marketed courses to vulnerable groups including consumers from low socio-economic backgrounds or with intellectual disabilities.
"Some people were enrolled who had limited reading and writing skills, could not use a computer and were not able to use email," Mr Sims said.
"We allege that AIPE failed to take adequate steps to ensure that it was not taking advantage of these vulnerable consumers."
The ACCC alleges AIPE enrolled 15,426 students between 2013 and 2015 for courses costing between $12,160 and $19,600, and that AIPE was paid $210.9 million by the Commonwealth for the enrolments.
The court action is seeking to have students' debts wiped and repayment of course fees made to AIPE under the VET FEE-HELP loan scheme.
AIPE told AAP on Thursday it had not yet received formal notification of any court proceedings.
The college said it was a "leading provider of vocational education" and that it sought to comply with all obligations under Australian consumer law.
AIPE said it terminated working arrangements with all agents it used to sign up prospective students last year after an audit by the Australian Skills Quality Authority.
The federal court action follows a joint investigation by the ACCC and NSW Fair Trading into the conduct of private colleges.
