Following a joint investigation by the Australian Competition and Consumer Commission and NSW Fair Trading into the conduct of private colleges, the ACCC and the Commonwealth (for Department of Education and Training) have instituted proceedings in the Federal Court against Phoenix Institute of Australia Pty Ltd (Phoenix) and Community Training Initiatives Pty Ltd (CTI).

Phoenix conducts VET FEE-HELP Diploma courses, costing from $18,000 to $21,000 per course through their trading name ‘Mytime Learning’, using face-to-face marketing, including door-to-door sales. Between January and October 2015, it is alleged that Phoenix enrolled more than 9,000 students in 17,000 courses (most enrolled in double Diplomas) and was paid in excess of $100 million by the Commonwealth for those enrolments.

The proceedings allege that Phoenix made false or misleading representations and engaged in unconscionable conduct, in breach of the Australian Consumer Law (ACL), when marketing and selling VET FEE-HELP funded courses between January 2015 and October 2015 in New South Wales, Victoria, Queensland, Northern Territory and Western Australia.

It is alleged that Phoenix represented to prospective students that they would receive a free laptop and that the course(s) were free or were free if the consumer did not earn approximately more than $50,000 per annum.  In fact, the laptop they received was on loan, and students enrolled in the courses incurred a VET FEE-HELP debt payable to the Commonwealth Government.  Repayment of this debt would commence if they earned more than a specified amount in a financial year ($54,126 in the 2014-2015 income year).

It is also alleged Phoenix’s conduct, including its marketing and enrolment system and its dealings with vulnerable consumers was, in all the circumstances, unconscionable.

CTI assisted Phoenix by providing administrative support and processing the enrolment forms. It is alleged that CTI aided and abetted, counselled or procured or was knowingly concerned in the alleged unconscionable conduct.

ACCC Chairman Rod Sims said: “We allege this conduct targeted some of the most vulnerable groups in the Australian community, including consumers from low socio-economic backgrounds and consumers with intellectual disabilities. Further, for these online courses, some people were enrolled who could not use a computer, and were not able to email. Not surprisingly, course commencement rates were extremely low.”

“It is alleged that the sales process used by Phoenix included incentives such as free iPads, unfair tactics and the failure to provide clear and accurate information about the price of the courses and the nature of the VET FEE-HELP loan,” NSW Fair Trading Commissioner Rod Stowe said.

“This is another reminder to colleges that they need to be upfront and clear with prospective students. Prospective students need to know that by signing up for a course they do not get a free laptop, they incur a lifetime debt,” Mr Stowe said.

Mr Sims said: “It is troubling that vulnerable consumers, some of whom have not completed high school, are being enrolled in two Diploma courses at the same time. The joint investigation illustrates how seriously both agencies view these allegations. The ACCC and NSW Fair Trading are continuing to investigate the conduct of other private colleges in the education sector.”

The ACCC is seeking redress for affected consumers (by cancelling VET FEE-HELP debts) and pecuniary penalties. The ACCC and the Commonwealth are seeking declarations, injunctions, orders for the repayment of course fees paid by the Commonwealth to Phoenix in respect of any VET FEE-HELP loans cancelled by court order, corrective notices and orders requiring the implementation of a consumer law compliance program as well as costs.

The matter has been filed in the Federal Court’s Sydney Registry. The first Directions Hearing is set for 15 December at 9.30am.