Empower Institute: ACCC seeks repayment of $90m paid to college

A TRAINING College that allegedly lured students with free laptops and cash is the latest institution to be hit by ACCC action.

Shonky Colleges

THE consumer watchdog’s crackdown on the vocational training sector steamrolls ahead, with a third training college facing court and the potential repayment of $90 million in government fees.

The Australian Competition and Consumer Commission has instituted proceedings in the Federal Court against Cornerstone Investment Aust Pty Ltd, trading as Empower Institute, following similar actions against Unique International College and Phoenix Institute.

Cornerstone Investment had the lowest progression rate among all VET FEE-HELP eligible private colleges, The Australian reported in October.

The ACCC alleges that between March 2014 and October 2015, Empower enrolled more than 10,000 students, often using offers of free laptops and cash incentives, into diploma courses costing about $15,000 each, and was paid more than $90 million by the Commonwealth.

Empower allegedly used face-to-face marketing, including door-to-door sales tactics, to target vulnerable consumers in remote communities and low socio economic areas in New South Wales, Western Australia, Victoria, Queensland and South Australia.

The ACCC alleges Empower made false or misleading representations and engaged in misleading or deceptive and unconscionable conduct, in breach of the Australian Consumer Law, when marketing and selling VET FEE-HELP funded courses.

“It is also alleged that Empower’s conduct, including its marketing and enrolment process and its dealings with vulnerable consumers was, in all the circumstances, unconscionable,” the ACCC said.

One student was an Aboriginal man from Bourke, New South Wales, with limited reading and writing abilities, who did not have a computer or internet connection and did not know how to use a computer or email, according to court documents.

In October 2014, the man went to a local bar “after being told there were people handing out $50 cash and free laptops there”. He was allegedly told to sign up to the course and that it would cost him nothing, and was given $50 by a local Aboriginal man paid by the recruiters.

VET FEE-HELP operates similar to HECS debt in that the provider is paid the cost of the course upfront by the Commonwealth, with the student incurring a lifetime debt that must be repaid once their annual income rises above about $50,000.

“We allege Empower engaged in unconscionable conduct when it marketed to some of the most vulnerable and disadvantaged groups in the Australian community, including consumers from remote areas, low socio-economic backgrounds and consumers with very poor literacy and numeracy skills,” ACCC Chairman Rod Sims said.

“Further, 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.”

NSW Fair Trading Commissioner Rod Stowe said: “It is alleged that the sales process used by Empower, which included offering free laptops and cash incentives, using unfair tactics, and failing to provide clear and accurate information about the price of the courses and the nature of the VET FEE-HELP loan, was in all the circumstances unconscionable.”

Empower declined an opportunity to comment. The matter is listed for a Directions Hearing on December 17.

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Originally published as Empower Institute: ACCC seeks repayment of $90m paid to college