Phoenix Institute pocketed $106 million in government loans in 10 months

AUSTRALIA is the land of opportunity. Thanks to Labor, this company was able to charge more than $100m to the taxpayer.

A TRAINING college which collected more than $100 million in government fees by enrolling disadvantaged students into expensive online courses has become the second company to face the wrath of the competition watchdog.

The Australian Competition and Consumer Commission and the Federal Government have instituted proceedings in the federal court against Phoenix Institute of Australia Pty Ltd and Community Training Initiatives Pty.

The ACCC alleges agents of Phoenix, part of Australian Careers Network, made false and misleading representations and engaged in unconscionable conduct when marketing and selling VET FEE-HELP-funded courses between January and October this year.

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

Phoenix, under the trading name ‘Mytime Learning’, allegedly enrolled more than 9000 students in 17,000 diploma courses ranging between $18,000 and $21,000, in the process collecting approximately $106 million in VET FEE-HELP fees.

The training company used face-to-face marketing, including door-to-door salesmen, to allegedly target disadvantaged communities including Aboriginal consumers, public housing residents and disability support pensioners.

According to court documents, one woman living on the disability support pension in public housing in Euroa, Victoria, was approached by an agent representing Phoenix.

The agent allegedly told her the Phoenix courses were free and that she would receive a free laptop. During the enrolment process, the woman advised the agent she had a disability and could not undertake a course, but the agent encouraged her to sign the forms and enrol anyway.

Another witness, an unemployed Aboriginal man living in Aboriginal housing in Moree, NSW, was allegedly paid $100 by a Phoenix agent to introduce the agent to others in the community to enrol them into courses.

“We’re alleging a business system that targeted vulnerable people. These are online courses yet some of these people didn’t even know how to use a computer,” ACCC Chairman Rod Sims told news.com.au.

The government will be seeking, in addition to penalties, to have the student debts wiped and loans fully repaid by Phoenix. But Mr Sims admitted it might not be easy.

“We understand we’ve got a decent battle here,” he said. “We’ll chase it down as best we can and we’ve got the Commonwealth working with us, but I realise it’s difficult.

“I can’t spell out the exact steps because each of these companies is going to be different, but we don’t underestimate the challenge.”

Mr Sims said another one or two would be before the courts before Christmas and more would follow next year.

“We’re putting a lot of effort into this because we think it’s important, we think the Australian community thinks it’s important, as does everyone I speak to.”

VET FEE-HELP operates similar to university HECS debt, in that the provider collects the cost of the course upfront and the student incurs a debt to the Commonwealth. The sector will cost the Australian taxpayer more than $4 billion this year alone.

The ACCC alleges agents of Phoenix misled prospective students by offering free laptops, and representing that the courses were ‘free’ if the student did not earn more than $50,000 per annum, when in fact the laptops were received on loan and the students were incurring a lifetime debt to the government.

The consumer watchdog, which is on a blitz of the scandal-plagued vocational education sector also alleges Phoenix’s conduct, “including its marketing and enrolment system and its dealings with vulnerable consumers was, in all the circumstances, unconscionable”.

Last month, the vocational regulator, the Australian Skills Quality Authority, cancelled Phoenix’s registration.

Communities targeted included Moree, Dubbo, Broken Hill, Wagga Wagga, Walgett, Toomelah, Boggabilla in NSW, Toomelahd and Dalby in Queensland, Dandenong, Euroa, Drouin and Broadmeadows in Victoria, Broome and Kalgoorlie in Western Australia, and Gray in the Northern Territory.

The first Directions Hearing is set for 15 December. It’s the second training college to be taken to court by the consumer watchdog following a joint investigation with NSW Fair Trading. Last month, the ACCC set out to claw back millions of dollars in course fees paid to Granville-based Unique International College.

That case had its first directions hearing this morning in the Federal Court and Unique is defending the action.

Last week, Australian Careers Network notified the Australian Securities Exchange it had been notified by the ACCC court proceedings were coming. CEO Ivan Brown told The Australian he was “comfortable” with the company’s conduct.

“Since early this year Phoenix has conducted tape-recorded telephone conversations with every student prior to enrolment where the full and complete understanding of the cost, VET FEE-HELP repayment obligations and their total understanding are obtained in a recorded format,” he said.

“The ACCC has not provided Phoenix with any specific alle­gations or the names of any complainant … once this is provided we can retrieve their recordings and … test the veracity of the claims.”

A statement from Sean Dignum on behalf of Phoenix and CTI said: “The company notes the media release today from the ACCC in regards to the prosecution of Phoenix and CTI.

“The company also notes that some of the statements in the release are unfounded and appear to be made in the absence of information.

“Further, in the affidavits filed with the court, the ACCC nominates 3 alleged victims, the company has been able to determine that the first two were never enrolled and the company has been unable to identify the third student.

“The documents further allege that students were never made aware of the Vet-Fee Help debts and the loan status of the computers. Phoenix has thousands of tape recorded student interviews that would disprove this and will be happy to produce them in relation to any victim the ACCC produces that is actually enrolled.

“Whilst the company is extremely concerned that alleged misrepresentations have taken place, it is just as concerned that the authorities involved don’t appear to be as concerned about the actual facts that they report to the media.

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Originally published as Phoenix Institute pocketed $106 million in government loans in 10 months