ACCC takes action against Phoenix Institute of Australia Pty Ltd and CTI
Tuesday 1 December 2015 @ 10.55 a.m. | Legal Research | Trade & Commerce
As reported in a recent ACCC Media Release, following a joint investigation by the Australian Competition and Consumer Commission (ACCC) 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).
Background to the action
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 m by the Commonwealth for those enrolments.
The ACCC proceedings
The proceedings allege that Phoenix made false or misleading representations and engaged in unconscionable conduct, in breach of the Australian Consumer Law (ACL) [the ACL is contained in Schedule 2 to the Competition and Consumer Act 2010 (Cth)], when marketing and selling VET FEE-HELP funded courses between January 2015 and October 2015 in NSW, Victoria, Queensland, NT and WA.
The Allegations
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 pa. 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. 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.
Reaction from the ACCC and NSW Fair Trading
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.”
The NSW Fair Trading Commissioner, Rod Stowe said:
“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. 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.”
Comment from Phoenix and CTI
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.”
Penalties sought by the ACCC
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.
TimeBase is an independent, privately owned Australian legal publisher specialising in the online delivery of accurate, comprehensive and innovative legislation research tools including LawOne and unique Point-in-Time Products.
