AIPE to be Pursued for $210 million in the Federal Court

Tuesday 5 April 2016 @ 10.00 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) has filed proceedings in the Federal Court against Australian Institute of Professional Education Pty Ltd (AIPE).

Background

AIPE allegedly recruited illiterate, disabled students into thousands of dollars worth of debt and is being pursued in the Federal Court for $210 million in taxpayer funding. The private college is a provider of VET FEE-HELP Diploma courses, costing from $12,160 to $19,600 per course. It marketed and sold these courses using face-to-face marketing, including door-to-door sales, as well as telemarketing.

Between 1 January 2013 and 1 December 2015, it is alleged that AIPE enrolled approximately 15,426 students into VET FEE-HELP Diploma courses and was paid in excess of $210.9 million by the Commonwealth for those enrolments.

The ACCC and the Commonwealth allege that AIPE 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 1 May 2013 and 1 December 2015 in areas in at least NSW, Queensland and WA.

The Allegations

It is alleged that AIPE represented to prospective students that they would receive a free laptop or tablet 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 or tablet students received were 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 ($53,345 in the 2014-2015 income year).

It is also alleged that AIPE’s pattern of behaviour for enrolling students into its courses and its dealings with vulnerable consumers was, in all the circumstances, unconscionable. It has been reported that one student with minimal literacy, was allegedly signed up to $19,600 worth of Commonwealth debt on the promise of a free laptop.

AIPE has repeatedly denied that it had anything to do with the call but internal documents have revealed that AIPE's operations manager, John Luhr, was on the other end of the phone and approved the registration for the Diploma of Human Resources Management Course.

The college is run by Sydney radiologist Tej Dugal, a medicine graduate from the University of Sydney and a former doctor at Royal North Shore Hospital, as well as Ajay Valanju, a real estate mogul who now owns more than 30 Sydney properties.

Comment from the ACCC Chairman

ACCC Chairman Rod Sims said:

“We allege AIPE marketed its courses to some of the most vulnerable and disadvantaged 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 had limited reading and writing skills, could not use a computer, and were not able to use email. We allege that AIPE failed to take adequate steps to ensure that it was not taking advantage of these vulnerable consumers.”

The NSW Fair Trading Commissioner Rod Stowe also said of this matter:

“It is also alleged that AIPE engaged in a pattern of behaviour that allowed sales to be made using incentives such as ‘free’ laptops, Wi-Fi access and mobile phone credits, which involved the use of unfair tactics and failed to provide clear and accurate information about the price of the courses and the nature of the VET FEE-HELP loan. This is yet another reminder to colleges that prospective students need to be properly informed before they can be enrolled. 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 Sims said:

“AIPE is the fourth private college the ACCC and the Commonwealth have instituted proceedings against for marketing practices which we allege breach the Australian Consumer Law. The joint investigation illustrates how seriously both agencies continue to view these allegations. The ACCC and NSW Fair Trading are continuing to investigate the conduct of other private colleges in the education sector.”

Redress sought by the Regulator

The ACCC is seeking the return of more than $460 million in taxpayer funding between Sydney colleges:

  • Unique;
  • Empower;
  • AIPE; and
  • Melbourne's Phoenix Institute.

Response from AIPE

A spokeswoman for AIPE said the college would provide comment after it has been served with the ACCC's pleadings and has had the opportunity to review them and consider its position.

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Sources:

AIPE: Sydney private college to be pursued for $210 million in federal court
ACCC takes action against AIPE following a joint investigation with NSW Fair Trading – ACCC Release MR 37/16 

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