A western Sydney training institute has been slapped with a record $26.5 million penalty and must repay $56 million to the federal government over “callous” student recruitment tactics.
The Federal Court on Friday handed down the highest penalties sanction for Australian consumer law breaches in history to Cornerstone Investment-owned Empower Institute.
Empower enrolled more than 4,000 new students, some of whom had very poor literacy and numeracy skills, in VET FEE-HELP funded courses from June 2014 to December 2014.
Recruiters often targeted remote communities, indigenous communities and low socio-economic areas and in some cases offered laptops as inducements, the court found.
The consumer watchdog launched court proceedings against Empower in 2015 as part of a crackdown on dodgy private colleges, leading to reforms of the student-loans system in 2016.
Australian Competition and Consumer Commission chair Rod Sims said Empower, which entered voluntary liquidation in April 2017, had engaged in “appalling tactics”.
“Empower misled many vulnerable and disadvantaged consumers who had poor English language literacy or numeracy skills, and others who could not even use a computer and did not have access to the internet,” Mr Sims said.
“It should have been clear that these consumers were not likely to complete Empower’s courses, but would still be saddled with significant lifetime student debt.”
Empower treated consumer protections with “callous indifference”, the court ruled, as it revelled in the financial spoils of students racking up large debts.
But the now-defunct education provider has now been ordered to hand back $56 million in VET funding despite the commonwealth cancelling over 6,000 debts for Empower students who enrolled in 2014 and 2015.
“The magnitude of these penalties … should serve as a serious warning to the vocational education sector, and all other Australian businesses, that engaging in unconscionable behaviour has very significant consequences,” Mr Sims said.