PRIVATE COLLEGES SELLING VET FEE-HELP DIPLOMAS
Following a joint investigation by the ACCC and NSW Fair Trading into the conduct of private colleges, the ACCC and the Commonwealth (on behalf of the Department of Education and Training) instituted proceedings against three companies involved in selling VET FEE-HELP Diploma courses. This included Unique International College Pty Ltd (Unique), Phoenix Institute of Australia Pty Ltd (Phoenix), Community Training Initiatives Pty Ltd (CTI) and Cornerstone Investment Australia Pty Ltd trading as Empower Institute (Empower).
It is alleged that the private colleges represented to prospective students that the course(s) were free or were free if the consumer did not earn more than approximately $50,000 per annum. In fact 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 (in some cases $54,126 in the 2014-15 income year). It is also alleged that the conduct by the private colleges, including their marketing and enrolment system, and their dealings with vulnerable consumers was, in all the circumstances, unconscionable.
The ACCC is seeking redress for affected consumers by cancelling VET FEE-HELP debts, pecuniary penalties, corrective notices and orders requiring the implementation of a consumer law compliance program by each of the private collages. The ACCC and the Commonwealth are seeking declarations, injunctions, orders for the repayment of course fees paid by the Commonwealth to the private colleges in respect of any VET FEE-HELP loans cancelled by the court order, as well as costs.
The ACCC also took action against Acquire Learning & Careers Pty Ltd (Acquire) which is a broker of education services that markets on behalf of Registered Training Organisations (RTOs) that offer vocational courses under the VET FEE-HELP system.
UNIQUE INTERNATIONAL COLLEGE PTY LTD (Unique)
In October 2015 proceedings were instituted in the Federal Court against Unique. Unique sells VET FEE-HELP Diploma courses costing from $22,000 to $25,000 per course using face-to-face marketing, and including door-to-door sales. In the 2014-15 financial year Unique enrolled over 3,600 students in their Diploma courses, and was paid approximately $57 million by the Commonwealth in respect of those enrolments.
The proceedings allege that Unique made false or misleading representations and engaged in misleading or deceptive and unconscionable conduct, which was in breach of the ACL, when selling VET FEE-HELP funded courses between July 2014 and September 2015 in New South Wales.
PHOENIX INSTITUTE of AUSTRALIA PTY LTD (Phoenix) and Community Training Initiatives Pty Ltd (CTI)
In November 2015 proceedings were instituted against Phoenix and CTI. The ACCC alleged that Phoenix made false or misleading representations and engaged in unconscionable conduct in breach of the ACL when marketing and selling VET FEE-HELP funded courses between January 2015 and October 2015 in New South Wales, Victoria, Queensland, Northern Territory and Western Australia.
CTI assisted Phoenix by providing administrative support and processing enrolment forms. It is alleged that CTI aided and abetted, counselled or procured or was knowingly concerned in the alleged unconscionable conduct.
CORNERSTONE INVESTMENT AUSTRALIA PTY LTD t/a EMPOWER INSTITUTE (Empower)
In December 2015 proceedings were instituted against Empower alleging they made false or misleading representations and engaged in misleading or deceptive and unconscionable conduct in breach of the ACL when marketing and selling VET FEE-HELP funded courses to consumers in New South Wales, Western Australia, Victoria, Queensland and South Australia.
Between March 2014 and October 2015 Empower enrolled over 10,000 new students in its Diploma courses and was paid over $90 million by the Commonwealth in respect of those enrolments.
ACQUIRE LEARNING & CAREERS PTY LTD (Acquire)
In December 2015 the ACCC instituted proceedings in the Federal Court against Acquire.
It is alleged that between July 2014 and March 2015 Acquire via telemarketing to selected consumers across various states and territories:
made false or misleading representations as to the nature and value of the course
engaged in misleading or deceptive conduct as to future matters and the purpose of the phone call
engaged in unconscionable conduct to pressure the consumers into enrolling in vocational education and training courses, and
incurring a VET FEE-HELP debt to the Commonwealth ranging between $19 000 to $52 000.
It is further alleged that Acquire breached certain provisions of the ACL relating to unsolicited consumer agreements. The ACCC is seeking declarations, injunctions, pecuniary penalties, audits of compliance programs and costs.
MULTIMEDIA INTERNATIONAL SERVICES PTY LTD t/a THE COMMUNITY NETWORK (Multimedia)
In November 2015 the ACCC instituted proceedings against Multimedia alleging that Multimedia engaged in unconscionable conduct by:
holding particular small businesses to ongoing payments under its contracts with them by refusing to allow them to terminate or release them from their payment obligations, engaging debt collectors, and threatening legal action in circumstances where Multimedia had not provided the advertising services to the small businesses
misleading small businesses by not sufficiently disclosing the unilateral change of location clause, the rollover clause and onerous termination clause in advertising contracts which small businesses entered into with Multimedia
making false or misleading representations to particular small businesses as to the location at which their advertisements would be shown and the conditions under which that location could be changed unilaterally by Multimedia, and
wrongly accepting payments from some small businesses in circumstances where Multimedia had reasonable grounds for believing that the advertising services could not be supplied at the specified location within a reasonable time.
The ACCC is seeking declarations, pecuniary penalties, injunctions, consumer redress, an order requiring the implementation of a consumer law compliance program and costs.
OZSALE PTY LIMITED trading as BUYINVITE (Ozsale)
The ACCC alleges that five children’s nightwear garments offered for sale by Ozsale between July 2014 and October 2015 were non-compliant with the applicable mandatory Australian standard.
The ACCC alleges that:
one garment’s composition and design was non-compliant with the mandatory Australian standard as it had a trim or attachment of excessive length, and the cotton material it was composed of was too dense, and
Ozsale offered a garment for sale without the required high fire danger labelling and in doing so represented that the garment presented a low fire danger, or no fire danger, when this was not the case.
The ACCC is seeking pecuniary penalties, declarations, injunctions, costs and an order that Ozsale implement a product safety compliance program.
WOOLWORTHS LTD (Woolworths)
In December 2015 the ACCC instituted proceedings against Woolworths alleging that in December 2014 Woolworths engaged in unconscionable conduct in dealings with a large number of its supermarket suppliers, in contravention of the ACL. The ACCC alleges that Woolworths set up a scheme called “Mind the Gap” which was approved by senior management to urgently reduce Woolworths expected significant half year gross profit shortfall by 31 December 2014.
In accordance with the scheme, Woolworths category managers and buyers systematically asked a large number of ‘Tier B’ suppliers for $60.2 million (which included individual requests ranging from $4,291 to $1.4 million) in order to achieve the target amounts totaling $11 million they had been instructed they were expected to obtain. Woolworths ultimately received approximately $18.1 million from these suppliers.
Through the scheme Woolworths set out to take advantage of the Tier B suppliers. While many suppliers refused to make a payment, there were some who, due to their disparity in bargaining power, agreed to the requests for payments even though:
Woolworths didn’t have a pre-existing contractual entitlement to seek the payments from any of the targeted Tier B suppliers
Woolworths either knew it did not have or was indifferent to whether it had a legitimate basis for requesting a “Mind the Gap” payment from every targeted Tier B supplier, and
the money was not intended to be used by Woolworths to promote or increase sales of the suppliers’ products because to do otherwise might jeopardise the suppliers’ ability to sell their products through Woolworths’ supermarkets.
It is alleged that Woolworths’ conduct in requesting the Mind the Gap payments was unconscionable in all the circumstances.
The ACCC is seeking injunctions, including an order requiring the full refund of the amounts paid by suppliers under the Mind the Gap scheme, a pecuniary penalty, a declaration, and costs.
LG ELECTRONICS AUSTRALIA PTY LTD (LG)
The ACCC has commenced proceedings against LG alleging that it made false or misleading representations to consumers about their rights in relation to faulty LG products.
It is alleged that in relation to complaints about defects with its televisions LG misrepresented to consumers, retailers or repairers that the remedies available to consumers were limited to the LG manufacturer’s warranty, and where the defect occurred after the LG manufacturer’s warranty had expired:
the consumer was only entitled to a remedy if the consumer paid for the costs of assessing the failure
LG had no further obligations, and any step it took in relation to the TV was an act of goodwill
the consumer was only entitled to have the TV repaired (and not to a refund or a replacement), and
the consumer was liable for the labour costs of the repair.
The ACCC has also alleged that by specifying the conditions relating to express warranties available for a variety of goods manufactured by LG including mobile phones, televisions, home appliances, IT products, air conditioners and business solutions on its website; that LG made false and misleading representations that it had no obligations to remedy defects beyond the period of the LG manufacturer’s warranty. In addition, these representations were false, misleading or deceptive, as they do not accord with the rights and remedies afforded to consumers under the consumer guarantee provisions of the ACL.
The ACCC is seeking declarations, injunctions, pecuniary penalties, corrective notices, a trade practices compliance program and costs.
FDRA Pty Ltd formerly known as ANGEL DIGITAL (FDRA)
In December 2015 the ACCC instituted proceedings against FDRA and its director Jackson Anni (also known as Temitope Ayodele Anifowose). The ACCC alleges that from September 2014 to the present time, FDRA, Mr Anni and its sales representatives entered into at least 600 agreements with Indigenous consumers in remote communities, as well as the Royal Darwin Hospital and associated hostels. The ACCC alleges that FDRA was supplying or offering to supply 7.85 inch Nextbook electronic tablet devices and:
engaged in systemic and individual unconscionable conduct
made misleading, deceptive and false representations, and
did not comply with the unsolicited consumer agreement provisions.
The case highlights numerous breaches of the unsolicited selling provisions including calling outside permitted hours, not informing consumers of cooling off rights, taking payment and providing goods within the 10 days cooling off period.
The matter is scheduled to be heard in 2016.
LAURENCE GLYNNE HANN
In December 2015 the ACCC commenced proceedings in the Federal Court alleging that Mr Laurence Glynne Hann is in contempt of orders made by Justice Tracey on 28 May 2012. In 2012 Justice Tracey found that Mr Hann had engaged in false, misleading or deceptive conduct in the promotion and sale of a parcel distribution business for 'Heartlink' branded household products. His Honour found that consumers were misled about the profitability and earnings potential of the business opportunity as well as the overall viability of the business.
The ACCC alleges that Mr Hann has breached a 15-year court order imposed by Justice Tracey which prevents Mr Hann from in carrying on a business or supplying goods or services in trade or commerce:
by which, or in connection with which, persons are invited to invest money or perform work
by which, or in connection with which, any claim is made that moneys or profits earned by the sale of goods are donated to charity, or
where the goods or services concerned are or include household cleaning products.
The ACCC also alleges that Mr Hann:
breached other related injunctions ordered by Justice Tracey
has continued to be directly involved in a business involving the sale of household cleaning products
has continued to make claims that some of the moneys earned from the sale of those goods would be donated to charity, and
also allegedly recruited a person to make sales and distribute products in connection with that business.
The matter is scheduled to be heard in 2016.
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