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$26.5 million fine for 'appalling tactics' to lure students

(Image: Getty)

The Federal Court has ordered a record $26.5 million penalty against an education business for "unconscionable conduct" against Australian consumers.

Cornerstone Investments Aust Pty Ltd, trading as Empower Institute, was also ordered to repay more than $56 million to the federal government after it received grants under misleading circumstances.

Empower, which ran adult education courses subsidised by the government's VET FEE-HELP program, enrolled vulnerable students from remote regions, indigenous communities and low socio-economic areas.

The court heard many of these customers were enrolled after false or misleading claims from the college, using recruiters that were not trained, and sometimes luring people in with promises of free Google Chromebook computers.

"Between June 2014 and December 2014, Empower enrolled more than 4,000 students, often using these appalling tactics," ACCC chair Rod Sims said.

The court stated Empower's behaviour as having "callous indifference" to consumers, many of who ended up with massive VET-FEE HELP debts that they could never repay.

"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," said Sims.

"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."

ACCC chair Rod Sims. (AAP Image/Peter Rae)

Commonwealth cancels Empower student debts

Unfortunately, the massive penalty and the money owed back to the Commonwealth is unlikely ever to be seen, as Empower stopped operating in April 2017 and entered liquidation.

In light of this, the federal government has cancelled the student debts of more than 6,000 people who enrolled with Empower.

"The ACCC welcomes the Commonwealth’s decision to cancel these student debts. It is important that victims are not saddled with a debt burden because they signed up to these courses as a result of Empower’s egregious conduct," Sims said.

The $26.5 million fine sets a new record for penalties imposed for violations of the Australian Consumer Law.

"We welcome the record-breaking Australian Consumer Law penalties of $26.5 million imposed by the court, which reflect the seriousness of the conduct,” Sims said.

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