A Sydney education firm has been hit with the largest fine ever levied under consumer law, after it was found to have told “disadvantaged” students that $20,000 courses would be free.
The Australian Institute of Professional Education (AIPE) has been ordered to pay $153 million in penalties after the Federal Court found it had engaged in unconscionable, misleading and deceptive conduct while enrolling customers into online diplomas between May 2013 and December 2015.
AIPE told vulnerable and disadvantaged students that their courses would be free. In reality, the students were landed with VET FEE-HELP debts of up to $20,000.
Additionally, students were offered “free” laptops if they signed up for a course.
“AIPE enrolled consumers, many of whom had limited reading and writing skills or could not use a computer, into online courses they were unlikely to ever be able to complete, but which left them with large lifetime debts,” Australian Competition and Consumer Commission (ACCC) chair Rod Sims said on Friday.
“This is the highest total penalty amount ever imposed under the Australian Consumer Law, which reflects the appalling conduct engaged in by AIPE and the substantial benefit it gained as a result of the conduct,” he added.
Over that period, AIPE received more than $210 million from the Government for around 16,000 enrolments, with around 70 per cent of enrolments, or 11,200 students, affected by the misleading conduct.
The ACCC and the Government began proceedings against AIPE in March 2016 following a Fair Trading and ACCC investigation.
AIPE has already been ordered to repay $142 million to the Government for the funding it should not have received.
Affected students have also had their debts cancelled, although those that believe they have been affected can contact the VET Student Loans Ombudsman (part of the Office of the Commonwealth Ombudsman).
“We support the Commonwealth’s continued work in cancelling these students’ debts,” Sims said.
“Because AIPE is in liquidation, the penalty will not be paid, but the penalties imposed nevertheless set an important benchmark for future cases and will serve to deter similar behaviour by others.
The penalty is significantly higher than the former record fine of $125 million, which was levied against Volkswagen in December 2019. Volkswagen had been found to have made false representations about its compliance with Australian diesel emissions standards.
“The magnitude of these [AIPE] penalties should serve as a significant warning to all Australian businesses that there can be very serious consequences for those who choose to engage in misleading and unconscionable conduct,” Sims said.