Australia’s competition watchdog has launched legal action against a private college that it accuses of “unconscionable conduct”, including targeting vulnerable and illiterate people with offers of free laptop computers if they signed up to diploma courses.
But of the 1,534 students who began courses with Unique International College between July and December 2014, just 15 had formally completed them, according to a statement of claim filed in the federal court in Sydney on Tuesday.
In the same period, the Australian Competition and Consumer Commission (ACCC) alleges Unique received $14.9m in payments from the federal government under the Hecs-style loan scheme available for vocational education and training (VET) courses, helping it to make a $11.3m net profit before income tax.
The case – the first to be brought by the ACCC against a private college over its use of VET Fee-Help – follows growing calls for governments and regulators to crack down on high-pressure marketing tactics deployed by some operators to enrol students in courses for which they may not be suited.
The ACCC chairman, Rod Sims, said several other operators could face similar action before the end of the year.
“We have nine or 10 investigations under way. Not all of them will go to court, of course, but we’re doing a lot of work in this area,” he told Guardian Australia.
“This is the first case. We anticipate we’ll have another couple in court before Christmas.”
The statement of claim alleges that the Sydney-based Unique International College “targeted particular locations, including rural and remote towns and Indigenous communities and areas with significant populations of low socio-economic status for marketing and enrolling consumers in its courses”.
“Unique employees visited the locations with boxes of laptop computers to give to consumers who signed up to a Unique course,” according to the 44-page claim filed jointly by the ACCC and the federal government.
These marketing tactics allegedly included visiting people at homes, but failing to ascertain whether consumers had the capacity to pay course fees or understood their obligations.
The Australian Skills Quality Authority, which announced last week that it had cancelled Unique’s registration as a VET provider, welcomed the ACCC action.
Unique now faces claims it breached competition law by making false or misleading representations and engaging in unconscionable conduct when selling courses funded by VET Fee-Help between July 2014 and September 2015 in New South Wales.
The statement of claim alleges that Unique employees told people the courses were free, or were free unless their income reached an amount which they were unlikely to earn on completion. It says the company enrolled people who did not understand they had been enrolled; who could not read or understand the nature of the courses, including that the study was to be done on an online learning platform; and the nature of their repayment obligations under VET Fee-Help.
Some of the consumers, according to the statement, could not access or use an email address, could not use a computer, did not have access to the internet, or did not have adequate literacy or numeracy skills “so as not to be capable of undertaking and completing the course in which they were enrolled”.
The statement of claim includes details of specific cases, including a 41-year-old Indigenous woman who lived in a housing commission home in Wagga Wagga with her young son. She had learning disabilities, received a disability support pension, and did not have an internet connection at home.
She saw sales representatives in her cousin’s house in April 2015 after hearing that some people were supplying free laptops. She allegedly filled in some details on one of the forms but told a salesperson she could not read one of the forms, so the representative asked her questions and wrote down answers for her, then she signed it.
The statement of claim says the sales people should have known the customer had difficulty reading and understanding the forms and was “vulnerable and susceptible to undue influence or pressure, and unfair tactics”.
It says a failure to inform her of the course costs or debt obligations if she did not cancel her enrolment prior to the census date “was false or misleading or deceptive, or likely to mislead or deceive”.
In an interview, Sims said he was shocked by the details of the allegations. He said the ACCC action sought the cancellation of loans and repayment of the money by Unique. It also sought the imposition of fines and corrective notices.
The chief executive of Unique, Amarjit Singh, issued a statement saying the college was aware of the ACCC action.
“Unique has sought at all times to comply with the relevant regulations and standards for private education providers, in the interests of providing our students with quality education and training outcomes,” it said.
“We have operated within the policy and regulatory framework set out by the Commonwealth government. Unique will defend the action brought by ACCC. In the meantime, our primary focus is to ensure that our students and staff are fully supported without any disruption to classes while the matter is resolved.”
Labor’s vocational education spokeswoman, Sharon Bird, said she hoped the ACCC action sent a “strong signal” to the sector. She said the opposition had been calling for public action by regulators “to send a strong message to the sector after our ongoing concerns about shonky operators for almost two years”.
Bird said the problems in the private VET system appeared to be “systemic”, with concerns raised across the country. “I talk to my colleagues all the time. It doesn’t matter what electorate … people have had reports of this sort of activity,” she said.
The NSW fair trading commissioner, Rod Stowe, said colleges should be upfront with prospective students and clearly explain the price of courses.
“Consumers need to be able to fully understand what they are agreeing to before making a decision to sign up to a course,” he said. “The VET Fee-Help loan incurred by students is a lifetime debt.”
Nearly two weeks ago, a damning Senate report prepared by a Labor and Greens-dominated committee called for sweeping changes because easy access to the loans had left students and taxpayers as “the victims of a provider-led feeding frenzy”.
The federal minister for vocational education and skills, Luke Hartsuyker, has introduced a bill to parliament to clamp down on VET providers, including a cooling-off period for taxpayer-funded loans and fines for unscrupulous operators. The legislation would also require providers to check literacy and numeracy skills before students start diplomas for which commonwealth loans are available.