Huge fine for scam school
The Federal Court has ordered $153 million in penalties against Australian Institute of Professional Education (AIPE).
AIPE, which is now in liquidation, was found to have engaged in a system of unconscionable conduct, as well misleading or deceptive conduct, when enrolling consumers into online diploma courses between May 2013 and December 2015 under the former VET FEE-HELP loan program.
AIPE misled vulnerable and disadvantaged consumers, telling them their courses were free, even though they would each incur a VET FEE‑HELP debt of up to around $20,000. It also enticed potential students by offering ‘free’ laptops as inducements to enrol.
AIPE received over $210 million from the Commonwealth for approximately 16,000 enrolments during the relevant period under the VET FEE-HELP scheme.
The Court found that at least 70 per cent of AIPE’s enrolments during the relevant period were affected by the conduct.
“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,” ACCC chair Rod Sims said
The penalties imposed by the Court comprise $150 million for AIPE’s systemic unconscionable conduct, and $3 million for contraventions involving 12 individual consumers.
“Substantial penalties are called for when a commercial enterprise systematically predates on both a government education support scheme designed to help disadvantaged members of the Australian community, and consequently, upon those consumers,” Federal Court judge Justice Robert Bromwich said.
It 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”, Mr Sims said.
“The magnitude of these 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.”
Using the VET FEE-HELP Student Redress Measures, the Commonwealth has already cancelled the debts of eligible consumers enrolled by AIPE.
“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,” Mr Sims said.
The orders for compensation to the Commonwealth, and legal costs orders, will be provable debts in AIPE’s liquidation.