ECEC training provider issued with $26.5m penalty

A registered training organisation who delivered Diploma level qualifications, including in early childhood education and care (ECEC), has been hit with a record breaking $26.5 million penalty as well as $56 million in repayments through the Federal Court of Australia. 

Cornerstone Investments Aust Pty Ltd, trading as Empower Institute (in liquidation), was recently issued the highest total penalties ever imposed for breaches of the Australian Consumer Law (ACL) in relation to “a system of unconscionable conduct”.

The Court found the law was breached by Empower when it enrolled consumers in VET FEE-HELP funded courses; marketed courses to consumers in remote communities, indigenous communities and low socio-economic areas; made false or misleading representations; used recruiters who were practically untrained; and, in some cases offered inducements such as free Google Chromebooks as a sign-on incentive.

Empower were also ordered to repay more than $56 million to the Commonwealth for funding it had received to provide the courses. Empower ceased trading and in April 2017 entered into voluntary liquidation.

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

“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.”

Mr Sims said it should have been clear from the outset that these consumers were never likely to complete the courses offered by Empower, instead becoming “saddled with significant lifetime student debt”. 

The Court said Empower’s conduct showed “callous indifference” to consumer protection, including signing up consumers for courses which meant they took on large VET-FEE HELP debts, for Empower’s financial gain.

“We welcome the record breaking ACL penalties of $26.5 million imposed by the Court, which reflect the seriousness of the conduct,” Mr Sims said.

The magnitude of the penalties, he added, should “serve as a serious warning to the vocational education sector, and all other Australian businesses, that engaging in unconscionable behaviour has very significant consequences”.

Based on the Court’s findings, and using the new VET FEE-HELP Student Redress measures, the Commonwealth has decided to cancel the debts of over 6,000 consumers enrolled in courses with Empower in 2014 and 2015.

The VET FEE-HELP Student Redress Measures came into effect on 1 January 2019 and provide a remedy for eligible students who, due to the inappropriate conduct of their VET provider, incurred debts under the VET FEE-HELP loan scheme.

“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,” Mr Sims said.

Those who believe they were affected by inappropriate conduct by an RTO provider as part of the VET FEE-HELP scheme should contact the VET Student Loans Ombudsman (part of the Office of the Commonwealth Ombudsman) who will assess and investigate the complaint.