Record $153 million in penalties ordered against training college AIPE

The Federal Court has ordered $153 million in penalties against Australian Institute of Professional Education Pty Ltd (in liquidation) (AIPE).

The Court had previously declared that AIPE had 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.

The penalties imposed by the Court comprise $150 million for AIPE’s systemic unconscionable conduct, and $3 million for contraventions involving 12 individual consumers.

In imposing these penalties, Justice Bromwich said: “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.”

“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,” ACCC Chair Rod 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.”

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 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,” Mr Sims said.

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 has previously been ordered to repay approximately $142 million to the Commonwealth in compensation for funding it should not have received.

Using the VET FEE-HELP Student Redress Measures, the Commonwealth has already cancelled the debts of eligible consumers enrolled by AIPE.

“We support the Commonwealth’s continued work in cancelling these students’ debts,” Mr 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 orders for compensation to the Commonwealth, and legal costs orders, will be provable debts in AIPE’s liquidation.

Note

The VET HEE-HELP Student Redress Measures came into effect on 1 January 2019. The measures 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.

If you were affected, contact the VET Student Loans Ombudsman (part of the Office of the Commonwealth Ombudsman) who will assess and investigate your complaint.

If it is confirmed you incurred your debt because of inappropriate behaviour by your provider, the Ombudsman may make recommendations to the Department of Education, Skills and Employment to cancel your VET FEE-HELP debt.

More than $2.8 billion in VET FEE-HELP debt has been re-credited to over 152,800 students since 2016, the majority through the VET FEE-HELP Student Redress Measures.

Background

The ACCC and the Australian Government Department of Education and Training commenced proceedings against AIPE in March 2016 following a joint ACCC and NSW Fair Trading investigation.

In November 2019, the Federal Court handed down judgment which found that AIPE engaged in misleading and deceptive conduct and implemented a system of unconscionable conduct.

AIPE was placed into liquidation after the ACCC commenced proceedings.

The ACCC has previously taken against Acquire Learning and, together with the Commonwealth, has successfully brought proceedings against Unique International College, Cornerstone Investment Aust Pty Ltd (trading as Empower Institute), and Phoenix Institute of Australia in respect of conduct involving the VET FEE-HELP scheme.

The ACCC also brought proceedings against Productivity Partners Pty Ltd trading as Captain Cook College in which the Federal Court recently held that Captain Cook College had made false or misleading representations and engaged in a system of unconscionable conduct. That decision is currently under appeal.

Previously, the largest penalty under the ACL was the $125 million penalty ordered against Volkswagen. The High Court recently refused special leave to appeal that decision.