The court found Acquire engaged in unconscionable conduct, made false or misleading representations and breached the unsolicited consumer agreements provisions in the Australian Consumer Law with its aggressive telemarketing practices.
Acquire, which went into voluntary administration in April after being “legislated out of business”, was founded by former AFL boss Andrew Demetriou’s nephew, Tim Demetriou, along with chief executive Jesse Sahely and managing director John Wall.
New rules announced at the end of last year as part of the government’s overhaul of the Labor-era VET FEE-HELP loans scheme banned the use of brokers to recruit students, stopping Acquire from operating.
In its judgment on Tuesday, the court found Acquire telemarketers were paid based on the number of consumers referred and enrolled in online VET FEE-HELP assisted courses.
Acquire admitted that it had made false or misleading representations and that its sales tactics towards eight consumers — identified in recorded phone calls — were unconscionable.
The broker also admitted that this conduct was clearly unfair or unreasonable, and inconsistent with the prevailing business and social values that underpin acceptable standards which apply to dealings with consumers.
“Acquire took advantage of vulnerable consumers by using unfair sales tactics to pressure consumers to enrol in a vocational training course and apply for VET FEE-HELP assistance,” ACCC Commissioner Sarah Court said in a statement.
“These consumers were vulnerable, at a disadvantage, and pressured into unsuitable online courses given their individual backgrounds and educational capabilities.”
Ms Court said the $4.5 million penalty was the watchdog’s second largest consumer protection penalty. “Businesses are warned that using unfair sales tactics and making misleading representations to pressure vulnerable consumers is unacceptable,” she said.
Justice Murphy described Acquire’s conduct in which it “rorted the VET FEE-HELP scheme” as “deliberate and overt”. “[Acquire’s business model was] based on maximising the number of enrolments it was able to achieve for its clients and thereby maximise the fees payable to it,” Justice Murphy said.
“The deliberateness of the contravening conduct, its nature in targeting vulnerable people, the losses suffered by the Commonwealth, and Acquire’s status as a market leader, indicates a strong requirement for general and specific deterrence.
“Its activities resembled those of an unscrupulous fly-by-night operation rather than those of a prominent and market leading provider of student recruitment services, as it describes itself.”
Acquire will also pay $100,000 towards the ACCC’s legal costs.
In a statement, Federal Education Minister Simon Birmingham welcomed the judgment. “Today’s result is the latest chapter in the sorry saga of Labor’s failed VET FEE-HELP scheme,” he said. “Dodgy providers are on notice — the Turnbull Government and regulators are backing students and shutting unscrupulous training providers out of the system.”
The consumer watchdog has taken action in the Federal Court against four private colleges — AIPE, Empower Institute, Phoenix and Unique International College — and accepted court-enforceable undertakings to cancel enrolments and repay government loans from two others, Australian Vocational Learning Centre and Careers Australia, which went into voluntary administration last week.
The government last year overhauled the VET FEE-HELP scheme due to widespread concerns about providers and marketers, with billions of dollars in loans issued to students and pocketed by colleges likely to never be repaid.
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