Australian Education Firm Hit With Multi-Million Dollar Fine

Last week, Get Qualified Australia Pty Ltd (GQA) was hit with penalties totalling $8 million dollars following the Australian Competition and Consumer Commission’s (ACCC) finding it had engaged in unconscionable and misleading conduct. The skills training company allegedly failed to provide the service it promised, and used unfair sales tactics to pressure consumers into enrolling since 2015.

Background

Until recently, Get Qualified Australia operated as a Recognition of Prior Learning (RPL) company that assisted job seekers in turning their on-the-job experience into a qualification in a industry such as business, construction, engineering and information technology. Despite customers paying enrolment fees of up to $8,500, it was discovered over 5,000 students did not receive a qualification. However, GQA advertised if a student was unsuccessful in obtaining a qualification, they would be entitled to a “100% money-back guarantee”. But their refund requests were always rejected.

Some customers attempted to take matters into their own hands by refusing to make further payments, which proved fruitless. GQA would pursue the debts of delinquent students by engaging debt collectors to chase after unpaid amounts. It was revealed from the 1 January 2015 to 30 June 2016, 4,900 of the 9,635 customers did not receive the qualification they signed on to receive. The Court relied on figures as an indication of “the potential effect and seriousness of the contravening conduct.”

Former GQA client Tarni-Jordan Pereira told the Sydney Morning Herald she lost $1,200 after applying for a qualification in childcare, which never came through resulting in the loss of job. Similarly, a person (who prefers to remain anonymous) called AV told the Court AV was denied a full refund of $6,000 for an Advanced Diploma in Engineering. A number of consumers have taken their frustrations out on Google with reviews declaring the education firm “scammed” them.

Criticisms

The Federal Court

Justice Beach condemned GQA’s business practices and conduct in His Honour’s judgment as “serious, extensive and deliberate.” His Honour concluded GQA’s business practices “amounted to a system of unconscionable conduct”, and stated “the education sector has been infected by the parasitic practices of operators preying upon the vulnerable and the unwary.”

Overall, the Court found GQA’s false or misleading representations and misleading or deceptive conduct occurred because the company:

1. Assured customers they were eligible for qualifications when, in actual fact, GQA could not directly offer qualifications, and its employees were not qualified to assess eligibility;
2. Told consumers they would be entitled to a money-back guarantee, yet it declined students’ requests for refunds;
3. Falsely claimed there were limited places in courses;
4. Failed to provide the service promised, refused refund requests, and took debt recovery action against consumers who did not receive a qualification and refused to make further payments.

The Court was not only displeased with the the business practice of GQA, it also denounced the conduct of its sole director, Mr Wadi. According to the Court, Mr Wadi was knowingly concerned in the conduct listed above. Justice Beach declared “I have no faith Mr Wadi will modify his behaviour. His conduct and self-justifying arrogance…reflects an individual not suited to managing a corporation.” The seriousness of his conduct and his inability to show remorse influenced the Court to impose a fine of $500,000 and disqualify him from managing a corporation for seven years.

The ACCC

Similarly, ACCC commissioner Sarah Court criticised the education company for taking advantage of vulnerable people wanting to better their careers. She said in a media release the conduct caused “significant personal and financial stress for people who put a large amount of time, effort and money into trying to get a qualification.” Ms Court viewed GQA’s conduct as illegal for the following reasons:

1. Use of misleading marketing and unfair sales tactics;
2. Not providing the service customers paid for; and
3. Refusing customers refunds despite its 100% money-back guarantee promise.

Finally, the ACCC confirmed it agrees with the size of the penalties issued against GQA. The consumer watchdog believes the penalties reflect the “serious and egregious” nature of the company and Mr Wadi’s conduct.

Final Thoughts

Get Qualified Australia did not defend the case at trial on 28 March 2017, and was placed into liquidation on 17 March 2017.

Let us know your thoughts on the Federal Court’s ruling by tagging us at #lawpath or @lawpath.