Phoenix institute could be ordered to repay taxpayer

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A TRAINING college shut down over allegations it ripped off disadvantaged students by promising free courses and computers will be pursued by the consumer watchdog.

The Phoenix Institute of Australia was placed into voluntary administration in March this year after its registration and approval as an education provider were torn up.

Its alleged that between January and November 2015, Phoenix preyed on prospective students through door-to-door marketing in poor areas, including Aboriginal communities and remote regional towns.

The institute offered diplomas in business, leadership and management, early childhood education and care, and community services work.

Brokers and agents acting on its behalf allegedly told potential students courses would be free, or that their student debts would never need to be repaid.

Some students were allegedly promised free iPads or computers in exchange for their enrolment, or cash incentives for recruiting others.

Students were allegedly signed up for multiple courses without their knowledge, and werent told how to withdraw from courses or terminate their enrolment.

Numeracy and literacy forms were allegedly completed by or under the direction of brokers or agents when students were incapable of doing so. Phoenix now stands accused of making false and misleading representations, and of unconscionable conduct.

The Commonwealth paid Phoenix $106 million for enrolments, with another $253 million in the pipeline, when the alleged scam was uncovered and the company collapsed.

The federal government is now seeking to recover the money its already handed over to Phoenix, and cancel any further payments it may be obliged to cough up.

The Australian Competition and Consumer Commission is seeking a declaration that Phoenix broke consumer law, arguing all affected customers should have their enrolment contracts declared void.

Phoenix applied unsuccessfully for a stay on the proceedings. Federal Court Justice Melissa Perry said there was significant public interest in the case and serious questions to be tried.

I have reached the view that leave to proceed should be granted to both the ACCC and the Commonwealth, Justice Perry said in handing down her decision.

If the allegations made by the ACCC are established, the respondents sought to procure a very substantial sum of up to $360 million from public revenue through misleading, deceptive and unconscionable conduct perpetrated upon highly vulnerable and disadvantaged people to their potential detriment.

Justice Perry said the fact Phoenix was no longer trading and may have no capacity to pay penalties was no barrier to imposing a sanction for general deterrence.

The ACCC and Commonwealth must not enforce any penalties, costs or refunds from Phoenix without leave from the court, she ruled.

The case will return to court at a later date.