Education company accused of using parents’ fears to get sales

An Auckland educational company preyed on parents’ “hopes and fears” about their children’s future to sell expensive tuition products, a court has heard.

The Commerce Commission charged the Auckland Academy of Learning (AAL) in June last year over the way it sold education software, claiming staff misrepresented the product and breached consumer credit and direct selling laws.

Yesterday a sentencing hearing was heard by Judge Noel Sainsbury in the Auckland District Court after the company earlier pleaded guilty.

The Commerce Commission had received more than 180 complaints between 2014 and 2015 over the way AAL sold computer-aided mathematic instruction (Cami) software.

The cost ranged from $6000 to $11,000, while the price was also misrepresented in some instances.

AAL’s sales pitches would “prey on parents’ hopes for their child’s education for their futures” as well as playing on the fear that the public school system was failing, counsel for the Commerce Commission Alysha McClintock said.

The company would attempt sell its “expensive product” to parents with “shock and scare tactics” and commit them to a long-standing contract, she said.

Victims of the AAL scheme said the rort was “gut-wrenching” and left them “dumbfounded”.

“You don’t get the product but you pay everything for it,” said one in a victim impact statement.

McClintock said it was not describing Cami as a “worthless product” but it shouldn’t have been tied to the New Zealand educational curriculum.

The Commerce Commission said the company had also failed to tell parents they had a right to cancel the uninvited direct sales agreement before it was entered into, that AAL failed to disclose key information about credit provided for the software, and that the price paid was misrepresented in some cases.

Academy of Learning is owned by its sole director, Gordon McPherson, and holds a distribution licence for the Cami software in New Zealand.

McPherson was in court for the hearing. His and AAL’s counsel Fiona McGeorge argued for a sentencing discount due to negative publicity

You don’t get the product but you pay everything for it. Victim

causing a “catastrophic” sales dip. McGeorge said the company accepts its sales representatives were not giving the correct oral advice to parents.

But she argued “written advice was stronger than oral” and the customers had signed a written contract.

She also said the customers had the opportunity to pull out of the deal.

Judge Sainsbury, however, said the reality was many people don’t read contracts when making an emotional decision — increasing the importance of oral advice.

The judge said the parents were incredibly vulnerable, particularly if they had limited education themselves and wished nothing but the best for their children.

Judge Sainsbury reserved his decision until later this month.