Compass Matin Pty Ltd, EduCollect Pty Ltd and Stephen Eric Palframan

The Australian Competition and Consumer Commission (ACCC) has accepted a court enforceable undertaking from CAMI and iTutor tutoring software suppliers, Compass Matin Pty Ltd [ACN 140 170 038] (Compass Matin) and eduCollect Pty Ltd [ACN 139 749 572] (EduCollect), in relation to Compass Matin and EduCollect’s use of unfair contract terms within the meaning of section 24 of the Australian Consumer Law (ACL) and representations made by Compass Matin to consumers in contravention of sections 18 and 29(1)(g) of the ACL.

The ACCC has also accepted a court enforceable undertaking from Mr Stephen Eric Palframan, a common director of Compass Matin and EduCollect.

Compass Matin is a supplier of subscription-based education products and services to consumers. It supplied the tutoring programs known as ‘CAMI’ until October 2019, and ‘iTutor’ from July 2018 until April 2020. CAMI and iTutor are, or were, supplied to consumers pursuant to standard form consumer contracts with a duration of between 12 and 48 months (Sales Agreements).

EduCollect is a provider of contract management services for Sales Agreements entered into by consumers prior to July 2018. It also managed some Sales Agreements and received payments from consumers between July 2018 and July 2019 on behalf of Compass Matin.

From July 2018 to November 2019, Compass Matin represented to consumers, via oral statements made during telemarketing calls and through promotional flyers, that consumers had ‘won’ or were otherwise entitled to receive a ‘free tutoring session or assessment’ or a ‘free face-to-face one hour lesson’. When a consumer agreed to receive the tutoring session, Compass Matin represented that a ‘tutor’ would attend the consumer’s home to provide the tutoring session at an appointed time. However the dominant purpose of the home visit was to allow a sales representative to enter the consumer’s home for the purpose of inducing the consumer to enter into a Sales Agreement (Home Visit Representation).

During the period January 2014 until July 2018, Sales Agreements contained a term requiring a consumer to make a payment equivalent to 6 months of subscription fees due under the Sales Agreement if the consumer terminated the Sales Agreement early (Six-month Penalty Fee). Shortly after each Sales Agreement was signed, it was assigned to EduCollect.

From July 2018 until November 2019, Sales Agreements contained a term requiring a consumer to pay out the full remaining value of the Sales Agreement in the event the consumer wished to terminate the Sales Agreement early (Remaining Period Penalty Fee).

Compass Matin admits that:

• By making the Home Visit Representation, it contravened sections 18 and 29(1)(g) of the ACL; and
• the Remaining Period Penalty Fee clause is unfair within the meaning of section 24 of the ACL.

EduCollect admits that the Six-month Penalty Fee clause is unfair within the meaning of section 24 of the ACL.

Mr Palframan acknowledges that:

• By making the Home Visit Representation, Compass Matin has contravened sections 18 and 29(1)(g) of the ACL; and
• the ACCC considers that the Six-month Penalty Fee and Remaining Term Penalty Fee clauses are unfair within the meaning of section 24 of the ACL

To address the ACCC’s concerns, Compass Matin and EduCollect have provided the ACCC with a section 87B undertaking that:

• Compass Matin will provide redress to certain consumers who were subject to the Home Visit Representation and/or affected by the unfair contract terms;
• EduCollect will release certain consumers from their agreements and take no further steps to collect monies owed by those consumers;
• Compass Matin will include a term in future contracts equal to, or exceeding, 12 months in duration that will enable consumers to terminate their long-term contract for any reason and at no cost by the later of 20 business days from the contract date, or 10 business days from the date the consumer is given access to the products/services (Early Termination Right);
• Both companies will implement a compliance program for a period of four years.

Mr Palframan has provided the ACCC with a section 87B undertaking to:

• Include the Early Termination Right in certain long-term consumer contracts relating to the supply educational goods or services, where Mr Palframan is a manager, director, secretary, shareholder with greater than 50 percent majority (his companies);
• Take reasonable steps to ensure that his companies do not make the Home Visit Representation;
• Personally inspect or review complaints data of his companies every 6 months; and

• Take reasonable steps to ensure that ensure that his companies implement a compliance program for a period of four years.