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Court finds recruitment firm, Zanok, misled overseas students

Court finds recruitment firm, Zanok, misled overseas students

Orders company to pay ACCC legal costs

Foreign students and IT graduates who paid for an IT course conducted by Zanok Technologies were misled and deceived about the course and exploited by unconscionable conduct, the Federal Court has found.

Justice Edmonds declared that Zanok engaged in unconscionable conduct by requiring foreign IT job seekers to pay for IT training in circumstances where it knew, or ought to have known, that the job seekers were seeking paid jobs in the Australian IT industry and not IT training.

The case has garnered worldwide scrutiny as foreign students represent some $1 million a year to the Australian economy. The international education industry is Australia’s largest services export sector, contributing $11.7 billion to the Australian economy in 2006-2007.

Zanok Technologies was taken to court by the Australian Competition and Consumer Commission (ACCC) earlier this year.

The ACCC alleged that Zanok had put job advertisements on various websites including MyCareer, Seek and Gumtree, offering IT positions, when Zanok was not offering job opportunities but rather ‘IT training’. Applicants had to pay up to $4700 for the positions. The training, however, wasn’t structured and provided no value, according to the ACCC.

The ACCC alleged that despite assurances from Zanok and its agents, there was no guarantee of a job at the end of the training.

The competition and consumer agency also maintained that Zanok knew, or should have known, that the students were typically from overseas, needed jobs to become permanent residents and only paid for the training because of the guarantee of paid employment at its end.

The court found Zanok directors, Darley Stephen and Vanitha Darley, both Indian nationals residing in Australia, had engaged in misleading and deceptive and unconscionable conduct toward the students and graduates.

The court also ordered the respondents pay the ACCC's costs.

Justice Edmonds said that the conduct "constituted more than simply taking advantage of a superior bargaining position but involved an unconscientious exploitation of another's inability or diminished ability to conserve his or her own interests".

At issue:

  • Zanok is a global company that has developed and sells functional IT software, when this is untrue.
  • Zanok had paid employment opportunities in Melbourne and Sydney, when in fact Zanok was offering IT training for which applicants would be required to pay a fee of up to $4700.
  • Zanok was offering IT scholarships, when this was untrue.
  • Zanok was offering an unqualified guarantee of paid employment on completion of IT training, when in fact it was not in a position to guarantee paid employment to all persons who completed the training course.
  • Zanok would pay all persons who completed the training course a salary of a minimum of $45,000, when in fact it was not in a position to pay that salary to all persons who completed the training course.
  • Zanok offered a referral program whereby trainees would be paid $200 for each individual they referred to Zanok who signed up for the IT training course, when in fact none of the trainees who have referred others to the program have received payment.

The court also declared that Zanok accepted money for IT training when Zanok intended to supply training that was materially different from the promoted training, or knew, or should have known, that it would be unable to supply the training for which payment was accepted.

The court declared that Zanok's directors were knowingly concerned in the conduct of Zanok.

The court made various injunctions restraining the future conduct of Zanok and its directors. These included an order restraining them for five years from soliciting people who are seeking employment to enter into an agreement in relation to IT training or make payment for IT training, until a cooling off period of seven days has passed after the person is made aware that they are required to complete paid training.

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Tags trainingacccIT recruitmentTrade Practices Act

More about Australian Competition and Consumer CommissionAustralian Competition and Consumer Commission

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