It said the mum learned if she terminated the contract early, she wouldn’t get a refund or be released of her obligation to pay the fees, except in very limited circumstances.
The consumer group said the mum learned the two-year programme and five years of support would cost slightly more than $72,000.
Consumer said the law should change to let consumers challenge unfair terms themselves, and only the Commerce Commission could challenge these sorts of contracts in court.
Consumer said the mum was surprised she would have to keep paying even if she terminated Crimson’s contract.
“We think it’s unfair to lock a consumer into a contract like this. It would be like sending your child to a private school in Year 9 and paying to keep them there until Year 13, even though you’d pulled them out and sent them to a different school in Year 10.”
The consumer group said Crimson’s termination clause should be amended and made clearer and fairer.
Consumer said Crimson provided no warranty and could change the terms whenever it liked.
“While it will give customers 30 days’ notice, if you don’t like the changes, your only option is to raise the change to the contract as a dispute.”
But Crimson told the Herald it was upfront with its terms, which were readily accessible online.
“Our terms are also designed to be easily digestible, well laid out, and free of extensive legal jargon.
“Prospective clients are provided with ample time and opportunity to review these terms,” the company said.
“Additionally, as part of our commitment to tailoring customised programmes for our students, prospective clients can negotiate certain terms and conditions prior to joining.”
Crimson said in the matter Consumer referred to, the mum requested a longer-term programme for comprehensive guidance.
“The quoted amount reflected the full five-year plan, designed to meet her child’s academic and admissions needs, but they ended up choosing a shorter, two-year programme.”
It said the mother and her child saw the value of this approach and chose the Rise programme to achieve their goals.
“Crimson Education adapted to their needs and desires, and they signed up with us for a two-year programme.”
The company added: “Our contract terms are fair, and we object to the allegation that they are not.”
It said each prospective family was invited to consider all programme options presented to them, in light of their own personal situation and their student’s ambitions.
“They can choose the length of their contract (from one to seven years) and in the instances where it doesn’t suit them (about 10% of New Zealand families), we work with the family and the student and adapt to their circumstances and needs.”
Crimson said its warranty approach helped it keep a simplified and consistent contractual framework across more than 20 jurisdictions, each with their own consumer protection laws.
“There’s very little a consumer can do once they’ve signed a standard-form contract,” Consumer NZ investigative team leader Rebecca Styles told the Herald.
She said consumers should read such contracts carefully, as they were widely used by businesses including gyms and power companies.
Consumer NZ said these contracts were the same for everyone and could not be negotiated on an individual basis.
“We’d advise you to look at the termination clause,” Styles said.
“Will you be paying for fees or not? Is it bogged down in legalese?”
In November, Crimson Education added a Series D raise at a $1 billion valuation and added David Cunliffe to its advisory board.
Crimson Education said it took college admissions consulting to a new level of personalisation and success.
The company’s advisers include former Prime Minister Sir John Key, ex-Australian Prime Minister Kevin Rudd and Clinton-era Treasury Secretary and ex-Harvard president Larry Summers.
