15 tutoring groups fined $5.7m for misleading adverts, pricing frauds

The State Administration for Market Regulation slapped fines amounting to 36.5 million yuan ($5.73 million) on 15 tutoring firms on Tuesday for false advertising and pricing frauds, as the government continued its efforts to crack down on irregularities in the private education sector.

The 15 companies, mostly listed in the United States and Hong Kong, include Tencent-backed Yuanfudao, Alibaba-backed Zuoyebang, New Oriental Education, Xueersi of the TAL Education Group, OneSmart Education Group, Beststudy Education Group and Scholar Education.

Others on the list are Zhangmen, Wall Street English, Dada English, Weixue100, Mingshi, Bond Education, Bluesky Education and Nice Education.

Yuan Xilu, director of the bureau of price supervision and anti-unfair competition at the market regulator, said the administration had set up special teams to inspect activities at Zuoyebang and Yuanfudao in early May, and subsequently conducted checks on 13 key off-campus training firms.

The inspection found that 15 institutions had indulged in false advertising, while 13 resorted to pricing frauds.

The regulator found that academic qualifications of some tutors at the private educational firms were fabricated or exaggerated. Similarly, some of the courses offered by the companies were sold at just 1 yuan, discounts that masked the actual price, said the regulator.

Yuan said it is necessary to build a long-term mechanism to further enhance supervision through the adoption of smart technologies and big data.

"Private tutoring firms should not become opportunities for pursuing profits nor tools for raising money. They should remain committed to the healthy development and benefits of common good," said Yuan.

Ji Xiaoling, deputy director of the bureau of price supervision and anti-unfair competition, said the penalty and exposure of such firms marks the beginning of efforts to regulate and rectify the private education sector.

Wall Street English, one of the English training institutes fined, said on its official Weibo account, that it will accept the penalty and correct its irregular pricing, false promotion and advertising. The company will continue to improve its internal management and carry out operations according to the law, it said.

"The scale of the fine is unprecedented," said Lyu Senlin, founder of Guiding Light Think Tank, an education industry expert. "The penalized enterprises are all leaders in the industry. As the big ones get warned, the small players will be alerted."

There are about 1.3 million private tutoring firms in the country with a market value of about 400 billion yuan. A majority of them are small and medium-sized, he said.

The crackdown on false practices of some educational institutions will help protect consumers and ease private tutoring burden for families with children.

Lyu's comments that the crackdown on such irregularities will continue come a day after the central government indicated that it will allow couples to have a third child.