Families were cold-called and children set up to fail.
An education company that took advantage of parents' fears their children weren't doing well at school to sell a software program has been fined $351,000 in court.
Auckland Academy of Learning (AAL) was fined on 11 charges under the Fair Trading Act in relation to misleading claims and failing to tell buyers about the right to cancel during the “cooling-off period”.
AAL identified homes with school-age children and cold-called them. Commerce Commissioner Anna Rawlings said parents were told an "evaluation and tutoring session" would identify "knowledge gaps".
"In fact the true purpose of AAL's visit was to sell the CAMI [Computer Aided Mathematics Instruction] system," Ms Rawlings said.
About half the questions were too difficult for the child's school year level and the tests did not correspond with the New Zealand curriculum.
Income from selling CAMI between March 2012 and September 2014 was more than $3.7 million. A 24-month subscription cost $6200 and a 48-month subscription was more than $11,000. A quarter of the 3359 contracts entered into were cancelled during the cooling-off period, leaving about 2400 contracts.
Judge Noel Sainsbury said in Auckland District Court today the children's inevitable failure of the assessment would put pressure on parents.
"It was cynical marketing targeting people that are vulnerable because of their natural concern for their children."
In victim impact statements, parents said they were made to feel like "a terrible parent" and "guilted into buying CAMI". The Commerce Commission received more than 175 complaints about AAL.