Government Council on Edtech Companies: is this a watershed moment for the sector?

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With several allegations against a leading electronics technology company, the Education Department has released a notice to parents. He said some electronics tech companies are luring parents under the guise of offering free services. He asked them to avoid the automatic debit option for paying subscription fees and also to read the terms and conditions carefully before doing anything.

The notice added that the successes announced by these edtech companies could be a trap for acquiring users.

During the recently concluded winter session of Parliament, Congressman Karti Chidambaram spoke about what he called the “predatory sales tactics” of electronic technology companies.

This outrage against ed-tech companies is not recent. In fact, electronics tech companies like BYJU have been taken to consumer courts on several occasions by disgruntled parents, who alleged the cheating of the company’s sales agents.

Last week, a Pune consumer court ordered BYJU to pay 50,000 rupees in compensation after a client complained that he had not received the promised reimbursement of course fees from the ‘business. The client also claimed that BYJU obtained a sanctioned Rs 1.1 lakh loan on his behalf without his consent.

We reached out to BYJU last week to find out its position on these recent allegations, but only received a response when this video was posted.

On consumer complaint forums and social media, several users have provided a model of what the typical sales call looks like for an electronics technology company.

If it is a face-to-face visit, the seller will demean the child’s intellect and encourage parents to purchase the ed-tech subscription to secure their future. Most vendors also express apprehension about the child’s education due to the state of public schools.

Parents, some of whom are from the lower strata of society, usually take out loans to finance the cost of the course.

While there is usually a free cancellation clause during the 15-30 day trial period, once the trial period has expired, there is usually a blocking period that spans several years. Many families seek to cancel their membership if they feel the quality of the course is poor. But they can’t because of the lockdown.

Families also face hurdles in getting the promised repayment during the trial period and find their accounts are being debited from IMEs for loans they haven’t taken out.

Several such cases have been taken to consumer courts.

Such sales tactics have grown in importance because the price of these courses, around Rs 20,000-30,000 for say math for grade 6, and over Rs 1 lakh for say math for grade 6 at 12, is often unaffordable for people in lower income groups.

On condition of anonymity, a start-up investor told Business Standard that while most claims of a “toxic sales culture” have clashed with those of BYJU, this is in fact a standard manual for All Indian education technology companies offering deals for K-12 or school learning segment.

Indeed, most of these companies share the same venture capitalists. These investors then ask the companies in their portfolio to follow the market leader to increase their sales.

The Indian ed-tech space has grown tremendously since last year. While startups in this sector raised more than $ 500 million in funding in 2019, since last year Indian ed-tech startups have raised more than $ 4 billion. We also have five ed-tech unicorns now, up from just one before the pandemic.

However, there are legitimate concerns about the quality of these electronics technology courses and whether these new age startups have their clients’ best interests in mind.

Experts have suggested that India’s electronic technology sector should be subject to government regulatory intervention. They suggested a “Netflix-like” monthly subscription model with no minimum lock-in period. This would force electronic technology companies to offer quality products to retain users.

We spoke to Gouri Gupta, director of ed-tech at the Central Square Foundation to better understand how the ed-tech industry can be regulated, without stifling innovation in the space.

Even the fiercest critics of Indian ed-tech would admit that the sector has enormous potential in a country where the quality of education in its schools and universities is largely poor. The government’s opinion may lead to some soul-searching in the sector. Perhaps electronics tech companies will now temper their growth ambitions to put customer concerns first.

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