Government cautions against predatory edtech tricking parents into paying for 'free services'

The government yesterday advised students and parents to be careful while choosing online education through edtech companies.

An advisory highlighted that "free services" offered by some edtech firms need to be carefully evaluated as these companies make customers sign up for Electronic Fund Transfer and auto-debit leading to payments without them realising it.

The advisory lists Do's and Don'ts including asking parents not to sign up for any loans and not trust advertisements blindly.

"Avoid credit/debit card registration on apps for subscriptions. Place an upper limit on expenditure per transaction. Avoid adding your data like emails, contact numbers, card details, addresses, etc. online as the data may be sold or used in scams," it cautioned.

The advisory also states that edtech companies have to comply with e-commerce consumer protection rules and need to establish a mechanism to check for compliance with the law.

This comes a few days after Parliament member Karti Chidambaram questioned the practices of edtech players in the Lok Sabha. Chidambaram had said that these companies are engaging in predatory marketing practices and preying upon the aspirational poor.

Chidambaram had also written to education minister Dharmendra Pradhan regarding these concerns and asked for steps to be taken to regulate the sector.

He also referred to Byju's saying that the company pulls down complaints by customers on social media.

"In fact, this company sponsors the Indian cricket team now. You know exactly as to whom I am referring to. This company is worth $21 billion. Our entire Indian educational budget is not worth that much," he had said.

A report by the BBC had raised another controversy for the edtech firm, by quoting parents as saying they were misled by Byju's sales representatives and not provided services promised by the company.

Byju's was also in the news this year for its shopping spree. In 2021 alone, it acquired 10 companies in the online education and competitive exam space, spending $2.5 billion.

2021 has been a watershed year for edtech startups with $1.1 billion raised in funds, according to data by Traxcn. Players like Vedantu, Eruditus and upGrad also turned unicorn in the year, joining the likes of Byju's and Unacademy. A unicorn is a privately held company valued at $1 billion or more.