Nova Corp., the nation’s largest English-language school chain, was ordered by the government Wednesday to partially suspend business for six months for lying to customers about its services.
Nova will be banned from selling long-term contracts for language lessons starting Thursday, officials of the Ministry of Economy, Trade and Industry said.
Contracts with existing students, however, will be allowed to be renewed.
“We have concluded that (Nova’s way of signing up students) was extremely malicious,” said a METI official who briefed reporters about the order.
Nova “engaged in illegal acts, with the top management at its head office authorizing the irregularities. The company even compiled a manual advising staff on how to respond to claims by students.”
The language school chain, with about 480,000 students and 900 schools, tells prospective students they can book language lessons “any time” they want and at any Nova school nationwide.
However, clients have complained that they were not able to book lessons during busy periods.
METI has been investigating business irregularities at Nova since it inspected the company’s headquarters in Osaka in February.
The investigation has uncovered that several Nova schools did not give full refunds to people who canceled lessons, the officials said.
In addition, some people have reported that Nova misled them into believing their cooling-off periods had expired and they could not cancel their contracts.
Under the law, private language school clients have an eight-day cooling-off period from the time they sign a contract, during which they can cancel and get a full refund. However, Nova staff reportedly told some people the cooling-off period begins on the day they register their name and address at the school, not when they sign a contract.
Nova shares fell 10 percent to end Tuesday’s trading at a 52-week low of 88 yen.
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