News & Analysis

Govt. Raises the Red Flag around EdTech Firms

The consumers affairs department has taken serious note of these companies over-selling their courses though any direct action threat appears still far away

When the world was locked down post the pandemic, education technology or EdTech was the darling of both the investors and customers. The first ones saw the pot of gold at the rainbow while the second lot were actually the rainbow as they struggled to keep children’s education on top of their agenda in a world that suddenly shut down. 

The EdTech industry continues to be a big mover with a future valuation of $30 billion with as many as seven unicorns that it boasts of till date. To put things in perspective, Statista estimates present market valuation at $2.8 billion, expected to touch $10.4 billion by 2025. There are 9,043 edtech startups in the country. 


There’s trouble at the mill though

However, amidst all this euphoria, there have also been some unsavory episodes like delayed payments on acquisition and the mis-selling of courses that amounts to misrepresentation of facts to students and their kin. Media reports said the government waved the red flag over such instances by Byju’s and other entities during a recent discussion with edtech representatives. 

A report published by ET says the Department of Consumer Affairs brought up concerns over this and other aspects of the business during a meeting of the India Edtech Consortium, the apex body of edtech companies and a sort of self regulator, late last month. However, the talks were limited to raising concerns and the apex body listening to it. 

However, it appears as though Byju’s is at the center of the matter as department officials followed up their discussions with the consortium with a specific call with executives at Byju’s, since most of the complaints received on the government portal were related to the Bangalore-based company and its group units.


How does the redress work?

Meanwhile, media reports claimed that the company’s cofounder Divya Gokulnath also attended the call, though efforts to get information from Byju’s didn’t materialize. Barring the input that the senior management had shared a detailed action plan with the officials to mitigate complaints, there wasn’t much forthcoming. 

However, sources in the ministry confirmed to us that over 150 complaints had landed with them on edtech startups. The list of such complaints would be shared with the companies at the earliest though most of them revolved around mis-selling courses to parents as well as certain claims that were made through advertisements and TV commercials. 

In fact, the reports said even the Advertising Standards Council of India (ASCI) were asked to play a proactive role to ensure that information is not oversold in commercials. The industry self-regulator had stated last month that over 5,500 ads were reviewed over the past 12 months and more than a third of them were from the education sector that includes colleges as well. 

Reports also claimed that the consortium itself had received complaints on Byju’s and its subsidiary WhiteHat Jr. As per the consortium norms, consumers are free to raise complaints about members of the group, which then gets forwarded for fixes. However, since the body has no statutory powers of regulation, the complaints and its response remain largely ornamental. 

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