Cancelled an Ed-Tech Course but the Loan EMIs Continue?

The complainant enrolled his child in an annual online tutoring program costing ₹75,000, funded via an instant NBFC education loan arranged on the spot by the sales representative. Within 7 days of the trial period, complainant submitted a formal written cancellation request due to sub-standard pre-recorded video lectures and missing dedicated mentorship. While the edtech company acknowledged the cancellation on email, they failed to remit the closure funds to the lending NBFC. Consequently, the NBFC continued auto-debiting monthly EMIs of ₹6,250 and reported overdue defaults to CIBIL when the complainant stopped funding the mandate account.

The District Consumer Commission held that under Section 2(11) (deficiency in service) and Section 2(47) (unfair trade practice) of the Consumer Protection Act, 2019, an edtech company cannot withhold customer refund funds while exposing the borrower to predatory loan recovery. The forum directed BYJU'S to immediately refund ₹75,000, ordered the lending partner to cancel the loan agreement with immediate issuance of a No-Dues Certificate (NOC), expunge all adverse remarks from the consumer's CIBIL credit report, and pay ₹25,000 in mental agony damages and ₹10,000 in litigation expenses.

Enrolled in an Executive Management Certification with a total fee of ₹2,20,000 financed through a 24-month NBFC loan under the representation of '100% placement assurance and full refund if job not secured within 6 months'. The course curriculum differed substantially from the brochure, and promised placement interviews were never arranged. When the student withdrew before the second module and requested termination of the financing arrangement, the edtech firm cited non-refundable clauses buried in the online portal terms of service, and the lender initiated automated e-mandate presentation with penal bounce charges.

The Consumer Forum struck down the 'no refund under any circumstance' clause as an Unfair Contract under Section 2(46) of the Consumer Protection Act, 2019. The Commission held that educational tech platforms cannot trap learners in unconscionable contractual covenants when promised deliverables fail. The forum ordered a pro-rata refund of ₹1,80,000, complete cancellation of future loan installments, refund of ₹3,540 collected in wrongful bounce penalties, and ₹35,000 compensation for harassment and legal costs.

Father purchased a coding curriculum for his 10-year-old child for ₹48,000 on a 12-month EMI scheme. The sales agent falsely represented that the loan was a 'free trial zero-cost installment plan with unconditional cancellation anytime within 14 days'. On Day 5, the parent submitted a formal cancellation ticket. The edtech company took 4 months to respond, during which 4 monthly EMIs were deducted. The company offered a course credit voucher instead of a bank transfer refund.

The Commission ruled that forcing credit vouchers on a consumer who exercised a valid cancellation right constitutes an unfair trade practice. Relying on CCPA misleading advertisement and dark pattern guidelines, the court directed the edtech firm and lender to refund all debited EMIs of ₹16,000, extinguish the remaining loan balance of ₹32,000, and awarded ₹20,000 for mental distress and ₹5,000 costs.

The borrower appealed a district commission order that had dismissed an edtech complaint on the grounds that the lender was a third-party NBFC separate from the educational provider. The student established that the loan was arranged exclusively through the edtech platform's sales executives using digital tablets, without providing a Key Fact Statement (KFS) or loan sanction letter at the point of sale.

The State Commission reversed the district forum, holding that under RBI Digital Lending Guidelines (September 2022) and the principle of composite commercial transactions, an EdTech platform functioning as a Lending Service Provider (LSP) and the Regulated Entity (RE/NBFC) are jointly and severally responsible for customer grievance redressal. The court directed immediate cancellation of the loan, restoration of the consumer's CIBIL score to 780+, refund of all debited installments with 9% interest, and ₹50,000 punitive damages for coercive recovery agent tactics.