China Fines 13 Tutoring Companies $4.94 Million for Fraud and False Ads

What’s new: China’s market regulator fined 13 tutoring companies 31.5 million yuan ($4.94 million) for false advertising and pricing fraud as authorities tighten the screws on the country’s after-school training industry.

New York-listed New Oriental Education & Technology Group Inc., TAL Education Group and OneSmart International Education Group Ltd. and Hong Kong-listed Scholar Education Group were among the companies penalized.

The crackdown mainly targeted large cities, including Beijing, Shanghai, Guangzhou and Hangzhou, and large institutions, aiming to breaking the unwritten rules in the after-school tutoring industry and effectively deter violations, the State Administration for Market Regulation (SAMR) said on its website.

The fines followed 2.5 million yuan of penalties to Alibaba-backed Baidu ed-tech spinoff Zuoyebang and Tencent-backed Yuanfudao last month for misleading consumers about tutor qualifications and faked user reviews.

The background: Since the beginning of this year, China vowed to tighten scrutiny of after-school tutoring institutions and punish illegal training activities. In March, Beijing educational authorities ordered all in-person after-school training classes — which were suspended in early February amid a resurgence of the Covid-19 pandemic — to postpone reopening and conduct inspections and rectification. In April, state broadcaster CCTV removed ads from some top online tutoring enterprises.

The market regulator said it will next implement rules to further ease the schoolwork burden on students, continue to strengthen supervision of the after-school tutoring market and rigorously investigate and punish violations.

A more detailed industry rectification plan is expected to be established, mostly likely before schools start in the fall, said an executive at a large tutoring company in Beijing.

Quick Takes are condensed versions of China-related stories for fast news you can use. To read the full story in Chinese, click here.

Contact reporter Denise Jia (huijuanjia@caixin.com) and editor Bob Simison (bobsimison@caixin.com)

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