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Lessons Unlearned

When Nova went bankrupt in 2007, two central themes of the collapse were the large pre-payment of lesson fees and the inability of Nova to provide refunds. The fallout was so large, the media dubbed Nova's collapse as the largest consumer wipe-out since the end of the Pacific War.

In the nearly three years following the the end of Nova, you'd think that things have changed--that people wised up to the pressure sales tactics and that the schools themselves took steps to avoid a fate like Nova's. Apparently nothing has changed.

A 22-year-old female student at a closing Geos school in Sangenjaya in Setagaya Ward, Tokyo, says she just paid her entire yearly tuition last month. She had previously paid her tuition on a monthly basis. However, around autumn of last year, the school started repeatedly recommending she pay her yearly tuition in a lump sum.

The student's mother is a former student at English conversation school chain NOVA, which also went bankrupt. She warned her daughter that it was suspicious that the school was trying to get her to pay so much money up front. The student says she hesitated to pay until the last minute.

"If they recommended the lump payment while knowing they would be going bankrupt, it's depressing," she said sadly.

Since no refunds will be offered, the student is considering continuing at the nearest school that G.Communication will take over, but said, "It's far from my home, and I'm worried that a new teacher wouldn't teach in the same way as the old one."

The Yomiuri shimbun also illustrates some of its own hard luck stories.

A housewife in Chofu talks about how she lost money at Nova and now GEOS. She paid a year's worth of lesson fees up front to send her son to GEOS, but now wonders what will happen to the money and the lessons.

A young woman going to the Sangenchaya school in Setagaya ward, Tokyo recently paid 25 thousands yen in March for her lessons. She regrets having given in to GEOS's pressure sales. A young man at the Jiyugaoka school paid over 300 thousand yen in February for his lessons. While he was aware of what happened with the Nova fiasco, he didn't figure the same thing would happen at GEOS.

The same is happening with the instructors, too. From the same Mainichi article:

Elsewhere, at a school in Nara that is scheduled to close, a 23-year-old American teacher who had come to find out the latest news complained angrily, "At yesterday's meeting, the school manager told us that Geos's financial condition was fine, but this morning we got an e-mail about the bankruptcy. We were lied to. If I don't get paid, I can't afford a flight back home."

The Yomiuri also reports that G.communication isn't guaranteeing that salaries will be paid.

Naturally, a bit of panic is setting in. GEOS set up a toll free phone number to address the concerns of its customers, but according to the Yomiuri shimbun, nobody is picking up.

Instead, customers are greeted by a recorded message. Nobody is answering the number on the GEOS website hasn't worked either. That's left the Consumer Affairs Center to be flooded with complaints about not being able to get in touch with GEOS.

The Yomiuri did manage to track down a few staff members at GEOS's Shibuya head office, but they all said that they knew nothing. Apart from not being able to get a hold of anybody at GEOS, the Consumer Affairs Center has been fielding a lot of calls from students wondering if they'll be able to get a refund.

The Asahi shimbun reports that it's Nova all over again. With 99 schools slated for closure and 7,800 students affected, G.communication says it won't be offering cash refunds. Instead, the Mainichi shimbun reports that students have three options:

  1. Continue studying at the nearest GEOS
  2. Continue studying at the nearest Nova.
  3. Take lessons using the old Nova Ginganet videophone system. It's not clear whether students would be subject to any extra fees with this option.

While it doesn't look like the GEOS bankruptcy will descend into the chaos of the Nova collapse at this point, one thing is clear: the lessons of the Nova collapse have been forgotten or ignored.

Japan: 

Comments

On one hand I feel a tinge of empathy for these people losing tens to hundreds of thousands of yen.

But on the other hand, there is a saying in poker: It's a crime to let a stupid person keep their money.

If you can't remember a tragedy that happened 3 years ago, you are doomed to repeat it.

I'd have a hard time paying a huge lump sum for a year's worth of anything and not worrying about it.

If the folks in Japan can't get angry and worked up about about this, stir some trouble and scream out for consumers rights, this will happen until the end of time.

Until then... it appears to be *shrug* 'oh well, that's too bad. what other McDonalds style English school can I sign up for?'

I don't think it's 50/50. If I'm selling my magic tonic in the wild west, and you're dumb enough to buy it, you've just made a dumb decision. I'm the one who is a liar, so I'm the one with the bigger sin. You don't get life sentences for shop lifting; some misdeeds are worse than others.

Customers don't have millions of yen to create advertisements protecting other consumers, or have the ability to pick companies brains to know exactly how they might be scammed, but GEOS had money to pay for advertisements, giving them leverage to take advantage of people.

Not a fair fight at all.

If we think these companies are so terrible, perhaps we'll do are part to make sure that they aren't allowed to exist at all if they're going to lie to us, including lying to our children, as was mentioned in this post.

If students end up having to continue studying with any of the two NOVA methods, they will be expected to pay a heavily discounted fee. G.com has agreed to give affected students a 75% discount on NOVA lesson fees, including the Ginganet videophone deal. If they're able to continue at another Geos branch, they will be able to continue on their original contracts which were drawn up before the bankruptcy.

Lie, cheat, steal money from staff and customers. It is the business style of modern Japan, it will be a slippery slope downhill from here and the politicians are making sure of that. One day very soon Japan will shut up shop and go back to their old ways. They are not interested in internationalisation anymore. Back to the days of Captain Perry,

"If I don't get paid, I can't afford a flight back home"

Really don't know what to say to this..... shouldn't you always keep a little bit of spare money aside for emergencies like this? Even after finidng out the Australian GEOS went under he/she didn't think to put any money aside? It beggars belief...

"If they recommended the lump payment while knowing they would be going bankrupt, it's depressing," she said sadly." Criminal more like it. Issue criminal proceedings and get that fucker of a president behing bars.

I think it's easy to fall into this situation. First, the companies only focus on the start-up money one needs to come to Japan. It's easy to forget about needing emergency money to return home. Second, pay has been declining so much that the salaries people earn are just about enough to break even or save a tiny bit per month and maintain a moderate social life. The first year it's really easy to save, but after that, you get hit with massive resident taxes and the monthly government health insurance fee shoots up. If you don't mind working extra, and the market isn't flooded in your area, you can supplement your income. Not everyone does this. They likely didn't come here to work 50+ hours a week, at least the first few years.

The level of chaos and anger might not be as bad as Nova, but that isn't saying much. Things still look pretty messy.

"It's a crime to let a stupid person keep their money."

Excellent summation of the eikaiwa industry's business model!

I am amazed to see people so blatantly rationalizing the industry's shady business practices, though maybe I shouldn't be. Maybe the teachers/operators should have taken a lesson from the Nova collapse, too -- this business would be more sustainable if schools actually did right by their customers. Some might call the customers stupid, but these anecdotes notwithstanding the overall number of students keeps dropping. The assumption that there's a sucker born every minute is breaking down.

I have put together a look at some of the recent data on the language school industry. It looks like some of the value provided by the schools has eroded over the last decade. Schools are charging essentially the same rates while offering fewer classes per student, and now the number of part-time teachers has outstripped full-timers.

http://www.mutantfrog.com/2010/04/22/the-geos-bankruptcy-whats-next-for-...

I have a warning to any ex-Geos employees out there looking for work who might be considering joining Berlitz. Whatever you do, do not agree to the per lesson contract. I repeat DO NOT AGREE TO THE PER LESSON CONTRACT. This is tantamount to selling your soul to the devil without any of the attendant rewards. What will happen will be this:

after attending 6 days of unpaid training you will have to agree to make yourself available between the hours of 8.30am and 9.10pm, and lessons are only given to you IF THEY ARE AVAILABLE. And as you will be the newest employee, you will be the last one in the pecking order and therefore the last one to get any lessons. So you might have a schedule where you have a 40-minute lesson at 8.30 and then 2 lessons at 19.45. And this is on a very good day. On some days you might get one lesson at 19.45 and others you might not even get any lessons at all. There are some teachers who have seen weeks where their average lesson count is 3. I am not joking about this. And because there is no fixed schedule, you only receive your next day's schedule the previous evening at about 7pm, which makes it very very difficult to plan things. Nothing makes the per lesson contract a worthwhile option. The paltry 210k G-comm is offering makes it look like their streets are paved with gold in comparison.

So I guess what I am saying is: look elsewhere, Berlitz is not the place to be pinning your hopes of salvation on.

Thankyou Adamu, that METI spreadsheet is one of the most interesting things I've seen this website throw up. I left the end of 2007. I couldn't have picked a better time!!

Lie, cheat, steal money from staff and customers. It is the business style of modern Japan, it will be a slippery slope downhill from here and the politicians are making sure of that. One day very soon Japan will shut up shop and go back to their old ways. They are not interested in internationalisation anymore. Back to the days of Captain Perry.

I am impressed. Not only are you expert in matters of business, but also in the lessons of history. I suspect that you have an MBA and a PhD in history. Excuse me for an intrusion on your expertise, but did you, perhaps, mean Commodore Perry?

Any word yet about teacher's rent being paid in the company apartments?

I don't have expertise, just an armchair critic but I think Im on the money. Captain/Commodore . you are splitting hairs, I'm sure everyone will understand he controlled a fleet of black ships.

So... Teachers contracts say, and I'm kind of quoting:

"contract until July 31st or the last day of your visa if it ends earlier"

So if I'm not misunderstanding... If your visa ends before that date, you are fired. If your visa ends after that: you are fired.

For both GEOS customers and for employees like these who find themselves in dire straits.

For the customers, the collapse of NOVA did not happen behind closed doors. It was splayed out on the pages of all the major newspapers and television airways for all to see. If people are too stupid to stop and apply a little critical thinking or just good ol' common sense, then they deserve to lose their money.

As for the employees, anyone who has been working there six months or longer has absolutely no excuse for the type of woe-betides-me story we saw in this post. Six months is sufficient time to squirrel away enough money to deal with a situation like this, and it's not like the writing wasn't on the wall months ago already concerning GEOS. This isn't some 16 year-old kid we're talking about, but a 23 year-old, university-educated adult. One would think he would have developed some sort of problem-solving skills or learned enough life-skills to manage himself and his finances a bit better. I fully expect to see stories and threads on here from ex-GEOS staffers clamoring for their respective embassies to get involved and help them out of the jam they are in.

Too bad, so sad for the both of them. Maybe next time they'll be more careful.

How in the hell can they consider G-Con some sort of saviour when they are giving 3 month contracts?! Found this on mixi:

Hi, everybody.

My name is Tommy. How are you?

So, recently there is big news. The English conversation school GEOS filed for bankruptcy and was bought by G-communication. This is similar to what happened to NOVA before.

As most of you know, I worked full time for GEOS. I didn’t know this would happen. It was a complete surprise.

“So, what is going to happen with Tommy?”
Many people are asking me this. Here is what is going to happen with me.

-First of all, I will NOT go back to America. My visa is still good and I have a house.

-Second, I will not get paid for the work I did in April. GEOS has no money, so they have no money to give me. I worked for free for one month. So, I have no money right now. Also, I was supposed to get a bonus when I finish with GEOS. I will now not get that money either.

-Lastly, I have no job now. GEOS is gone so that means that everyone is fired. The new company (G-communication) offered everyone to join their company, but it is not good because A) the contract is only for 3 months, B) if I sign, I will not get paid until May 15th. Also, that payment will be small. I have no money now, so I can’t wait for a small paycheck in the future. I need to make money quickly or starve.

TO MY STUDENTS:
Your contracts at GEOS are still OK. GEOS Yokohama is still open and you can still go there, but unfortunately I will no longer be your teacher there. Remember, the money you paid for my lessons for April I will not get. The bosses at GEOS will keep it. I have no money to pay my bills of buy food, so I will focus on a new career. I will play more concerts, teach bass and teach English privately (by myself at a café or at home). If you want to continue my lessons, you can take them direct from me! I will charge ¥2,500 plus train fees for a 50-minute lesson. Since most of you probably will not get a lesson this week, I will make up your normal lesson this week for free (one time)!!! Just call or e-mail me if you want to meet.

080-3211-0449
TommyfromLA@softbank.ne.jp
Tommycurse@yahoo.com

TO MUSICIANS:
I have no job now. I can play any concert you want me to play. I the free time to play any day – any time!

TO EVERYBODY:
If you know anybody who wants English lessons or bass lessons (wood bass or electric) please tell them about me! Again, I will charge ¥2,500 plus train fees for a 50-minute lesson. My info is above.

Thank you!
I will do my best!

I think what you meant to say was how the hell can anyone consider any company to be a savior when they let themselves get into poor Tommy's situation?

I guess if Tommy is really desparate he could sell his house...

Fight on brave Tommy!

What did these people study in school to get a degree? Not ESL obviously - GEOS would not want anyone to show up at the door already trained to teach. Not economics or business either I suppose - otherwise they would have bank accounts with money in them. What was it these teachers majored in during their college days? Hopefully, it was psychiatry so they can cry on their own shoulders without paying a yen.

Salt to the wounds (sorry) - I saved the equivalent of US $12,000 after one year of teaching in Japan.

Good for you, I saved NZ$48000 in my first year in Japan and fuck was I tired. I have been here for 10 years now. You do the math times plus times 10

Japan (and eikaiwa) has never been a difficult place to save money if you eat Japanese and live mostly locally. I came in the early 2000s with the intention of living overseas for a bit, having some fun and paying off my student loan. I managed about 50-70k a month, was all paid off in about 2 years. Not a huge amount, but I was out 3 or 4 times a week and seeing a fair bit of the country. A fair few people I knew would literally have ichi-man left with 2 weeks to go to payday. I never could figure out how anyone could be that bad with money but obviously people are.

48'000 Kiwi rupees? That's about 8000 yen (or 80 bucks Australian) right? :-)

Yeah mate! So you mean you can't caculate and you are broke

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