Pedestrians walk past a street stall for Wall Street English in Shanghai. File photo: IC

Chinese students who enrolled in Wall Street English (WSE), an Italian international adult English training company that reportedly will announce the bankruptcy of its Chinese business this week, are preparing to file a lawsuit against the company over alleged fraud in a bid to reclaim their tuition fees, which could total more than 100 million yuan ($15.44 million), some students told the Global Times.

The company's reported bankruptcy announcement comes after China ramped up measures to clamp down on problems in the private tutoring sector. Although most measures are intended to regulate K12 education companies, niche industries in the sectors of adult and vocational education are also seeing a freeze as capital withdraws.   

WSE owes tuition refunds to more than 1,000 students across China. Consumers set up dozens of online chat groups over the weekend to share evidence and seek advice from lawyers, the Global Times learned from a chat group's manager.

"The company's sales representatives were still promoting courses in late July, when they should have been notified of the bankruptcy decision. So this is about more than getting our tuition back. It involves fraud," the manager said. 

The Global Times learned from several students that the fees were rather high, and they spent over 20,000 yuan on average. The manager herself paid about 400,000 yuan for a one-on-one English-learning VIP course. 

"Once consumers register for WSE's basic course, they will be bombarded by phone calls from sales representatives, persuading them to spend more to 'upgrade' their courses. Some will be advised to pay the hefty upgraded tuition fees with loans from financial institutions," another WSE student told the Global Times on condition of anonymity. 

According to media reports, WSE recommended that its students apply for loans from umoney, an online lending platform owned by Baidu. The internet finance industry has been under Chinese regulators' intense scrutiny since last year to fend off financial risks. 

Baidu had not responded to an interview request by the Global Times as of press time.

Hao Junbo, a lawyer with the HAO Law Firm in Beijing, told the Global Times on Sunday that from a practical perspective, it will be extremely difficult for customers to claim refunds as the institution, which will file for bankruptcy, does not have the financial ability to repay these tuition fees. 

WSE was founded in Italy in 1972. It entered the Chinese market in 2000 and opened 71 learning centers in 11 Chinese cities, employing more than 3,000 staff at its peak. 

In 2020, WSE was sold back to the original founder of the company, Luigi Tiziano Peccenini, at a deep discount by Hong Kong-based Baring Private Equity Asia and CITIC Capital Holdings, according to media reports.