Corporations could now be held directly responsible for predatory business models following a landmark court decision.

The High Court case involved vocational institute Captain Cook College, which hired marketers to sign up students for its online courses, tempting them with gifts such as free laptops.

The college initially had processes to weed out students who would be unable to take on study, but abandoned those systems when recruiters complained they meant they did not make as much money.

This resulted in students, many from disadvantaged backgrounds, became liable for substantial debt for courses they never started.

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At the same time, the college’s profits soared from $326,000 to $18.9 million.

Professor Elise Bant from Melbourne Law School said the implications of the decision could extend to many aspects of corporate wrongdoing, including harms that occur through AI.

“Corporate fraud and predatory behaviour are common, harming consumers, fair traders and society as a whole,” Professor Bant said.

“Yet, as the Banking Royal Commission showed, too often corporations are structured to allow them to avoid or limit responsibility, to hide behind excuses of ‘system errors’ and ‘incompetence’.”

The new principle potentially also applies to both corporate groups and government entities, “so public entities could be held to account for systemic abuses such as Robodebt”.

Professor Bant said the decision was “a game-changer” and would force corporations to “think through their systems”.

“This is a practical way of unmasking corporate fraud and predatory practices,” she said.

– AAP