CN05 - Funeral industry remains in the ACCC spotlight

On 2 September 2021, the Australian Competition and Consumer Commission ("ACCC") announced funeral services provider Alex Gow Proprietary Limited (Alex Gow Funerals) paid a penalty of AUD $13,320 for allegedly making false and misleading representations about the price of its funeral services and fees consumers were required to pay. 

Key takeaways

• The ACCC made clear that competition and consumer issues in the funeral sector were a 2021 compliance and enforcement priority. Its action against Alex Gow Funerals is the latest example of the ACCC giving effect to this enforcement priority and we expect more enforcement activity in this sector.
• Pricing representations continue to be scrutinised by the ACCC and this action is a reminder to all businesses to provide accurate information about the price of services and fees consumers are required to pay. Consideration may need to be given to the circumstances in which customers acquire the relevant services (here, consumers using funeral services are experiencing a difficult and emotional period).
• In addition to misleading conduct involving pricing representations, the ACCC continues to look closely at the use of unfair contract terms in this sector and more broadly. Have you reviewed your standard form (consumer and small business) contracts for this purpose?

Alex Gow Funerals is an Australian funeral services provider which operates funeral homes across four locations in Brisbane, Queensland. The ACCC issued Alex Gow Funerals with an infringement notice for falsely representing in an invoice that a $400 ‘Estate Fee’ was payable for its funeral and/or cremation services, when in fact, the fee was a late payment fee payable if the customer did not pay the bill on time. 

The alleged conduct occurred between at least July 2020 and May 2021.

Deputy Chair of the ACCC, Delia Rickard stated clearly:

"Funeral businesses must clearly describe the purpose of all fees included in their invoices, as well as the total price and due date for the invoice. If a fee applies for late payment of an invoice, the late payment fee must be clearly stated and should not be included in the total amount due on invoices".

The ACCC can issue infringement notices where it has reasonable grounds to believe that a person or business has contravened certain provisions of the Australian Consumer Law.  The payment of a penalty under an infringement notice is not an admission of contravention.

To resolve this action, in addition to paying the penalty under the infringement notice, Alex Gow Funerals:

• refunded 40 customers during the period which had paid the "Estate Fee"; and
• amended its invoices replacing "Estate Fee" with the accurate description "Late Payment Fee".

Further, Alex Gow Funerals agreed to amend its consumer contracts to address the ACCC's concerns that certain terms should be regarded as unfair, including excessive interest fees for late payment and broad indemnity clauses, each of which the ACCC considered were not reasonably necessary to protect Alex Gow Funerals' legitimate interest in recovering costs.

There should be no doubt about the ACCC's continued focus on the funeral services sector.  The ACCC has stated that the issues raised in this action are widespread industry issues of concern.

This case is an important reminder that (i) pricing representations (in the funeral industry and more broadly) are closely scrutinised – they must be accurate and provide sufficient information so as not to mislead a customer; and (ii) the ACCC continues to devote resources to examining potentially unfair contract terms – businesses should review their standard form small business and consumer contracts for compliance with the unfair contract terms regime. 

With thanks to Isabella Hunt of Ashurst for her contribution.