Funeral homes hit the grieving with inflated prices

A report has found practices in the funeral industry can gouge thousands from customers.

Mourners dealing with loss are being taken advantage of by funeral homes with inflated pricing and practices that stunt competition, reveals a report by the University of Sydney Business School.

Competition in the industry is stifled further by conglomerate InvoCare, which confusingly operates more than 30 different brands of funeral homes.

The report It's your funeral: An investigation of death care and the funeral industry in Australia found service regulations can be met for $1200, but suggests the average cost of a funeral is $6000.

Professor Sandra van der Laan, lead author of the report, says funeral homes inflate the pricing of individual services by offering them only as part of a bundled package.

The report notes people are of "impaired" ability when coping with loss, and identifies that they are usually unwilling to shop around.

"Funeral directors provide a service that a lot of people...don't want to worry about," she says. "All the research shows there's a level of exploitation of vulnerable consumers."

The report, which conducted market research on and called more than 120 funeral homes, found most won't publish any pricing.

The findings were consistent with a CHOICE investigation late last year, in which people felt guilty about shopping around after having spent a couple of hours working through pricing with funeral home operators.

But Professor van der Laan found people could save money by using services that published prices online.

"Funeral providers that advertised online were about $1000 to $1500 cheaper," she tells CHOICE.

Among the most ambiguous items on the list of charges from funeral homes is the "professional service fee", which on average makes up 39% of funeral costs.

"[Funeral homes] are collecting the body from the hospital, they're preparing it and dealing with all the regulatory requirements. What they add on is the celebration of life."

Not offering price lists would also make it difficult for customers to put together cheaper services, such as buying a coffin from a different supplier – a product she says can be marked up by 300 to 500 percent.

"Most funeral directors won't allow you to source your own coffin. You have to use their services for everything.

"You can get a similar product for less money. I mean even Costco is selling coffins."

The markup is often used "to cross-subsidise other areas of the operation", notes the report.

Competition in the industry is exacerbated further by conglomerate InvoCare, which runs more than 30 seemingly independent funeral homes.

InvoCare-owned funeral homes were found to charge up to $1500 more per service.

"Our research shows if you buy a funeral from InvoCare companies, you will pay more," Professor van der Laan confirms.

"I can't tell you a reason why, other than they're a listed entity that has to make a profit and give some of it back to their providers of capital."

Funeral services could be arranged from $4250, but the report found a funeral hosted by one of InvoCare's subsidiary brands would start at $6250.

A representative from InvoCare says the average cost of a funeral – less burial or cremation fees – is "around $6000".

"InvoCare believes every family has the opportunity to farewell their loved one in the way they would like and to have as much choice available to them," says the representative.

"Throughout the funeral planning process, we provide price transparency upfront so that our customers can select an option to best suit their needs."

However, a CHOICE journalist was told late last year by an InvoCare subsidiary "that a price list wasn't available and instead figures were quoted over the phone".

InvoCare, which declared sales of $450 million in 2016, holds a dominant 40% share of the Australian market.

"It poses real problems if you live on the east coast of Australia where InvoCare has a market share of up to 80%," says Professor van der Laan.

"People think they're shopping around when they're one company. You could ring Simplicity Funerals, Guardian Funerals and White Lady Funerals without realising you're dealing with InvoCare."

Funeral homes owned by InvoCare cover different pricing points. A funeral service held in Sydney would cost $6010 with Simplicity funerals, $8755 with Guardian Funerals and $9980 with White Lady Funerals.

Professor van der Laan believes funeral pricing should be published to help grieving consumers make an informed choice.

"There should be a product information standard where everything should be itemised," she says.

"You should be able to have an itemised list showing the things you're buying."