Need to know
- Funeral provider InvoCare plans to remove the "administration fee" – which is a late payment fee, billed in advance – from its customers’ invoices
- InvoCare applies the late fees by default, putting the onus on customers who pay on time, and their funeral directors, to deduct the fee from the total
- CHOICE investigated the fees and submitted a complaint to the ACCC arguing that InvoCare breached consumer law
Australia's largest funeral provider, InvoCare, plans to remove misleading late payment fees from the bottom of its funeral invoices, following a CHOICE investigation into the fees last year.
We found the company was applying a late payment fee, masquerading as an "administration fee", upfront on funeral invoices across all of its brands. The fee costs $352 including GST.
When we asked InvoCare's group executive of business operations, Keiron Humbler, about the removal of the fee from invoices, he said, "that's the plan", but declined to provide further details.
Because the fee is vaguely named and is applied by default, there's a good chance that people will pay it without realising they don't have to
To avoid paying the administration fee, customers have to pay their full funeral bill within three weeks.
But the onus is on them to notice that the administration fee should be subtracted from the total – and on them or their funeral director to notice if an overpayment happens.
Because the fee is vaguely named and is applied by default, there's a good chance that people will pay it without realising they don't have to if they're settling the bill within three weeks. This is arguably even more likely if they're distracted by grief at the loss of a loved one.
In fact, an invoice we saw from InvoCare's Guardian Funerals showed that a customer paid the full cost of a funeral in advance, and was still charged – and paid for – an administration fee, not realising it was actually a late fee they didn't need to pay.
We asked InvoCare why the company decided to remove the fee from invoices, when it would be removed, and whether they would stop charging the fee entirely or just change the way it's billed.
Jacinta Gale, InvoCare's PR manager, responded with this statement in an email: "We confirm the administration fee is under consideration."
She previously emphasised the fact that the administration fee is explained in the terms and conditions of the contract customers sign ahead of the funeral. But this disclosure is not given with the invoice they receive afterwards.
Instead, invoices list the administration fee along with funeral goods and services such as the professional fee, coffin, and cremation or burial fees. A note at the bottom of the invoice then instructs the customer to deduct the administration fee if they pay within three weeks.
Several customers who sent us their invoices described the amount they paid as "discounted", which suggests they believed the sum they paid was a markdown from the original price of the funeral.
In reality, they were paying the true cost – excluding a late fee they had been pre-emptively billed. None of them could remember thinking anything of the so-called administration fee, which some mistook for being a fee for a service.
A Guardian Funerals invoice shows that a customer paid the administration fee, not realising it was actually a late fee they didn’t need to pay.
In a complaint submitted to the ACCC last year, CHOICE argued the term "administration fee" was "misleading because the fee does not cover any type of service, and therefore operates as a pre-emptive penalty".
And, by including a pre-emptive late fee in customers' total funeral costs, InvoCare appeared to be in breach of the Australian Consumer Law, which states that businesses have to give you the minimum total price of a product or service as a single figure.
Amy Pereira, a campaigns and policy adviser at CHOICE, says she's pleased to see that InvoCare is moving to remove the administration fee from its invoices.
CHOICE will continue…to make sure that vulnerable people are not further disadvantaged by unconscionable behaviour in the funeral marketAmy Pareira, campaigns and policy adviser at CHOICE
"This represents a small win in a market that is highly concentrated and systemically engages in practices that take advantage of families when they are at their most vulnerable," she says.
"CHOICE will continue to watch InvoCare closely to make sure that vulnerable people are not further disadvantaged by unconscionable behaviour in the funeral market."
The administration fee is one example in a long list of poor conduct by many funeral providers. Our multi-part investigation in the funeral industry asked: Part 1 Do you need a funeral director?, Part 2 How much do funerals cost? and Part 3 Should you get a pre-paid funeral? Part 4 looked at the future of funerals and industry disruptors.