A funeral insurer accused of preying on Aboriginal people is being sued after allegedly draining nearly $40,000 from one woman’s welfare payments.
Coral King, a 49-year-old Aboriginal woman from the NSW town of Lismore, signed up to a policy in 2005 with the Aboriginal Community Benefit Fund - which has no ties to Indigenous communities.
She paid up to $175 per fortnight after she was signed for funeral insurance to cover herself plus 11 family members: her parents, her sister and eight nephews and nieces.
At the time, two of the children were babies and Centrelink allowed the funeral insurer to deduct payments from her welfare payments through its Centrepay system.
Over the course of a decade, ACBF allegedly charged Ms King a total of $37,662 for the schemes – which would each pay a maximum benefit of $6,000.
She said that she would not have entered into the contract if ACBF told her she would pay more for the insurance than she was entitled to receive.
“The majority of the members of Ms King’s Aboriginal community (including Ms King) live on low incomes and have minimal assets and no savings,” the statement of claim reads.
“Ms King felt a strong obligation to make provision for the funeral needs of members of her household and other close relatives, including her father, mother and sister ... who had a cognitive disability and was incapable of making provision for herself.”
The case, which will be heard at the Federal Court in Sydney, was filed on Friday by Legal Aid NSW.
It is the first legal action against the insurer since it took a beating at the banking royal commission in June.
The first case management hearing will be heard before Justice Jayne Jagot on November 27.
Jemima McCaughan, a senior solicitor for Legal Aid NSW, said funeral insurance “with limited benefit” was often being sold to Aboriginal people.
“People can end up paying a lot more than they may ever get back, particularly if they are young,” she told NITV News.
“We say that ACBF has acted unconscionably and that they’ve misrepresented the nature of the product and breached the duty of good faith to our client.”
ACBF has 13,500 funeral plan holders, the banking royal commission heard. About 4,900 are children and another 2,000 are aged between 18 and 25.
It is not an Aboriginal organisation nor affiliated with any Indigenous or government organisation.
The company, which markets itself as “Australia’s only funeral insurance plan dedicated to the Aboriginal community”, is based on the Gold Coast and is privately owned by non-Indigenous people.
At the royal commission Bryn Jones, the CEO of ACBF, revealed he does not hold relevant qualifications or have financial services experience. He got the job after having a coffee with the group’s founding director, Rob Pattenden, who was a client of Mr Jones’ father.
The investigation also heard that the insurer may have breached criminal laws regulating misleading conduct by using colours and imagery significant in Aboriginal culture.
Last month, the ACBF promoted its products and handed out toys to children at the Koori Knockout in Dubbo.
Mark Holden, a solicitor for the Financial Rights Legal Centre who was at the event, said the stall stood out among others organised by communities services.
“There were a pile of showbags with ACBF logos that they were handing out to everyone, especially the children,” he told NITV News.
“The likely impact of this is that the children will hold onto these items which will be in view of the parents.”
Mr Holden also said that the ACBF stall featured a football passing competition with a company representative taking down contact details.
“They were there for the entire four days and they just stood out so blatantly," he said.
"All the other tents were white. Their tent was a bright orange ochre colour.”
Mr Holden said the company’s conduct was concerning in the wake of the revelations at the banking royal commission.
“In my personal opinion, [they shouldn't] be able to market this as business as usual without giving any acknowledgement of the harm it causes to the community,” he said.
“They haven’t even bothered to change the name of their organisation.”
ACBF has not responded to requests for comment by NITV News.