Funeral insurer Aboriginal Community Benefit Fund has been found to have misled an Indigenous woman who bought a policy in 2006 under the impression that the plan would benefit her community.

The Australian Financial Complaints Authority (AFCA) ordered the insurer, which last year rebranded as Youpla, to refund the woman $2705.71 plus interest from June 21 2017 – the date her policy was cancelled because of non-payment of premiums – until the refund is made.

AFCA says the evidence produced by the complainant, who is a First Nations woman and had just turned 20 when she signed up for the plan, showed she was duped into buying the product.

In the complaint lodged through her lawyer, the woman said the insurer engaged in misconduct in relation to the marketing, selling and issuing of the funeral plan when two representatives approached her unsolicited.

AFCA accepts her mental state was most likely unstable and not able to deal with written material from the representatives. The woman had been experiencing homelessness and medical issues from drug and alcohol abuse during early childhood.

The complainant submitted that the insurer failed to disclose it was not an Aboriginal organisation. She also said the representatives were white, although one claimed he was Aboriginal. They relied on Aboriginal imagery and provided the complainant with a pamphlet with an Aboriginal flag.

AFCA says it accepts the complainant would have been aware that she was signing a document to provide cover for her funeral.

“However, the panel finds it is fair to conclude the complainant was misled, through ACBF’s sales and marketing, into believing ACBF was an Aboriginal fund, set up for the benefit of the Aboriginal community,” AFCA ruled.

“The panel is satisfied the misrepresentations resulted in the complainant becoming a member of the fund at a time when the complainant was a vulnerable person.”

The insurer has not responded to an insuranceNEWS.com.au request for a comment to the AFCA ruling.

Youpla was criticised during parliamentary hearings in April by MPs and also during the Hayne royal commission hearings in 2018 for selling low-value funeral products to the Indigenous community under its previous name.

The company marketed the business as having ties with the community and that the products were designed to benefit Indigenous people.

In April Youpla CEO Bryn Jones told the House of Representatives Standing Committee On Economics that the company’s application for a financial license was rejected.

The Australian Securities and Investments Commission (ASIC) declined to provide details about Youpla’s licence application, saying such information is confidential. But an ASIC spokesman told insuranceNEWS.com.au the regulator understands Youpla has stated publicly it is not selling products at the moment and has also deactivated its website.

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