The Federal Court has ordered ACBF Funeral Plans Pty Ltd to pay a further $3.5 million in penalties for falsely claiming the company was Aboriginal-owned or managed.

The insurer, operated by Youpla Group Pty Ltd, collapsed in 2022, leaving thousands of predominantly low-income Aboriginal families without the funeral cover they had paid into for decades. The group had marketed itself for more than 30 years as a First Nations business, selling funeral insurance to Indigenous communities across Australia.

The Australian Securities and Investments Commission (ASIC) took legal action against ACBF and Youpla, resulting in the latest $3.5 million fine, handed down by the Federal Court on Thursday. This follows an earlier $1.2 million penalty issued in 2023 for misleading consumers into believing they would receive a lump sum payment, which was not the case.

Justice Anthony Goodman said the "overwhelming message conveyed by the marketing material and the point-of-sale documentation deployed by ACBF was that ACBF was an Aboriginal company".

Although the penalty serves as a legal deterrent, Youpla has since folded, and the company will not pay the fine.

Nonetheless, ASIC Chair Joe Longo said the judgment sends a clear message.

"The penalty will act as a strong deterrent to anyone who tries to mislead Aboriginal consumers by falsely claiming Aboriginal ownership or management," he said. "It is one of ASIC's enduring priorities to tackle misconduct targeting First Nations people and our work in this case shows exactly why," he said.

In response to the ruling on Thursday, Bettina Cooper, a campaigner with the Save Sorry Business Coalition, said whilst they "welcomed" the penalty, it "doesn't help the thousands of people who were deceived into thinking they were buying a funeral plan from an Aboriginal owned business".

"But it very clearly warns other businesses that if you claim or imply you are a First Nations business in order to make money and [take] advantage of community, and you are not, you will be held to account," she said.

ASIC said many customers paid fortnightly premiums under the belief they were securing funeral costs for their families.

"ASIC submitted that the making of the Aboriginal Ownership/Management Representation was deliberate and callous and involved egregious conduct," Justice Goodman said. "I agree."

The company also used colours associated with the Aboriginal communities, including red, black and yellow, in its marketing materials and advertising to bolster its claims of cultural authenticity.

"The use of that imagery and those colours has a heightened significance in the context of a target audience of Aboriginal persons," Justice Goodman said.

Ms Cooper said the "finding around ABCF misrepresenting being an Aboriginal-owned organisation was incredibly distressing for community and made it hard to fully appreciate the broader findings about ABCF's conduct".

"But ASIC listened and acted to appeal this principle. We thank ASIC for pursuing this very important matter for all the people who were misled by ABCF/Youpla," she said.

The Aboriginal Community Funeral Plan (ACF Plan) was the only funeral fund permitted to access Centrepay — a government payment system introduced in 2001 that allowed automatic deductions from welfare payments for essential services like rent or food.

ACBF was also known to use door-to-door sales tactics and misleading advertisements. In 2018, the banking royal commission found the company had acted "below community standards," including by exploiting the cultural importance of funerals in Indigenous communities.

"The ACBF Court of Appeal decision sets an important precedent on misrepresentation of First Nations ownership or 'black-cladding,'" Ms Cooper said. "Government agencies should continue to identify and take action against black-cladding, so legitimate First Nations-owned organisations are able to flourish and support their community."

In response to the Youpla Group's collapse, the federal government last year announced a $97 million compensation package for affected policyholders who held an active plan on or after August 1, 2015.

At the time, Minister for Indigenous Australians Linda Burney said, "As soon as we came into government, we responded quickly with an interim support program. Since then, we've ensured the needs of First Nations people, communities and key stakeholders have been front and centre in designing the Youpla Support Program."

"This measure will hopefully bring peace of mind to thousands of families impacted by the collapse of the Youpla Group."