|Funeral Ethics Association
215 South Grand Avenue West
Springfield, IL 62704
July 19, 1999
Dear FTC Commissioner:
The Funeral Ethics Association submits these comments to the questions found in the Federal Register, which include but are not limited to the following inquiries.
1. Is there a continuing need for the Funeral Rule?
The Funeral Ethics Association and its members believe that the Funeral Rule has been helpful to consumers and probably should be continued for at least a couple of more years.
2. What changes, if any, should be made to the Rule to increase the benefits of the Rule to purchasers?
The Funeral Ethics Association believes that the changes should, in fact, embrace all sellers of funeral merchandise and/or services.
3. What significant burdens or costs, if any, including costs of compliance, has the Rule imposed on funeral providers subject to its requirements a) Has the Rule provided benefits to such funeral providers?
The burdens or costs to funeral directors, as an example, have largely been incurred in training of all employees so that anyone can answer questions on the phone or be prepared to promptly give a General Price List under the conditions required by the Rule. However, since other sellers of funeral services or merchandise are not under the Rule, they have a definite competitive edge and are in a better position to avoid fair disclosures.
One of the Rule's benefits is that is has caused funeral providers to reanalyze their operating expenses. So, when you see the professional services fees increase at a rate sometimes greater than inflation, the provider is not taking advantage of the consumer. Instead, he or she is allocating their actual costs in a meaningful way so that putting the burden partially on merchandise is no longer a necessity although a profit on that merchandise is.
4. What changes, if any, should be made to the Rule to reduce the burdens or costs imposed on funeral providers subject to its requirements? a) How would these changes affect the benefits provided by the Rule?
One of the important changes that should be made to the Rule is to allow a funeral director to have a service fee for the casket. The FEA would not object to a limitation on that fee, based on the circumstances, but we do know that there are real costs involved in the receipt of the merchandise, inspection, transfer to a holding area and the related risks that go with handling merchandise. A handling fee of, say, in the $100-$200 range has been justified by detailed analysis conducted by current National Funeral Directors Association President David Pearson, who also is a Certified Public Accountant. A copy of his findings have been reported in the media. A copy is attached.
Most of the burdens have been addressed and are history. Equalizing the requirement for all providers to use a General Price List would be a fair approach. Such a change would give equality in competition with those who do not now have to comply with the Rule.
5. Does the Rule overlap or conflict with other federal, state or local laws or regulations?
There is no overlap or conflict as we see it in the State of Illinois, although some other states, particularly New York and New Jersey, do have additional rules that sometimes have to be interpreted before knowing whether a person is in violation of either the federal or state rules.
6. Since the Rule was issued, what effects, if any, have changes in relevant technology or economic conditions had on the Rule?
Actually, the Rule has had an adverse effect on funeral service providers because third-party sellers, such as casket stores, can now deliver merchandise to the funeral home and shift some of their costs to the funeral home for the handling, inspection and movement of the casket. Those additional cost burdens have to be reflected in the professional service changes because that's the only place the additional costs can be captured.
7. What significant burdens or costs, if any, including costs of compliance, has the Rule imposed on small funeral providers subject to its requirements?
Again, those initial costs have largely been expended and the requirement for a GPL is no longer a significant cost element to the funeral director.
The burdens that do exist are more significant for a small operator because he can spread those costs over a limited number of services as opposed to a larger service volume provider. The costs are fixed and so larger providers have less impact per service.
8. To what extent are the burdens or costs that the Rule imposes on small funeral providers similar to those that small funeral providers would incur under standard and prudent business practices?
The burdens are about the same. Every firm, large or small, has to be cost-effective.
9. What changes, if any, should be made to the Rule to reduce the burdens or costs imposed small funeral providers?
The Funeral Ethics Association does not believe that there are ongoing burdens to either large or small funeral providers as they relate to a GPL. However, the FTC should certainly allow a reasonable service fee of, say, up to $200. Such a change would not adversely affect the competitive position of a larger funeral provider.
10. How, if at all, has the Rule affected the relative number of consumers who contact more than one funeral home before deciding which one to use?
In the early years, it did not have much effect. Today, funeral service is experiencing some increase in shoppers or those seeking price information. The Funeral Ethics Association does not consider that an unreasonable burden. Everyone should be able to justify their prices and to be competitive.
11. How, if at all, has the Rule benefited consumers by: a) Alerting consumers to the importance of price information and ensuring that they obtain such information at the critical point of choosing a provider?
12. How have prices changed (in total and for specific funeral goods and services) since the Rule was amended in 1994? To what extent, if at all, are these changes attributable to the Rule?
The Rule did not significantly change the total price of a funeral for consumers. Since the inception of the Rule, funeral directors have learned more about their actual costs and have become more adept at recovering those costs under the professional service fee, as opposed to loading that and their reasonable profits on the merchandise.
13. Has the relative prevalence of: a) ground burials; b) cremations; c) above-ground entombment; or d) other dispositions, increased or decreased since the Rule was amended in 1994? To what extent, if at all, has the Rule influenced these changes?
Ground burials have decreased and cremations have increased, but they are not particularly related to the Rule. They are economic decisions or personal conditions based upon environmental decisions that have caused cremation rates to increase. Above ground entombment is increasing, to some extent, as an alternative to in-ground burial. The Funeral Ethics Association believes that these are cultural changes not necessarily related to the Funeral Rule. For example, as the price of grave space, openings and closings have gone up more rapidly, people see the wisdom of cremation and scattering of ashes. That has no real link, at all, to the Rule.
14. How, if at all, since the Rule was amended in 1994, have the following factors changed?
15. How, if at all, has the Rule affected the cremation industry? Should the Rule be amended to include within its scope unfair and deceptive practices by crematories, if any?
Organizations which use deceptive practices, crematories or anyone, should pay a price for those deceptions because they are always discerned. Cremations are going to increase, not because of any particular greater affinity for the process, but rather it has become a viable alternative to burial. In the long run, it is more cost efficient.
16. To what extent are providers of funeral goods and services complying with the Rule overall, and with each of its component requirements?
Based upon the inquiries received by the Funeral Ethics Association, very few complaints have to do with pricing. We attribute that to the fact that funeral directors are complying with the GPL and other requirements of the Rule. We believe that the compliance rate is close to 90% and growing. The FTC sweeps have been effective in highlighting the need for exact compliance. However, reports from those who have been shopped by the FTC or the American Association of Retired Person (AARP) indicate that some of the maneuvers were deliberately planned to trick a funeral director into engaging in discussions marginally related to prices that were a form of entrapment. We believe the FTC recognizes that has occurred and they have improved the quality of shopper they are putting on the road. That is both helpful and fair.
17. What difficulties, if any, are providers of funeral goods and services experiencing in complying with the Rule?
The Funeral Ethics Association does not believe that funeral directors are having a difficulty in complying with the Rule except to the extent that the Rule prohibits a casket service fee, which is inappropriate. We understand that some licensees exceeded logic when they previously put heavier handling fees than could be justified. However, there are additional costs and if the fee of up to $200 is used, the funeral directors won't have a significant problem in complying.
18. How has the National Funeral Directors Association's Funeral Rule Offenders Program (FROP) affected compliance with the Rule, if at all?
The Funeral Ethics Association is not at all convinced that the FROP is in the best interest of consumers. We commend NFDA and the FTC for trying to come up with some reasonable accommodation to the huge cost of defending against an FTC unilateral decision. Our sense is that the funeral directors have saved some money, but they've also gotten a benefit to which they may not be entitled. Finding the rascals is not as effective as disclosing who they are and what they did. To an outsider, it looks somewhat like a cozy deal where both the NFDA and the FTC get some financial benefits, and cost relief, to which the offending licensee may not be entitled, particularly if he was fairly confronted and not entrapped as we know has occurred in the greater Chicago area particularly.
In Chicago, for example, one funeral director who had not even served one family, was found guilty of a violation which he could not even identify as having been a part of. We believe he and a few of the others who were shopped by the AARP Fraud Squad were victims of overzealous consumer benefactors.
19. Do consumers who receive itemized price information at the inception of the arrangement conference tend to spend less on funerals than those who receive such information later?
The Funeral Ethics Association has no insight on whether early dissemination of a GPL affects the consumer's decision at a later time. What we do know is that funeral directors are caregivers. It is impossible to be perceived as a sensitive, caring person when you are faced with a grieving family and have to immediately hand them a GPL. It makes them defensive and it irritates them. Unfortunately, the blame for such insensitivity falls on the shoulders of the funeral director who otherwise would lay a foundation of relationship with the family before charging ahead on handing out the GPL. The FEA believes that the FTC puts far more reliance and takes much more credit for accomplishment related to the GPL and the Rule than it should.
If you think about it, the question implies that perhaps an earlier disclosure will cause people to spend less and that's the reason the funeral directors don't want to make the disclosure. Actually, the FTC's files are filled with strong and consistent testimony, by funeral directors, in past hearings, where even the hearing officer recognized that whipping out a GPL, immediately, is offensive, unprofessional and totally inappropriate. There is a time for everything and giving a GPL when you first meet a grieving family is not the time to do that. To that extent, the FTC has fostered discontent, by consumers, with the funeral director. These funeral providers have broad experience as counselors as people who are experienced in dealing with grieving families and who can better judge when to enter discussions related to financial obligations. To rush them is to harm the consumer and the FTC will serve society best if it gives much more flexibility to the professional who is responsible for serving the family in when the GPL is to be delivered.
20. Do consumers who make preneed arrangements spend less on funerals than those who do not? If so, why? Does receiving information at the inception of a preneed arrangement conference contribute to decreased spending? Does it encourage or facilitate comparison shopping?
The Funeral Ethics Association has access to information on some 46,000 preneed accounts where the average sale is in the range of about $4,600. That is well below the average funeral sale, but really isn't related to how much the people spend. The reason is that most people who make prearrangements are doing so for either themselves, because of health conditions, or on behalf of parents who might even be going on public aid where restrictions inhibit them from spending as much as they might choose to on their loved one. Actually, early delivery of the GPL, at the inception of the preneed arrangement conference, irritates and angers people at the insensitivity of the funeral director. The FTC should be sitting in the funeral director's shoes when the people take offense at his apparent "get to the action" attitude. It serves no one well and the FTC should change that. We don't even believe it's ethical for you to demand that a GPL be given at a particular time, as long as it is communicated to the family. They can't make judgments just by looking at a GPL. They ask questions. They try to find comparisons of other things and more frequently than not price is not even the issue. They are much more concerned about how Mom will look, what meaningful ways can be developed to memorialize a loved one and the like. The FTC is hung up on commercialism to the detriment of the consumer and that should be changed.
21. Should the requirement that itemized price lists be given to consumers at the beginning of discussions about funeral arrangements be modified? If so, how? What would be the relative costs and benefits of such a modified provision?
Yes, the GPL needs to be provided, to the family, at an appropriate time. That means before a sale is consummated. Let the professional work toward the financial discussions, after he or she recognizes it is now time to discuss the financial aspects of the arrangement. There would be no cost benefits, but there would be tremendous social benefits in allowing the families to be gently led to the financial aspects. Contrary to what you may believe, funeral service is not primarily about money. It is about service, understanding, empathetic listening and the exercise of social graces which are helpful to the grieving family.
22. Should the Commission expand the definition of "funeral provider" in order to bring non-traditional members of the funeral industry within the scope of the Funeral Rule's coverage? Are consumers being harmed by the current limitation on the scope of the Rule's coverage?
Yes, the Commission should expand the definition of "funeral provider" in order to bring non-traditional members of the funeral industry within the scope of the Funeral Rule's coverage. Of course consumers are being harmed. The third party sellers, who frequently exercise outrageous telephone solicitation and knock-on-the-door type selling, end up selling similar merchandise for much higher prices. It's only natural that the prices have to be higher because the commission-paid solicitors run up the cemeteries' operating costs. Most funeral directors don't even have sales people committed to preneed. It is the funeral director who makes the preneed arrangement with the family when they walk in the door. He's simply doing his job and does not incur any additional costs and therefore doesn't have to recover them in higher prices.
23. Should non-traditional providers of funeral goods and services be subject to only certain provisions of the Funeral Rule?
The Rule should be applied to everyone who sells merchandise or services or both. To link services and merchandise together simply eliminates cemeteries from having to comply with reasonable disclosures.
24. Does the prohibition on more than one non-declinable fee reduce barriers to competition and increase consumer choice?
25. What new fees, prices, goods or services have emerged in the sale of funeral goods and services since the Rule was amended in 1994?
Yes, funeral directors have to compete. So, they will use package pricing in order to compete with the provider of economical but less quality merchandise. That is fair. The average person can't tell the difference between quality and glitter. However, in the final analysis, they would choose quality.
26. Have the 1994 amendments been effective in prohibiting casket handling fees? If so, what benefits or costs have resulted from these amendments?
The answer is the FTC hasn't eliminated casket handling fees. You have simply placed the burden on those people who buy caskets from the funeral director. They have to pay for the extra cost of service because the FTC has chosen to try to make the funeral director give away that service. They can't do it and they won't. Nor should they be asked to do so.
If a funeral director takes a vault into a cemetery, the cemetery will always charge not only an opening and closing fee, but a vault handling fee. Think about that. What's the difference? There is no difference. They have costs and they have to recover them. By eliminating a fair casket handling fee, the FTC places a burden on those who do business with a funeral director because they have to pay for the free services that the FTC has given away. And where did the FTC get that right?
27. How widespread is it for funeral providers to offer substantial discounts on funeral packages that include a casket from the funeral home?
Funeral directors are offering more package prices and forms of discounts than they have in the past in order to better compete with the providers of merchandise who take advantage of the FTC Rule and make the funeral director come out and help them unload the casket, move it into their selection room, where they then have to inspect it, clean it and take responsibility for it. Except where there is a nearby casket store, the packaging of discounts has not been very widespread. By and large, third-party sellers charge just as much, or more, if the quality considerations are taken into account!
28. Should the requirement for a General Price List be modified? If so, how? a) Are there any new fees, prices, goods or services that should be added to the General Price List requirements?
Finally on #28, the GPL gives the funeral director every reason in the world to blame the FTC for higher prices. Hopefully they don't do that, but the customer understands that government controls equals higher prices - always!
29. The Rule applies to both preneed and at-need funeral arrangements. Should preneed and at-need consumers be treated differently? If so, why? a) Can a funeral provider readily distinguish between a preneed and an at-need customer or will this complicate compliance with the Rule?
If the GPL is going to be retained for at-need services, then it is also appropriate for preneed. It should simply be the same for all providers of goods and/or services. There is no justification for distinguishing between the two.
a) The funeral provider can readily distinguish between a preneed and an at-need customer. There's no reason to change the Rule based upon preneed versus at-need. The approach is essentially the same.
30. Are there widespread unfair or deceptive practices occurring with respect to the prearrangement of and prepayment for funerals by consumers? What are these practices? How could these practices be remedied? Are these remedies within the commission's authority and jurisdiction? Would the benefits to consumers likely to result from such remedies outweigh the likely costs to funeral providers or other industry members?
The Funeral Ethics Association is aware of widespread, unfair and deceptive practices regarding prearrangement and prepayment for funeral-like services and merchandise. The practices are primarily those of cemeteries. They are outrageous and should be stopped by some reasonable regulation. First, let's look at the examples.
1) A cemetery prefers not to have to trust funds for adequate perpetual care. The end result is they run short of money and have to skimp on service or dramatically raise prices. An examination of the perpetual care fund at 15% of the price of the plot or even 20% will show the fallacy of that small deposit. The only thing the cemetery can use is the interest off that deposit. Then, inflation continues to run up the cemetery's costs. But, they can only get the interest on the amount that was originally placed in trust. Ultimately, that means that all cemeteries will have to find alternate means of providing care funds because they are not setting aside enough of the principal to accomplish that feat. We see it in Illinois every day and it is causing a great deal of problems for consumers who buy a lot, pay for the opening and closing fees and then see different forms of alternate charges, levied by the cemeteries, to help them recover costs needed to keep the grounds decent.
2) The FTC should find a way to ban what is called "constructive delivery." Here is an example: Cemeteries love to sell vaults or outer burial containers, preneed, and then bury them on the plot site. That way they don't have to put any money into trust. Sounds reasonable, right? Wrong. It simply denies the consumer the right of getting their money back if their circumstances change and they move. If they have to have the money in trust, the consumer has a chance, even though they lose the value of the plot, to retain their other preneed payments.
Second, on this same subject, how smart is it to dig a hole and put a concrete box in it and cover it up, waiting for the person to die? Inevitably, some of those boxes get broken because of deterioration or because they stick to the mud and are broken when the tops are removed. This is ridiculous and only adds costs to the consumers.
3) You have to think about this one. Instead of selling a family the two graves and two vaults they have requested, the cemetery will encourage them to buy four plots with the right to exchange two of them for vaults. This is just another example of how cemeteries avoid trusting and the adverse impact it has on families whose circumstances will change during the course of their latter years. What happens is that when the family agrees to buy four graves with the right to trade in two for vaults, they give up all right of a refund. Under almost all state laws, they can get a refund on the merchandise, but they can't get a refund on the plots. In effect, this is a plot against the consumer.
4) Likewise, cemeteries will take a casket and place it in mausoleum in order to avoid trusting. Now anyone who knows anything about a mausoleum knows that temperatures get to 175º and that the casket is going to clearly not be suitable for containing the body at a visitation five or ten years later. Still, it is scheme after scheme. The Funeral Ethics Association receives these calls on a regular basis. People are distraught because they can't get their money back. The reason they can't is that cemeteries have been effective in getting state laws changed to allow them to take advantage of consumers.
5) If the FTC wants to prevent actions which are unfair to consumers, they ought to prevent preneed sales in the homes of the individuals where they haven't been invited. If someone knocks on a person's door, particularly an elderly person who's lonely, they have a 50-50 chance of making a sale. If they don't knock on the door, the consumer loses nothing. If they knock on the door, the consumer is going to lose options to change their mind. For example, some cemeteries actually place caskets and vaults in warehouses to avoid trusting, which means the consumer can't get their money back. While 30 states have 100% preneed laws, which means the people get 100% of their money back plus interest, these schemes, dreamed up by the cemeteries, prevent them from getting their money back. That should cease.
6) We believe that if a cemetery wants to put up a mausoleum, they should fund it, just like a person who's going to build a funeral home. That isn't the way it works, though. Instead, they go out and sell mausoleum space on a preneed basis and then keep the money in trust, sometimes for years, while they decide whether or not to actually build the mausoleum. Here in Illinois there have been sad instances where a cemetery has gone out, sold 50% of the planned space, started the mausoleum and then couldn't sell the rest of the space and everyone loses their money. There is no reason why consumers should be put in that situation.
The FTC alleged that cemeteries didn't need to be monitored because they didn't have any complaints. We've got hundreds of them. Yet, the FTC started its original funeral industry investigation with as few as 20 complaints. That's out of two million funerals a year. Ladies and gentlemen, it is just possible that the FTC is not needed by the funeral industry. However, if you still feel that extra desire to oversee, start with the cemeteries. They are going to be a growing source of true fraud and misrepresentation which you simply don't find in funeral service at the funeral home level.
Thank you for your thoughtful questionnaire. We hope these responses have been helpful, even if they are tainted a bit by knowledge, experience and just a touch of frustration.
Robert W. Ninker