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Jefferson
Memorial Cemetery and Funeral Home June 6, 1999 Secretary, Federal Trade Commission Submitted via e-mail TO: funeral@ftc.gov
I am a third generation cemeterian who operates one of the largest independent cemeteries in the United States. From February, 1988 to September, 1993, our firm was one of the first third party sellers of caskets in the Commonwealth of Pennsylvania. In 1993, we established a full service traditional funeral home on the grounds of the cemetery. As a true “combination” of both funeral home and cemetery services, I can relay to the commission from personal experience, the stark contrasts and differences between funeral providers and cemeteries in the areas of daily operations, pre-need and at-need sales, and the management practices necessary to each. We have also chosen to remain independently owned despite numerous inquiries by all the major national consolidators of cemeteries and funeral homes. The funeral provider and the cemeteries coordinate to serve the family. Therefore, the media, who coined the phrase “the death care industry”, has combined two separate industries under one label for their own convenience. It may be true that some consumers’ perception have followed the media lead. Because of the general professionalism by both funeral providers and cemeteries, the family experiences an uninterrupted event from the funeral providers’ services of preparation, visitation, religious ceremony, to burial, memorialization and on-going care at the cemetery. In actuality, the funeral provider’s primary responsibilities end at the time of interment whereas the cemeteries primary responsibilities have just begun. I can attest to you that the funeral and cemetery industries are separate and distinct industries whose respective operating personalities are as different as night and day. Even though we now see various associations (e.g.: International Cemetery & Funeral Association and Pennsylvania Cemetery Funeral Association, among others) comprised of funeral providers, cemeterians, monument dealers and florists who choose membership in a broadbased association. Their memberships have made a decision to end the historical bickering to learn and share from and to each other the best of the other. THE RULE HAS HELPED CONSUMERS The “Funeral Rule” as adopted and revised has been remarkably effective in achieving its stated purposes. By requiring that the funeral director unbundle the services and casket pricing, which was predominant in the market place, and to require itemized pricing of all goods and services has succeeded in providing consumers with the necessary information to make enlightened choices. Choices which were generally denied to them prior to the rule. The rule has again succeeded in its goal to lower the barriers to price competition. As consumers have over time and experience become more aware of the funeral rule the instances of price shopping, over the telephone and in person to collect a price list, have moved from the “hardly ever happens” category to some where between numerous to frequent occurrences. I have witnessed an interesting application of the rule by the funeral providers themselves who go out to their competition to collect the mandatory price lists to ensure they are not at the upper end of the market price. Then one or another always tries to increase market share by providing the same high quality service for the lowest area price. THE FUNERAL RULE SHOULD BE RETAINED
The funeral industry has been historically shielded from the
normal market pressures that other industries have always experienced.
Some of this was by design of funeral providers who
successfully lobbied to enact restrictive, anti-competitive and
protective state laws (most of which seem to have remained on the
books unchallenged by private dollars vs. public dollars).
In addition the social ethnic structure in place for many
generations, where different ethnic or religious groups only
frequented a specific funeral provider (this has been changing rapidly
as the baby boomers make decisions).
Part of this insulation was simply because of the very personal
nature of the services rendered and the consumer was satisfied with
the services received. The Funeral Trade Rule, along with the attitude changes of the post WWII generation has only just begun to create a fundamental shift in consumer attitudes toward funeral providers. Therefore, the funeral rule should be retained. THE
FUNERAL RULE SHOULD NOT BE EXPANDED The funeral rule was introduced, hotly debated, and adopted to deal with specific issues and problems of the funeral industry in their dealings with consumers. Principle among these was unbundling of the casket and services price, the absence of menu style price lists and lack of other price disclosures common to other industries. The FTC deemed that there was sufficient evidence presented to justify the initial rule for funeral providers. However, during the formulation of the original rule and during its subsequent revision, the FTC found no compelling reason to expand the rule to other than funeral providers. I believe that if you use the same yardstick you used to establish and revise the Funeral Rule, you will once again determine that there is not sufficient demonstrated cause to expand the rule to other industries. Even if you determine, now or in the future, that federal regulation of other industries that fall under the “Death Care” umbrella (monument dealers, cemeteries, crematories, cremation societies, and florists) each would require their own specially tailored rule. The funeral trade rule simply does not fit any industry other than the one it was designed for. RETAIN THE CASKET HANDLING FEE PROHIBITION A consumer who purchases a casket from a third party vendor almost always makes such a purchase in a pre-need setting. In my experience I can never recall an at-need casket sold 3rd party by my firm, except for an employee. The reality of handling fee’s (or package discounts triggered by the purchase of the casket) is that they are not discovered by the consumer until a death occurs and the casket is to be delivered to a funeral provider, generally a significant number of years later. Handling fee’s and package discounts are unfair to consumers and defeat a major goal of this regulation to promote competition among the various providers of merchandise. Overhead is permitted to be recovered in the non-declinable fee. Therefore handling fee’s and package discounts become profit recovery fees for those funeral providers who have not properly priced their services and merchandise. Our experience and history (first as a third party seller and now as a funeral home owner) show that families that purchase caskets pre-need generally spend less on their casket than those who buy at the time of a death. This clearly reinforces our long held opinions that consumers who choose to make decisions in an unemotional setting, with an opportunity to discuss the choices with each other make more economical decisions. Many of our pre-need clients are or have been price shopping and most finance their purchase over time rather than paying cash. As a third party seller for more than five years before our funeral home was built, I can attest to the negative financial impact “handling fees” had on consumers who thought they had done a good deed for their families by pre-purchasing their casket. “Package discounts”, triggered by the purchase of the casket from the funeral director have the same negative effect. I have personally seen funeral bills where the consumer was charged several hundred dollars as a casket handling fee. There is simply no viable argument, which can be made to support these anti consumer abuses. RETAIN THE NON-DECLINABLE FEES CURRENTLY ALLOWED Every organization, profit and non-profit, has to recover its overhead, costs and surplus or profit to remain viable. The current non-declinable fee is probably the best regulatory vehicle. Especially considering that forwarding and receiving a deceased from another funeral director and direct cremation or immediate burial packages are required to have the non-declinable fee (overhead recovery) included. The only other option is to create a series of pre-determined packages covering all normal funerals that include the non-declinable fee. However, this may be impracticable because of the wide variation in local customs across the nation. Frankly, I believe the non-declinable fee should be retained as is. Market pressures should keep fees in line. DO NOT EXPAND THE DEFINITION OF A “FUNERAL PROVIDER” I do not believe it is appropriate or necessary to revise the rules definition of a funeral provider. The reality of the current market place is that all merchandise, principally caskets, outer burial containers and urns, fall in the no mans land between the funeral directors services and the cemeterians services. This in between arena is the territory of these involved in pre-need sales. That pre-need marketer is generally a local funeral home or cemetery but occasionally is a true 3rd party not affiliated with either. Funeral directors would love their casket sale guaranteed by regulatory definition as would cemeteries love their vault sale guaranteed. Such guarantees would not be in the best interest of the American consumer. Our experience as a cemetery and funeral home is that very few families shop around at the time of a death. However, once the pre-need marketer raises the issue, there is considerable price shopping. This is good. The current definition of funeral provider has assisted in promoting price comparison by consumers and price competition between sellers. The argument put forth by funeral specific trade organizations that the funeral trade rule puts them at a disadvantage when competing with others (generally cemeteries) not covered by the Rule is pure bunk. Our cemetery prices are as well known without a mandated GPL as our funeral homes prices are with one. The level playing field argument is only valid when one party is at a disadvantage. No such disadvantage exists. Cemeterians have for years publicly advertised their prices in newspapers, various forms of mailings and other advertising. You seldom see price advertising for a funeral home (except ours). Cemetery pre-need representatives have for more than 40 years given personal presentations with price and selection options. This one on one interaction with consumers and the questions and answers it generates, far exceeds funeral providers' FTC requirement to hand out pre-printed price sheets. (1) Do not eliminate the non-declined fee. See my previous remarks for more detail. (2) Do not add a price for private viewing without embalming. The current GPL is more than adequate to price this service. Further more, it is an extremely rare request. Do not add a price for bodies donated from a medical school. It may be appropriate to print the cost of the cremation process itself. However, if you require it, you must allow this one item to be a ‘price subject to change without notice’ because the cost of this service is generally contracted out (unless the funeral provider is also a crematory). A change in price by that independent vendor could require the unnecessary & expensive reprinting of the funeral providers GPL even though the remainder of the funeral providers’ prices are unchanged. It may be appropriate to print the price for rental caskets. Our firm has done so voluntarily for a number of years. (3) Do not include the cost of the cremation itself in the charge for a direct cremation. See my comments about requiring the cremation fee price on the GPL above. (4) There should be a disclosure to the consumer if there is any mark-up on cash advances. In theory, the average cost of performing these services is covered by the non-declinable fee. (5) Do not expand the scope of the rule to others who are not funeral providers as currently defined. Refer to my previous comment for more detail. SPECIFIC COMMENTS REQUESTED IN PARAGRAPH C: DETAILED IN ORDER AND FORMAT SHOWN (1) Need to continue the rule - Yes (a) Benefit to purchases: The rule has made available to consumers, in a uniform format, the full range of services available and the costs of those services. The rule has allowed the consumer to choose only what they truly wish to purchase. (b) The rule has imposed no direct costs on the purchaser other than a nominal increase in prices to offset the cost of production of the GPL and associated firms. (2) It may be appropriate to add: The cost of the cremation process itself with an FTC approval disclaimer that this change may be subject to change without notice (See my prior comments under FAMSA issues (a) These changes would not affect the providers' costs. (3) The rule has nominal cost burdens to the provider. The only true cost is the cost of printing the GPL and other required forms for distribution and use. (a) The rule has been beneficial to funeral providers because it has made the provider analyze his/her business pricing structure more realistically in their market place. Funeral providers now understand the business site of their profession more completely. (4) The only change that I can think of that would reduce the cost of the rule is to permit the casket price list to show only the 10 or 20 most commonly selected caskets from their establishment and the outer burial container (OBC) price list to show only the 5 or 10 most commonly selected OBC. Both with a clearly legible notation that the prices of other available units are available upon request. This would then allow the mandatory inclusion of these prices within the GPL (in addition to the price ranges now shown). The most difficult item to get from a funeral provider, for the consumer to take home and review, is the casket price list and OBC price list. Our casket price list, as a funeral provider, is voluminous since it lists nearly everything we can obtain for a consumer, only a small portion of which are regularly selected by consumers. By having a certain number of units required to be priced in the GPL (with the disclosure others are available on request) the consumer is guaranteed to see at least some prices in writing. This verses the current practice of handing the consumer separate and voluminous lists or books containing a confusing list of caskets and OBC, the majority of which they will never consider. Market pressure would soon weed out those who would high ball or low-ball their required prices. In reality, most funeral providers would still show high, medium, and low prices units of caskets and OBC. (a) This change could improve consumer awareness of casket and OBC prices by insuring the consumer took the prices home rather than forcing the consumer to request (and the provider to print) separate documents. (5) The rule is superior to most state regulations where they might overlap. (6) There have been no changes in technology and economics that have affected the rule. (7) The costs of compliance with the rule have been minimal and well worth it to consumers. The costs involved are simply the printing cost of the GPL and associated forms for hand out or use. A small price to pay for the benefits the rule has provided to consumers. (a) Little difference. Large providers may have a slightly lower printing cost on a bulk order. (8) Other than printing GPL for hand out and other forms for use in compliance with the rule, there are no additional burdens on the provider that prudent business practices would not demand. (9) See my discussion in paragraph (4) pertaining to my suggestions regarding including mandatory casket and OBC prices in the GPL. (a) See above (b) No (10) In our experience the rule appears to have stimulated more price shopping. This is truer of pre-need but has been true also of at-need. I am convinced that this is due to the ease of obtaining information over the phone and GPL’s in person, as well as the ease of comparing one provider to another because of the standardization required by the rule. (11) (a) See (10) above (b) See (10) above (c) Yes, the consumer benefited (d) Yes, the consumer benefited (e) Yes, the consumer benefited (12) Service prices seem to have increased and merchandise prices decreased or held steady. Part of this cost shifting is due to the rule and part is due to the influence of non -funeral provider sellers of merchandise such as casket and OBC. (13) In our cemetery and funeral home, the distribution of ground burials, cremations and entombment's has remained relatively constant. There is a very slow growth in cremations. Not, in my opinion, due to the rule. Cremations are now actively marketed and anything promoted long enough is purchase by a segment of the market. (14) (a) In the Pittsburgh market funeral providers numbers appear stagnant. The few new providers, such as ourselves, offset by those who close their doors. (b) In Pennsylvania, the ability of a non-licensed funeral director to open a traditional funeral home is difficult to nearly impossible because of archaic, anti-competitor, restrictive and protective state laws. Unless FTC wants to challenge such unreasonable laws they will remain on the books. (c) The non traditional entrants have principally been sellers of strictly burial or funeral merchandise (caskets, OBC, urns). There are a few truly independent sellers, because most 3rd party sellers are funeral directors or cemeteries. The entire 3rd party issue has been vastly over blown in its presentation to the commission. In the Pittsburgh area they have had only a small influence. Other industries (Auto, retail, etc) compete head to head daily. Why should any business be immune to competition. (d) There has been a great consolidation in the industry sine 1994. However, the pace should slow now as many of the choicest establishments who wish to sell have already done so. (e) Relatively the same. (15) Other than funeral providers selling cremations, the rule seems to have had little effect. I do not believe the rule should be expanded to cover crematories because it wasn’t designed for them. However with the recent national revelations about crematories the FTC may wish to consider separate regulation for the cremation industry. (16) I cannot speak for others but our funeral home does its best to comply. I certainly believe that the vast majority of funeral providers do their best as well. (17) Few if any. (18) FROP Effect – Unknown Comment: In general I believe that all business’ try to comply with the various regulatory burdens placed upon them. It is disheartening to read of those heavily fined or incurring legal fee’s (that sometimes bankrupt them) for violations that are unintentional, have caused no harm (physical, financial or environmental). The hand of government can be heavy indeed. If compliance (not destruction of the employer) is the goal then give anyone a reasonable time to fix his or her oversight. Government and industry can work together for the betterment of our society. (19) We have seen little difference in what consumers select when the arrangements are at-need.
(20) Yes consumers who pre-arranged spend less, principally on the casket. I don’t think the GPL had any effect. Pre-need has nearly always been a lower volume sale. We have also seen more shopping during pre-need arrangements than ever before. We do attribute this, in a great part, to the rule. Also the baby boomers do not necessarily do what their parents did.
(21) No
(22) Do not expand the rule. It has not been demonstrated that this is necessary. (Also see my prior comments) Consumers are not being harmed by the current scope of the rules coverage.
(23) Non-traditional providers should not be subject to the rule. It has not been demonstrated that this is necessary.
Neel comments continued
(24) ––Yes—
(a) Yes (b) Yes (c) The benefit of one fixed fee with a menu of other services (d) None (25) The rental casket for cremations (26) Yes the ban has been effective. This has saved consumers hundreds of dollars of unjustifiable costs (said changes generally offset the savings realized by purchasing elsewhere) (27) In Pittsburgh numerous providers established these discount schemes. (a) Caskets purchased from other than the funeral provider are almost always purchased pre-need. Therefore the consumer doesn’t find out about this “discount” until the casket is needed. We have had consumers want to cancel the casket they purchased and paid in full years ago because of the significant difference in the package discount price and the un-discounted service price. That does tend to restrict consumer choice if they tell their neighbor not to buy pre-need because if will cost you more later when its needed. (28) No, except possibly (4) below. (a) 1. No. Private viewing without embalming is rarely asked for. (a) 2. No. Actually this question was unnecessary. In our experience the funeral director never sees a donated body. The medical school handles the entire event including removal of the remains. (a) 3. The rules current requirements are sufficient to prevent deception. No. The rule should not mandate including the actual price of the cremation. (See my previous remarks on this issue). (a) 4. Possibly. Our funeral home has done so voluntarily for a number of years. (b) Delete nothing from the current GPL. (c) Add nothing to the current GPL, except possibly the rental casket.
(d) Zero cost to provider. Possible benefit to consumers who choose viewing with cremation. (29) Pre-need and at-need consumers should not be treated differently. First there is no reason to do so, and second it is easier procedurally for the provider to do everything the same way. (c) It is very unlikely that a funeral provider could not readily distinguish between a pre-need and at-need customer. Very few consumers hide the fact of a death even if they are price shopping (though it has happened). Yes, any change in the application of the rule could complicate compliance. (30) To the best of my knowledge there ARE NOT widespread unfair or deceptive practices occurring with respect to the arrangement of or pre-payment for funerals in Pennsylvania To my knowledge and experience such activities are nearly non existent. To be more accurate we should separate the process of pre-arrangement and pre-funding into two separate events. Because they are not always simultaneous. Today pre-arrangement and pre-funding are generally accomplished together. But not always. I have personally encountered consumers who have pre-arranged their funeral with no funding. That consumer was fully aware that the funeral was not paid for and would be paid at the then current price when performed. But she was very comfortable knowing she had selected the services and merchandise. It is not uncommon to have pre-arrangements made where the funeral provider accepts an assignment of an existing insurance policy. The funeral pre-arrangement is regulated by Pennsylvania laws governing funeral directors. The pre-funding of a funeral by a funeral home is covered by a Pennsylvania funeral director laws, and/or by a separate merchandise and services trusting law, and/or by state insurance departments if insurance is used as a funding vehicle. These issues are better left to the state legislatures and would not appear to be within the commissions authority. The Commonwealth of Pennsylvania regulates funeral directors via licenser with the state board of funeral directors and cemeteries via licensure with the state real estate commission. In addition to the statutes and regulations enforced by these two boards a separate law covers the monetary trusting requirements for the sale of merchandise and services. There are adequate laws in Pennsylvania covering both funeral providers and cemeteries to protect our consumers. Enforcement of these laws and regulations is a governmental function and the commonwealth is living up to its responsibilities. Fines have been levied, consent decrees reached, licenses revoked and people have been put in jail. Honest business follow the law. Dishonest people wouldn’t no matter how many are on the books. I hope my comments and answers to your questions have been helpful. Sincerely,
Harry C. Neel, President |