FTC Staff Provides Comments to Pennsylvania General Assembly on Proposals Affecting Pre-Need Cemetery Sales

Federal Trade Commission staff has submitted a comment to Pennsylvania State Representative Robert W. Godshall in response to his request for the FTC’s views on legislative proposals that would further regulate the pre-need sale of cemetery and funeral merchandise and services in Pennsylvania.

The comment, submitted by staff of the FTC’s Office of Policy Planning and the Bureaus of Economics, Competition and Consumer Protection, concerns SB 874 and HB 1364, as well as SB 1491, a proposed bill from the 2014 legislative session. All bills would amend Pennsylvania’s Cemetery and Funeral Merchandise Trust Fund Law.

“The bills, if enacted, appear to impose additional restrictions and requirements on cemeteries that engage in the pre-need sale of cemetery goods,” the comment states. “These provisions could lessen competition, resulting in potentially higher prices and fewer options for consumers, without countervailing benefits to consumers.”

The staff comment addresses three main issues: (1) prohibitions on the pre-need delivery and installation of cemetery merchandise, (2) requirements for merchandise trust funds and refunds when a consumer breaches a pre-need contract, and (3) compliance with the FTC’s Funeral Rule requirements for the sale of merchandise by sellers not covered by the Rule versus specifying state-specific requirements governing such sellers and sales.

The comment notes that prohibiting pre-need warehousing and installation of certain cemetery merchandise could discourage cemeteries from offering these products to consumers as part of a pre-need sale, which could lessen competition between cemeteries and funeral homes, as well as between pre-need and at-need sellers. Such a prohibition also could forestall reported economic and environmental benefits associated with the pre-need installation of burial vaults and lawn crypts.

The staff comment encourages the General Assembly “to consider carefully what percentage amounts should be set aside in merchandise trust funds and whether alternatives such as surety bonds may be equally effective in protecting consumers from performance defaults by sellers.”  The comment also encourages the legislature to refrain from a blanket adoption of the FTC’s Funeral Rule. The Rule was written to address specific problems in the funeral home industry and does not apply to most cemeteries, and some of its specific disclosures could be confusing if made by cemeteries. The staff recommends instead that any legislative proposals specify the disclosures or prohibitions that the General Assembly thinks are “necessary to address evidence of specific problematic sales tactics by cemeteries engaged in the sale of pre-need contracts.”

The Commission vote approving the comment was 4-0. (FTC File No. V150014; the staff contact is Patricia Schultheiss, Office of Policy Planning, 202-326-2877)