Testifying on behalf of the Federal Trade Commission today before the Subcommittee on Children and Families of the Senate Committee on Health, Education, Labor and Pensions, Eileen Harrington of the FTC's Bureau of Consumer Protection provided an overview of the Commission's law enforcement efforts to promote competition and protect consumers in the funeral industry.
The testimony focused on the FTC's enforcement of the Funeral Rule, which requires that consumers shopping for a funeral be given accurate itemized price information, and prohibits misrepresentation and other harmful practices. In particular, the Funeral Rule prohibits: 1) mis-representing that embalming is legally required or necessary (when it is not); 2) misrepresenting that a casket is required for direct cremation; 3) misrepresenting that any funeral goods or services have protective or preservative abilities (when this is not the case); 4) embalming without consent; or 5) subjecting consumers to "tying" arrangements - requiring a consumer to purchase any funeral good or service as a condition of purchasing any other good or service.
Harrington stated that the Commission shares the Subcommittee's concern about the recent shocking incidents in the states of Georgia and Florida involving cemeteries and a crematorium. "The conduct involved in these incidents appears to be essentially criminal in nature," she noted. "Like much criminal activity, the conduct at issue conceivably could be attacked under Section 5 of the FTC Act as unfair or deceptive practices. However, compared to the criminal sanctions available under state law, the equitable sanctions available to the FTC as a civil law enforcement agency would likely have significantly less impact in punishing or deterring this conduct."
The testimony also focused on the Commission's recent program of Rule enforcement, which entails the Funeral Rule Offenders Program (FROP), a Commission-approved industry education and certification program operated by the National Funeral Directors Association (NFDA). FROP offers a non-litigation alternative for correcting "core" Funeral Rule violations, such as the failure to provide mandatory itemized price lists. Funeral providers, often found through "test shopping" industry sweeps, who have not provided the mandatory price lists can participate in FROP rather than face law enforcement action by the FTC which could result in civil penalties of as much as $11,000 per violation. Violators that opt for FROP make voluntary payments to the U.S. Treasury in an amount slightly less than the civil penalty the FTC would seek in a law enforcement action, and participate in NFDA-led training and competency testing. They remain in the program for five years and certify completion of the FROP requirements to the NFDA.
The testimony notes that since the implementation of the FROP-oriented sweeps program, 61 sweeps involving 1,400 funeral homes have been conducted across the country and 200 funeral homes that were found not to be in compliance have opted to enter the FROP program. "FROP has enabled the Commission to achieve better compliance with the Funeral Rule while expending fewer resources," Harrington said.
Harrington stated that the Commission remains cautiously optimistic about the success of the FROP program and is seeking ways to improve the program as part of its overall effort to protect consumers in their dealings with the death care industry. "By implementing FROP, while continuing to maintain some traditional enforcement presence," Harrington concluded, "we can encourage greater compliance and thus achieve greater protection for consumers."
The testimony also noted that the Commission has initiated a regulatory review of the Funeral Rule. One proposal raised by some commenters during the regulatory review is to expand the Rule to cover some sellers of funeral goods or services not currently within the scope of the Rule's coverage. Harrington stated that the Commission's staff is currently examining the record of the regulatory review.
The Commission vote to approve the testimony was 5-0.
Copies of the full text of the testimony and the news release are available from the FTC's Web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; 1-877-FTC-HELP (877-382-4357); TDD for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.
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