Final Committal Texas problems With Pre-Paid Funeral Services and other tales of mishandled, misrepresented, or overpriced funeral and burial services A report prepared by Consumers Union SWRO October 2000 available in pdf format

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Few of life’s purchases cost three to fifteen thousand dollars, and those that do—a car or a home improvement—we often research carefully, collect bids, and compare service quality before laying down money. But a funeral and burial is less a purchase than a life event, fraught with grief and confusion, for which none of us can be fully prepared. Unfortunately, funerals and burials are also an expensive product and the devastation of a recent death is only compounded if families face “sticker shock” or poor care from a funeral home, monument company, insurer or cemetery. While many families try to ease the stress by pre-paying for a funeral service, preneed arrangements can be just as difficult to navigate and create new areas of confusion when finally used. In Texas, the funeral and burial industries come under the jurisdiction of four different state agencies, a fragmented bureaucracy that leaves citizens without a clear advocate. Each of these agencies has different policies and procedures with respect to complaints, and interagency cooperation is sometimes poor even after three of the agencies signed a mutual cooperation agreement in 1993.(1) Method Consumers Union Southwest Regional Office (CU) reviewed nearly 300 complaints filed with the Funeral Services Commission (FSC), the Texas Department of Insurance (TDI), the Texas Department of Banking (TDB), and the Attorney General (AG) in 1998 and 1999.(2) Clearly, these complaints do not reflect the experience of satisfied families who receive good service from funeral homes, cemeteries and insurance companies. At the same time, not all families who are dissatisfied actually find a regulator and file a formal complaint. Therefore issues identified by these customers probably occurred to others. While some of these complaints related to highly individualized incidents, most reveal a pattern of problems shared among many consumers that should be addressed through a stronger and more coherent regulatory system. General Findings Consumers filed complaints about rude funeral home employees, improper preparation of the body, damaged or incorrect coffins, poor burials or graveside services, and shoddy cemetery or mausoleum conditions. But the largest category of complaints, representing almost a third, relate to preneed arrangements. Current regulations allow insurance companies and trusts to keep a substantial portion of a policyholder’s money when a contract is cancelled, and many consumers were shocked to receive very little after making substantial payments. In general, complainants expressed confusion about the terms and benefits associated with the preneed contract, although the terms and benefits were usually spelled out in the small print of the contract itself. More than 14 percent of all complaints relate to services provided by funeral homes. Consumers found employees rude, uncooperative and deceitful, and describe incidents of mishandled bodies, damaged or incorrect coffins and failure to file a death certificate in a timely manner. These complaints fall under the jurisdiction of the Funeral Service Commission, which sometimes took months to investigate them. An additional 7 percent of consumers complained of the high cost of a funeral, particularly the high cost of the non-declinable “Basic Services” fee. This fee covers funeral home overhead, and can range from a few hundred dollars to over $2,000—on top of the costs of the service itself, the casket, the flowers, transportation, a chapel in the funeral home and more. The Federal Funeral Rule permits this fee, but funeral establishments can include different services in the non-declinable charge, making it more difficult for consumers to work out an affordable funeral. More than 10 percent of complaints related to monument companies, which require a substantial downpayment to fill the customized orders. When they do not place the gravestone as promised, consumers can experience frustration trying to get a refund. Unfortunately, monument companies are the least regulated provider in the funeral service. Seven percent of complaints related to cemeteries, although this number would probably be higher if the Department of Banking maintained complaint files over a period longer than one year. Problems included run down cemetery conditions and misplaced bodies. Almost 15 percent of complaints are sent to the wrong state agencyor are beyond the purview of any agency. Consumers are confused about which department has jurisdiction over which part of the funeral industry. Funeral Sales Practices: The Hard Sell Funeral companies, monument companies and preneed funeral companies still send salesmen door to door to find the elderly people worried about their funeral arrangements—and sell them something. Sometimes the elderly are victimized by unscrupulous solicitors who have clearly violated existing consumer protection laws. Soila Trevino of Harlingen purchased a headstone from a door-to-door agent, who picked up $40 monthly payments at her home. After she had fully paid, she discovered that the salesman had not worked for the cemetery in more than a year. When she went to the local police, he promised to pay her money back, but he did not. After she contacted the Attorney General, the man again promised her a refund within 30 days, but the AG had no record of whether that payment was made. According to Ms. Trevino, the salesman paid back $75 then stopped making payments and disappeared. Neither the AG nor the local police have gotten her money back for her to date.(3) Consumers like Ms. Trevino may never see their refund because small time con-artists are the hardest group to prosecute for their crimes. They typically have few assets for the Attorney General to sue over in civil court, and criminal prosecution is at the descretion of the local prosecutor who may prioritize violent crimes and drug prosecution on a day to day basis. But hard sell tactics are not limited to con-men. Consumers complain of pushy sales from large funeral service companies as well. Melvin Geiser of Edgewater, Florida wrote to the Texas Attorney General after SCI Funeral Services, the country’s largest funeral service chain, refused to refund two membership fees for memberships in the “National Cremation Society,” an SCI affiliate. The memberships were part of the cost of pre-paid cremation and travel contracts. Within two days of purchase the Mr. Geiser and his wife went to the office and requested cancellation in writing. The company refunded the cost of the contracts, but not the two $55 membership fees. “We had insisted to your representative,” Mr. Geiser wrote to the company, “that we did not want to complete the applications at this time and would like more time to consider the whole matter. However, your representative persisted that we would have three days to cancel the whole matter and get all our money fully refunded. There was absolutely no mention of any non-refundable portion(s)…I consider your unecessary “pushy” salesmanship habits and refund-delaying tactics as unethical business practices.” After intervention from the Texas Attorney General, SCI refunded the membership fee. “Our policy is that membership fees are non-refundable,” wrote Denise Skerritt, of SCI’s Society. “Since you were not told that, we are refunding your membership fees.”(4) When a consumer complains to the Attorney General or another regulatory agency about hard-sell tactics, the funeral companies involved sometimes dismiss the complaint as a simple misunderstanding. Misrepresentation is hard to prove because no one else can verify the consumer’s version of statements made by a salesperson. A salesperson came to the home of Emilio and Zoila N., Portland, Texas, and successfully sold them burial plots. According to the Nunez’ complaint (filed by their son-in-law), she told them they would get a $600 discount if they signed up that day only. She also told them they could have side-by-side plots, their only absolute stipulation. Over the years, the company sold them another preneed contract and a cemetery plot for a grandchild—another “one time only” offer. But when the couple finally received the deed for their burial plots, they learned that the plots were not side-by-side as they had stipulated, but stacked. The couple’s children first went to a lawyer, and then filed a complaint with the Attorney General, but according to all the papers, they had indeed purchased a stacked vault. “What you assert was a misrepresentation, in all probability was simply a misunderstanding between the parties,” the company wrote to their lawyer. The company offered to change the contract to side-by-side spaces for an additional charge of $900, and the couple would have to purchase outer burial containers separately upon internment. After intervention by the Attorney General, the company dropped the additional $900 charge.(5) Consumers Union generally advises that consumers avoid making major purchases under pressure from a sales person—especially at home. Federal law gives consumers a three day window to cancel a contract and get a full refund, but this means consumers must very quickly assess their decisions. Recommendations: Texas legislators should enact: a waiting period between a sales home visit and payment for preneed contracts; and a 30 day “free look” period during which a consumer can change his or her mind and get a full refund. ______ Notes: 1 28 Texas Administrative Code, Part 1, Chapter 3, Section 3.9002, Joint Memorandum of Understanding, effective July 19, 1993. 2 There were far more complaints filed with each of these agencies than Consumers Union was allowed review. Some were not provided to us because the investigation remained open, while others were not provided because the Department of Banking destroys complaints older than one year—everything prior to mid-1998 had already been destroyed at the time we asked for the information. Finally, the Texas Department of Insurance blacked out a considerable amount of information from the complaints, making some too difficult to analyze. 3 Office of the Attorney General, Consumer Complaint File M9812-0007. 4 Office of the Attorney General, Consumer Complaint File M9903-0349. 5 Office of the Attorney General, Consumer Complaint File M9811-0060.