Final Committal Texas problems With Pre-Paid Funeral Services A report prepared by Consumers Union SWRO October 2000 available in pdf format

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Funeral Industry Prices Funerals are expensive, and families sometimes feel cheated when they select a cost effective, no frills option within their budget and yet still pay thousands. One of the most expensive parts of a funeral—and one that causes sticker shock among buyers—is the “Basic” or “Professional” services fee. The Federal Trade Commission (FTC) Funeral Rule allows funeral homes to charge this non-declinable fee to every customer. The amount of the fee is unregulated, and funeral homes do not necessarily include exactly the same services in it. In general, it covers funeral home overhead (for example, some funeral homes cite the 24 hour availability of staff as a service covered by this fee). This fee is in addition to the separate charges for embalming, visitation, memorial services, or transportation, and the significant markup on caskets, urns and vaults.(6) Texas price lists from 1997 to 2000 indicated that this fee ranges from a few hundred dollars to more than $2,000, or 26% to 47% of the total cost of a low end funeral (see sample price table, page 10). The fee is added to every bill and included in the price of immediate burial (no service) or cremation. Harry Tate of Durango, Colorado, paid $2,984 for a cremation with no services. He asked the Texas Funeral Services Commission to help him get a refund of his $1595 basic services fee, because the funeral home provided no funeral or memorial services. But the funeral home said he had been told about the charges. “They (the funeral home) contacted me to say that they have overhead, and charge this fee whether people use the service or not,” Mr. Durango told Consumers Union. The FSC closed the file. (7) Marcia K. of Garland tried to handle most of her relative’s funeral services herself. She dressed the body and hair, placed the obituary, and bought a casket and outer burial container at a discount shop. But she still had to pay the funeral services fee of $1995, nearly half the total cost of the funeral. The funeral director sent a letter of apology, but maintained that the basic service charge is fair and offered no refund. (8) Consumers who attempt to save money by shopping around for high cost items like the casket may be told that there will be an extra fee associated with the use of a different casket. In 1998, a Longview casket store filed a complaint against a funeral home, alleging that the director threatened to charge an $800 fee if the family purchased their casket from the casket store. “Not being about to afford an additional $800, the family were essentially forced to purchase the casket offered by the funeral home,” wrote De’Lores Arline of the Arline Casket Store. (9) The FTC Funeral Rule prohibits funeral homes from adding such fees or otherwise preventing consumers from purchasing the casket from any distributor. (10) Last year the FTC reopened discussion of the non-declinable charge as part of its review of existing rules. According to the National Funeral Directors Association, the charge primarily covers the time funeral directors spend consulting with a family, time making arrangements, and the time to obtain and file the death certificate. But consumer advocates note that it significantly curtails the consumer’s ability to control funeral costs when it rises to 40% of the total charge, and many families don’t need or want all the services included. (11) Recommendations: Texas legislators should establish a single state agency (outlined in more detail below) charged with funeral service consumer protection, and direct that agency to: study the use of the non-declinable charge and determine which services currently included could be itemized and then declined by consumers who wish to handle more of the funeral arrangements themselves, and investigate capping the non-declinable charge at 10 percent of the funeral services costs (not including merchandise); and collect funeral service and cemetery price lists regularly and publish (in paper and electronic formats) updated consumer price guides similar to those produced by the Department of Insurance for Medicare Supplement and auto insurance. Monuments Monument companies take orders for gravestones and other markers. They take a custom order and request a down payment. Whether the company makes the monument on its own premises or sends the order to a factory, it takes some time before the order can be filled and the monument placed. This, in and of itself, is not unusual. However, where orders take months and companies are unresponsive, consumers begin to file complaints with the Attorney General—who may act under his general consumer protection authority under the Deceptive Trade Practices Act. Michael C. of Farmers Branch paid $1623.83 to a monument company after the death of his 17 year old son. He waited months for delivery. Then he called, only to find the phone number out of service, and the company itself no longer at the address on the business card. The monument company responded to the Attorney General (eight months after the initial order), saying that the order was unusual, would take more time, and did not provide an expected completion date. The AG closed the file. (12) Gloria C. of Grand Prairie paid a $869.25 downpayment on a marker and waited six months for it to arrive. The company did not return her calls and she began to worry, so she wrote to the AG. The company told the AG that it had recently changed suppliers and the monument should be ready soon. But two months later she wrote to the state again because she still had no marker on the grave. The AG files documented no further action. (13) At least three other customers of this same monument company filed similar complaints with the AG in the fall of 1998.(14) Unlike other companies that provide funeral services, monument companies are unregulated by any specific funeral service laws. Complaints related to firms that manufacture and place headstones, markers and monuments must be sent to the Attorney General, the state’s enforcement agency for general consumer protection. The Funeral Services Commission has no jurisdiction over monument companies. For the most part, the Attorney General acts as a mediator between monument companies and consumers, but rarely pursues legal action. If the company does not voluntarily cooperate with the Attorney General, a family may be forced to pursue private legal action to get the monument they purchased placed on a loved one’s grave. Recommendation: Incorporate the regulation of preneed and at-need monument sales into the regulations for other funeral products through a single state agency; Require monument companies to offer to fully refund a consumer’s payment if the monument cannot be delivered within a reasonable time; and Extend a 30 day cancellation period to those who purchase a monument on a preneed basis, as recommended for other preneed funeral merchandise and services (see pp. 18-19). _____ Notes: 6 According to testimony provided to Congress by the National Funeral Directors Association, the markup on caskets is about 2.5 times cost. Senator Charles Grassley stated that markups are even higher than that. Death Care Business Advisor, NFDA’s followup focuses on portability, revocability, Vol. 4 No. 20, May 10, 2000. 7 Office of the Attorney General, Consumer Complaint File D9903-0323. 8 Funeral Service Commission, Consumer Complaint File 99-021. 9 Office of the Attorney General, Consumer Complaint File D9810-0291. 10 FTC Funeral Rule Sec. 453.4(b). 11 Federal Trade Commission, Docket No. P984407, In the Matter of Funeral Rule Review Working Group, November 18, 1999, pp. 206, 209-211, 218-220, 224. 12 Office of the Attorney General, Consumer Complaint File D9812-0182. 13 Office of the Attorney General, Consumer Complaint File D9811-0312. 14 Office of the Attorney General, Consumer Complaint Files D9811-0273, D9811-0240, D9809-0882.