Scandal at the Morgue: Beware Shady Expenses

By Eric Reed

NEW YORK ( MainStreet) -- When you bury a loved one, the last thing you want to deal with is a pushy salesman. Yet, for many people, it turns out that's exactly what's happening.

According to a report from the Federal Trade Commission, a recent investigation found nearly 20% of funeral homes visited were in violation of the agency's consumer protection laws. The businesses in question, 23 out of 127, are spread across eight states and were visited by undercover investigators posing as consumers.

The parlors in question were found in violation of the Funeral Rule, a regulation enacted in 1984 that requires every funeral home to deliver a specific, itemized list of all goods and services called a General Price List, or "GLP." The funeral home must deliver this GLP before offering any kind of package deals and must include realistic information about the customer's actual needs.

The FTC adopted this rule to make sure that businesses don't take advantage of consumers when they're at their most vulnerable, swooping in with tied-together packages and easy paperwork for families who are only worried about how they'll deal with the death of a loved one. Easy paperwork is admirable of course, especially during a difficult time, but not when it comes with extra costs lining an imported teak wood coffin.

According to Craig Tregillus, Funeral Rule Coordinator for the FTC, this kind of predatory practice used to be commonplace.

"Back in the '50s and '60s and '70s if you walked into a funeral home and only wanted a direct cremation, as many people do today, you basically had to pay the price for a full funeral," Tregillus said, "because that was the only thing the funeral home would sell you. And that was why the Funeral Rule was put out, to unbundle that service so that you could buy only what wanted or needed."

Similar, somewhat ironically, to weddings, every aspect of a funeral seems loaded with meaning. When a funeral director pushes expensive packaged options, customers can often feel like it's disrespectful to a loved one's memory to eliminate them based on money. Unfortunately, this can also lead to spending far more than the customer had wanted.

In fact, before the Funeral Rule took effect, this practice was so widespread that it was often simply impossible for customers to find inexpensive or itemized options at any regional funeral parlors. In many parts of the country, according to Tregillus, even families that wanted a simple cremation still had to pay for a full casket and ceremony regardless of the hardship that may have imposed.

In many parts of the marketplace this kind of granular regulation is ordinarily not necessary. However the funeral industry's history of lockstep practice, as well as the extreme vulnerability of anyone shopping at a funeral parlor, created a need and the government stepped in.

"What we're most concerned about is that consumers receive the price disclosures they're supposed to receive when they're supposed to receive them," Tregillus said. "So that when you walk into a funeral home to make arrangements, before any discussion of funeral or other services the funeral home provides, they're required to give you an à la carte listing of all of their prices."

Compliance with this rule has always been an issue. When it was first passed back in the mid-'80s, 10 to 35% of funeral homes actually obeyed the rule. As the it became more entrenched and education more widely available, those numbers unsurprisingly went up. Today the best estimate is that approximately 85% of funeral homes comply with the rule.

The other 15% still tend simply to present customers with the all-in-one price, an appealing option at a time when families may not want to make difficult financial decisions, but one which also allows unscrupulous business owners to generously pad the bill.

Unfortunately scandal with a client's money is far from unknown in this industry, including a series of recent lawsuits against the Illinois Funeral Directors Association over the loss of millions of dollars from a pre-purchase trust fund. In fact, the risks can be great enough that the FTC even tends to advise consumers not to pre-pay for their funerals at all.

"We recommend pre-arrangement," Tregillus said, "meaning people figuring out what funeral arrangements they want and communicating that to their family members. We don't recommend pre-payment."

That can be a dangerous proposition.

"There have been in the past occasions when funeral home owners ran off with the funds," he said. "It's a figure of speech because most of the funds go into trust accounts, so the way you get them is you pretend to make arrangements, then get hold of the funds to pay and run off with the money."

The FTC's enforcement power for this rule ranges. First time offenders are typically enrolled in the Funeral Rule Offenders Program, or "FROP," a mostly education focused program that helps business come into compliance with the law. For second time offenders more serious penalties can attach, including being taken to court for fines of up to $16,000 per violation.

Almost all violations in the FTC's current announcement are first time offenders.

Protect Yourself

It's important as a consumer to know his rights. In the tragic event that you're doing business with a funeral director, remember, it's not just good business for him to show you a price list--it's also the law. Don't be afraid to insist on getting only what you want and can afford, and nothing more. If he's not interested in what works best for you, pack your bags and find someone who is.

Written by Eric Reed for MainStreet

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