FSL Chapter 15R3 - FTC Introduction

FUNERAL SERVICE LAW

IN THE UNITED STATES, 2nd ed.

A GUIDE FOR FUNERAL SERVICE STUDENTS

CHAPTER 15: FTC FUNERAL RULE- INTRODUCTION

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Federal Trade Commission

� The mission of the Federal Trade Commission (FTC) is to protect consumers and competition by preventing anticompetitive, deceptive, and unfair business practices through law enforcement, advocacy, and education without unduly burdening legitimate business activity.

� The goals of the FTC are to:

� protect consumers from unfair and deceptive practices in the marketplace;

� maintain competition to promote a marketplace free from anticompetitive mergers, business practices, or public policy outcomes; and

� advance the FTC’s performance through excellence in managing resources, human capital, and information technology.

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History of the FTC Funeral Rule

� The Funeral Rule was originally adopted in 1984 and revised in 1994. Rule to consider updating provisions to reflect contemporary standards.

� Twenty-six years later, in early 2020, the FTC announced a review of the Rule to consider updating provisions to reflect contemporary standards.

� The FTC began the review process by sending surveys to state funeral director associations and other allied professionals.

� The review was halted with the onset of the Covid-19 pandemic and the future status of the project has not been announced (as of January 2022).

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Consumer Rights

� The purpose of the Funeral Rule is to provide certain rights to consumers when making funeral arrangements.

� These rights apply to both at-need and preneed cases when making funeral arrangements.

� The Rule specifically prohibits funeral directors from engaging in these five activities:

1.

Misrepresenting legal, crematory, and cemetery requirements.

2.

Embalming for a fee without permission.

3.

Requiring the purchase of a casket for direct cremation.

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Consumer Rights continued

4.

Requiring consumers to buy certain funeral goods or services as a condition for furnishing other funeral goods or services.

5.

Engaging in other deceptive or unfair practices.

� In practice, the Funeral Rule allows consumers to comparison shop for prices from any number of different funeral establishments.

� With pricing information in hand, consumers can make an informed decision on which establishment they want to provide them with funeral goods and
services.

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Who Must Comply with the Funeral Rule?

� A funeral provider is any person, partnership, or corporation that sells or offers to sell funeral goods and funeral services to the public.

� A provider may not always be a funeral establishment, as other individuals and entities may offer to sell both funeral goods and funeral services.

� Sellers that offer only funeral goods or only funeral services (not both) do not meet the definition. For example, the Costco Wholesale Company sells caskets online and from wholesale outlets, but they do not offer or sell any type of funeral services, such as embalming. They therefore do not meet the definition of a funeral provider and are not subject to the Funeral Rule.

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Funeral Goods and Funeral Services

� Funeral goods are goods sold or offered for sale directly to the public for use in connection with funeral service events.

� Funeral services are any services which may be used to:

� care for and prepare human remains for burial, cremation, or other final disposition; and/or

� arrange, supervise, or conduct the funeral ceremony or the final disposition of human remains.

� More simply, funeral goods are tangible merchandise items purchased by the consumer, such as a register book or flag case; and

Funeral services are non-tangible items provided to a consumer for a fee,
such as the use of the funeral establishment for calling hours.

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The Funeral Rule and Preneeds

� Funeral Rule requirements apply to all new preneed cases, including those that are pre-planned but not prefunded.

� The Rule does not apply to preneed agreements made prior to 1984, however …… if any agreement – including those made prior to 1984 – are changed or amended, all Rule requirements are triggered and apply. For example, if a prefunded preneed was purchased by a consumer in 1978 (prior to the Funeral Rule) – and they now want to change the type of final disposition from burial to cremation – all of the requirements and mandates in the Funeral Rule would apply when making the change.

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Consumer Education

� As primary enforcer of the Funeral Rule, the FTC promotes consumer education as one means to ensure compliance.

� For consumers, the FTC publishes articles in a series titled, Shopping for Funeral Services. The series includes these titles:

� Consumers may view these online or request they be mailed. The FTC also provides consumers information on how to file a consumer complaint.

The Funeral Rule

Types of Funerals

Choosing a Funeral Provider

Buying a Cemetery Site

Planning Your Own Funeral

Funeral Terms

Funeral Cost and Planning Checklist

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Funeral Provider Compliance

� The FTC uses self-enforcement and direct enforcement actions to facilitate

� For self-enforcement actions, the FTC has published a set of guidelines

titled, Complying with the Funeral Rule, to assist funeral directors in
understanding and applying the rule in the workplace.

� These guides include detailed information on the three required price lists, as well as the mandatory itemized statement that must be given to consumers.

� Guides are available online and in print

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Direct Enforcement

� For direct enforcement actions, the FTC conducts annual undercover inspections to observe whether funeral establishments are complying with the Funeral Rule.

� Undercover enforcement officers randomly go into funeral establishments in a targeted area and inquire about funeral goods and services.

� These ‘shoppers’ observe actions taken by the staff to verify they are complying with the Rule, such as timely providing a General Price List.

� Typically, when undercover officers have observed non-compliance issues on at least two separate occasions, enforcement action will be taken.

� FTC staff may also respond to a specific consumer complaint by conducting a compliance review for a particular funeral establishment

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Funeral Rule Offender Program (FROP)

� A funeral establishment in violation of the Funeral Rule may be offered an opportunity to enter the Funeral Rule Offender Program (FROP) – a
three-year training program designed to increase compliance.

� This program is a one-time alternative to formal enforcement action and civil penalties up to $40,654 per violation (as of 2018).

� The program is administered by the NFDA and provides participants with a legal review of the requirements in the Funeral Fule, along with ongoing training, testing, and monitoring of compliance.

� Participants must make a voluntary payment to the U.S. Treasury in lieu of a civil penalty and pay annual administrative fees to the National Association.

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The FTC in Action

� In April 2018, the FTC reported investigators, working undercover in 11

states, found failures to disclose pricing information in 29 of the 134
establishments they visited in 2017. In part, the press release stated:

The [Funeral] Rule gives consumers important rights when making funeral

arrangements. For example, funeral establishments must provide consumers with an

itemized general price list at the start of an in-person discussion of funeral

arrangements, a casket price list before consumers view any caskets, and an outer

burial container price list before they view grave liners or vaults.

The Rule also prohibits funeral establishments from requiring consumers to buy any item, such as a casket, as a condition of obtaining any other funeral good or service. By requiring the provision of itemized prices, the Funeral Rule enables consumers to compare prices and buy only the goods and services they want.

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THE END

Author: Larry J Cleveland

Publisher: Hudson Valley Professional Services

PPT Release: #3 June 2022
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FUNERAL SERVICE LAW

IN THE UNITED STATES, 2nd ed.

A GUIDE FOR FUNERAL SERVICE STUDENTS