In early February, the Federal Trade Commission announced it will begin reviewing the Funeral Industry Practices Rule, commonly referred to as the Funeral Rule. As part of their review, they are requesting feedback from the public regarding what effect, either positive or negative, the rule has had on them—if it affected them at all.
The Funeral Rule was formally enacted in in 1984 and last revised in 1994. As with other FTC rules, it was created with the aim of protecting consumers and ensuring they have access to any and all relevant information they may need to make an informed decision. Given the fact that the Funeral Rule has set definitions for what the FTC considers to be funeral goods, providers, and services, lays out consumers’ rights, and details specific considerations funeral professionals must make with respect to consumers and how they conduct business. The rule applies to all funeral businesses and is in effect for both pre-need and at-need situations.
While true funeral professionals provide their services with compassion and honesty, given the sensitive nature of funeral services and the level of emotion involved in decision-making, the FTC’s rules and regulations are particularly important to protect consumers from corrupt businesses looking to take advantage of people in a vulnerable state. One of the provisions under the Funeral Rule is that providers of funeral goods and services must have a General Price List (GPL) available for consumers who ask about making funeral arrangements. Additionally, they must also have a Casket Price List (CPL) and Outer Burial Container Price List (OBCPL) to identify casket and alternative container options and vault and grave liner options, respectively. The consumer also has the right to choose what they want, so the provider may not require they purchase any particular product or service unless otherwise required by local or state law; notably, this is often cited in reference to embalming. This right must be stated clearly on the general price list. Should a consumer choose to purchase a casket elsewhere, a funeral provider may not refuse to use it, nor can they charge an additional fee to do so, while providers of cremation services must make alternative urn and container options available.
To ensure funeral home are compliant, the FTC performs undercover inspections each year; should they fail to meet the standards of the Funeral Rule, there are penalties. For minor compliance violations, the FTC simply requires proof from the funeral home that the issues have been corrected. For major violations, the business in question generally has two options: enter the three-year long Funeral Rule Offenders Program (commonly referred to as FROP) or face a lawsuit filed by the FTC which may result in penalties of up to $16,000 per violation. The FROP is conducted by the National Funeral Directors Association and provides education, testing, training, and monitoring to participants who pay dues to the NFDA and make voluntary payments to the U.S. Treasury Department in lieu of a civil penalty from an FTC lawsuit.
The call for comment is directed not only to consumers but to industry professionals. The FTC released an extensive list of questions for individuals to consider when submitting their comments; many are relevant for all parties, but some are targeted specifically to industry members. The questions are broken up into 2 broad categories: General Regulatory Review Questions and Specific Questions Related to the Funeral Rule. Among the more noteworthy and interesting questions are:
- Should all funeral providers be required to post their itemized GPLs, CPLs, or OBCPLs online? Why or why not?
- Should funeral providers that have websites be required to post their itemized GPL, CPLs, or OBCPLs online? Alternatively, should they be required to provide an email address or other online mechanism for a website visitor to request the itemized price list information electronically and be subject to a time limit for replying to such requests?
- Would a standardized format make it easier for funeral providers to prepare compliant itemized price lists, particularly small businesses?
- What modifications, if any, should be made to the Rule to account for current or impending changes in technology or economic conditions? How would these modifications affect the costs and benefits of the Rule for consumers and businesses, particularly small businesses?
- Should the Commission broaden the Rule to include products or services not currently covered?
- What benefits has the Rule provided to businesses? Does the Rule impose any significant costs, including costs of compliance, on businesses, including small businesses?
- What new forms of cremation and other processes for the disposition of human remains (such as chemical and organic reduction processes) are available in the U.S. market? What percentage of consumers are choosing these newer options?
- What, if any, modifications should be made to the Rule in light of new and developing processes for human remains disposition? Why? Should the definition of “cremation” in the Rule be amended to reflect these new processes?
- Should the Rule permit a non-declinable basic services fee? Why or why not?
- Should the Commission broaden the Rule to apply to cemeteries? Why or why not?
These questions show that the FTC is interested in looking at the Funeral Rule from the perspective of both business pros and consumers. While their first and foremost goal is to empower and protect consumers, it’s important that compliance not become too intensive and costly that it forces small funeral goods and services providers out of business. Things have changed a lot since 1994, particularly technologically, so it’s no surprise they are looking for feedback on things such as online price lists and new processes for burial and the disposition of remains.
Deathcare industry professionals should pay close attention to developments as the review process continues and eventually concludes. Should the FTC decide to amend the Funeral Rule, it will be the first change in more than 25 years and would certainly have an impact on funeral homes, crematories, and other deathcare businesses. In the meantime, funeral businesspeople may consult the FTC’s guidelines to make sure they are in compliance with the Funeral Rule. If you are interested in formally submitting comments to the review, there is a space to do so on the Federal Register’s notice of the review.
About MKS&H: McLean, Koehler, Sparks & Hammond (MKS&H) is a professional service firm with offices in Hunt Valley and Frederick. MKS&H helps owners and organizational leaders become more successful by putting complex financial data into a truly meaningful context. But deeper than dollars and data, our focus is on developing an understanding of you, your culture, and your business goals. This approach enables our clients to achieve their greatest potential.