WASHINGTON, D.C. — Attorney General Karl A. Racine today led a coalition of 22 Attorneys General calling on the Federal Trade Commission (FTC) to enhance consumer protections around funeral home services. In a comment letter to the FTC about its Funeral Industry Practices Rule, the Attorneys General warn that insufficient pricing transparency in the funeral industry inhibits consumers from accurate comparison shopping and exposes them to being overcharged. The coalition recommends funeral service providers be required to publicize prices online, standardize pricing disclosures, and safeguard consumer funeral funds from misuse and fraud. As deaths from COVID-19 rise, the Attorneys General urge the FTC to better shield bereaved families nationwide from unknowingly overpaying for funeral services. Earlier this month, the D.C. Council unanimously adopted AG Racine’s proposal for a consumer Funeral Bill of Rights in its latest COVID-19 emergency legislation.
“The FTC can better protect grieving consumers by requiring funeral homes to be more up-front about their pricing,” said AG Racine. “Following a 2017 investigation by my office which revealed local funeral businesses were taking advantage of District residents, I called for stronger consumer protections around funeral services. I thank the Council for adopting the proposals in its latest COVID-19 emergency legislation. As this pandemic continues, it’s more urgent than ever that the FTC make common-sense changes to safeguard consumers against predatory business practices.”
FTC’s Funeral Industry Practices Rule
The FTC is reviewing the relevance and effectiveness of its 1982 Funeral Industry Practices Rule, which regulates funeral homes. The current iteration of the FTC’s funeral rule requires funeral providers to give up-front itemized price information along with explanations for those prices, though there is no standardized format providers must follow to offer easy price comparison for consumers. It also allows consumers to use caskets purchased elsewhere at no added expense, to pay for only the goods and services they want and need, and offers some protections from misrepresentations around services such as embalming. However, it does not require providers to post this information online or offer consumers context around average funeral costs. It also leaves consumers paying for services in advance, such as through a life insurance policy, vulnerable to overpayment or fraud.
The District’s Funeral Home Industry
There are more than 35 funeral businesses licensed to operate in D.C., regulated by District government. In 2017, OAG conducted an investigation of the District’s funeral homes using both a price survey and undercover shoppers. This investigation found nine funeral homes that may have violated laws through suspect pricing and sales practices, including discouraging the use of outside caskets and padding prices for certain services. OAG sent letters to these funeral homes detailing the problems, after which all nine confirmed their compliance with the law.
Since that investigation, OAG introduced legislation to increase transparency and provide for easier enforcement of consumer protection laws, including a Funeral Bill of Rights. The Council included a Funeral Bill of Rights provision in its latest COVID-19 emergency relief legislation.
In their letter, the state Attorneys General urge the FTC to strengthen protections for consumers by requiring funeral providers to:
- Publicize itemized price lists online: Prices on funeral goods and services can vary widely between funeral homes in an area. For example, OAG’s 2017 District price survey revealed basic service fees ranging from $965 to $9,200, while top casket prices ranged from $5,795 at one home to $125,000 at another. Requiring providers to post their prices online would enable consumers to easily comparison shop and make informed decisions about the costs of the funeral services they are purchasing.
- Disclose the average cost of funeral services on its online price list: When a family opts to pay for funeral services using a life insurance plan, funeral homes or third parties will advance funds in exchange for the assignment of the policy. This arrangement may tempt funeral service providers to engage in price gouging or outright theft in order to recover more funds from the policy. Requiring providers to inform consumers of the average costs of their services would give consumers a clearer sense of how much money they should expect to allot from a life insurance plan.
- Provide consumers electronic copies of price lists before they select services: The Attorneys General suggest a requirement that upon request providers send consumers an electronic price list following an initial solicitation of the provider’s services. This would provide documentation to consumers about the costs, and would also allow them to consider whether they want to pay for cash-advance items—such as clergy, crematory and burial services, or flowers, themselves, rather than through the home.
- Standardize the format for price lists and other disclosures: A standardized format for price lists, along with standardized disclosure requirements around funeral services such as viewings and visitations, would ensure transparency and clarity for consumers. It would also inhibit funeral homes from charging unlawful or unreasonable fees. At the same time, standard forms would make it easier for funeral homes to assess whether they are complying with regulatory requirements.
- Provide receipts for services paid to third parties and repay any funds in excess of final costs: To ensure that funeral service providers do not pad the charges for payments to third parties, a few common-sense requirements are necessary. First, they suggest requiring the funeral home to provide receipts for any such payments within one week of the funeral. Second, if the consumer has paid an amount for a third party’s services that exceed the final bill, providers should be required to refund consumers within one week of providing the receipts.
- Protect pre-need funeral payments: The Attorneys General recommend funeral providers keep any pre-needs payments in separate escrow accounts and that funeral homes provide annual bank statements to consumers showing the amounts in these escrow accounts.
- Disclose embalming requirements: In some jurisdictions, funeral homes may insist on embalming even when it is not required by local law. The Attorneys General note that stronger disclosures around these requirements are necessary to enable consumers to make a choice about this service. They also urge the FTC to mandate disclosure from any funeral home that requires embalming in its services even if the law does not.
A copy of the letter is available at: https://oag.dc.gov/sites/default/files/2020-04/Multistate-Letter-FTC-Funeral-Rule.pdf
District of Columbia Attorney General Karl A. Racine led this comment letter and was joined by the Attorneys General of Arizona, California, Colorado, Connecticut, Delaware, Hawaii, Iowa, Maine, Maryland, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Virginia, and Wisconsin.
Consumer Resources for Planning a Funeral
Planning a funeral can be stressful and trying to understand all the options and costs can be confusing. To know your rights under the law, read OAG’s fact sheet about consumers’ rights when planning a funeral, as well as a survey of current prices for funeral services compiled by the Office of Consumer Protection.
Submit a Consumer Complaint
To report scams, fraud, or unfair business practices, you can submit a consumer complaint by calling OAG’s Consumer Protection Hotline at (202) 442-9828, email@example.com, or online.
OAG’s COVID-19 Resources
In response to the COVID-19 pandemic, the Office of the Attorney General (OAG) is teleworking until at least May 15. You can access OAG services online and over the phone during our telework period at:
- Website: oag.dc.gov
- Email: firstname.lastname@example.orgOAGCommunity@dc.gov
- Phone: (202) 727-3400
- Fax: (202) 347-8922
- TTY: (202) 727-3400
For updates from OAG on COVID-19, consumer tips, resources, and warnings:
- Sign up for OAG’s newsletter
- Bookmark and visit OAG’s Coronavirus Information Page
- Follow us on Twitter, Facebook, and Instagram
Know Your Rights: Read OAG’s Consumer Alert—available in multiple languages—to protect yourself from scams, price gouging, discrimination, and to get information about consumer, worker, and tenant rights during the pandemic.
For more District Government updates about coronavirus, visit coronavirus.dc.gov