This article was published previously, but it is being updated because the FTC recently announced the results of its latest sting operation and a high percentage of the funeral providers that were investigated ended up with violations. Several of the national and state associations in the industry have announced new seminars about the FTC Rule requirements and dealing with sting operations.
The FTC Funeral Rule has been in effect since 1984 and there are still funeral directors that ignore the requirements or are just negligent in complying. The FTC from time to time conducts sting operations to check on funeral providers in various areas of the country. Sometimes these stings are conducted by undercover FTC employees and sometimes by undercover local government representatives or even maybe from a member of a local consumer group.
If an undercover person visits your funeral home they will usually be inquiring about information and prices for a terminally ill relative, but that may not always be the situation. Also, it is possible there may be more than one individual. They will not announce or identify themselves. They will not indicate you have violated the Funeral Rule. There also will be a second and maybe a third visit by a different individual or individuals as the FTC recognizes that there may be an inadvertent violation of the Funeral Rule. The idea is to determine that you or your firm continually violates the requirements of the Funeral Rule.
While there are many possible ways to violate the Funeral Rule, it appears to the author that one of the primary violations is the failure to provide the General Price List (GPL) in a timely manner. The author advises clients to hand out the GPL immediately to anyone entering the funeral home.
A second primary area for a violation is if the GPL and other forms required by the Funeral Rule are not in compliance with the requirements. Since there is a tremendous amount of information available from the FTC, industry associations and private sources about the requirements for these forms, there really is no excuse for the failure to comply.
Another key area for violation is the failure to provide casket and outer container price information in the time and manner required. While the Funeral Rule does require that a funeral provider give a GPL to a person inquiring about funeral arrangements, the Funeral Rule does not have that requirement for providing price information on caskets and outer burial containers. The Funeral Rule provides that there are two options for providing price information about caskets and outer burial containers. Option 1 is to list the details of the caskets and outer burial containers available on the GPL. Option 2 is to list the range of prices of the caskets and containers on the GPL and to indicate that detailed information is available at the Funeral Home. If option 2 is followed, the funeral provider may use a Casket and Outer Burial Container Price List or it may maintain a book, chart or even a computer in its display room with that pricing information. The requirement to give a casket price list and outer burial container list or to provide the information in the book, chart or computer occurs when the caskets and outer burial containers are shown or are being discussed.
When the FTC determines after two or more visits that there have been violations of the Funeral Rule a form letter will be sent to the funeral provider. The letters the author has seen usually first states some general requirements of the Rule and the basis for the alleged violations. Then the form letter indicates that the funeral provider is being offered two alternatives to resolve the matter. The first alternative is to participate in the FROP Program sponsored by the NFDA for 3 years, enter into a Consent Decree with the FTC and pay a fine based on .8% of the funeral provider’s average gross sales for 3 years. The letter also requests the funeral provider to provide the FTC with extensive information about its financial situation and structure so the FTC can calculate the fine.
The other alternative requires the staff to recommend that the Commission authorize the commencement of a civil penalty action for Funeral Rule violations in the Federal District Court near the location of the funeral provider. Since a guilty determination can result in a penalty of $16,000 for each violation, plus the expenses for a defense, this alternative is usually not a good idea.
In addition, under alternative one the alleged violation does not become public record. However, when the FTC files an action in the federal courts, the whole dispute becomes public, so that the situation can possibly affect the funeral providers relationship with current and future customers.
The subject in the column will be continued and concluded in Part 2 next month.
The author wrote articles for the Cemetery and Funeral Business and Legal Guide (“Guide) that have been published by CB Legal Publishing Corporation since 1970. The Editor of the Guide recently announced the suspension of this publication. However, CB Legal Publishing Corporation also publishes the Release Form Kit, which was prepared by the author and has been recently updated and revised by the author. The publication of the Release Form Kit will be continued. This Kit contains Release and Hold Harmless forms for Funeral Homes, Cemeteries and Crematories to use in situations where it has resolved a complaint with a customer, and wants to be sure that there will be no further action by the customer or their relatives. The forms can now be purchased in an electronic format. Anyone interested in purchasing the forms can contact Cheryl Lapin, at the address of CB Legal Publishing Corporation, 2592 Chedworth Ct, Northbrook, Illinois 60062. The author also continues to practice law and can be contact by phone at 847-334-1983.