|
Washington Report
December 1999
U.S. GAO Investigative Report
Of Funeral-Related Industries
Finds Few Complaints
by Robert M. Fells, Esq., General Counsel
Recently, the U.S. General Accounting Office (GAO), the investigative arm of Congress, published its long-awaited investigation of funeral homes and cemeteries titled, Funeral-Related Industries: Complaints and State Laws Vary, and FTC Could Better Manage the Funeral Rule. On the whole, the report is not an attack on the industry that some industry critics had predicted but, instead, found that consumer complaints are low in numbers. However, the report criticizes the Federal Trade Commission (FTC) for lacking a systematized process for measuring funeral home compliance with the Funeral Rule.
Without attempting to editorialize on the substance of the GAO Report, among the noteworthy findings are the following:
1. The Bureau of Labor Statistics found that funeral expenses increased faster than the consumer price index from 1990 through 1998. (p. 4 of the report)
2. The FTC has a major role in protecting consumers during death care transactions through the FTC Act. The Funeral Rule is referred to as one such tool used by the FTC. (p. 5)
3. Although laws vary from state to state, every state except Alabama and the District of Columbia has enacted some sort of regulatory action to oversee preneed contracts. (p. 6)
4. An insurance industry research firm, Conning & Company, estimates that the preneed funeral market amounted to over $21 billion in 1996. (p. 7)
5. The GAO selected five states to study on the basis that four of them -- California, Florida, New York, and Texas -- have the highest numbers of deaths annually, and the fifth, Maryland, had recently established a new regulatory agency. (p. 7)
6. Consumers can complain to a number of organizations about death care issues, thus a single complaint could be contained in the files of multiple organizations. However, there is no single organization that collects and compiles all complaints. (pp. 8-9)
7. GAO speculates that the reason for low consumer complaint levels may be due to the personal or emotional component of the death care situation. (p. 8)
8. The industry-sponsored Cemetery Consumer Service Council was highlighted as a specialized organization assisting consumers in matters involving private cemeteries and memorial parks. (p. 9)
9. Due to the fact that there is no single organization processing consumer complaints, the use of aggregate numbers from a variety of organizations does not assure that the number of complaints would be accurate, either overstated or understated. (p. 9)
10. Available data indicated a range of concerns but organizations stated there were few complaints. (p. 10)
11. The Better Business Bureau (BBB) received 453 complaints about death care goods and services for calendar year 1997, of which three related to cemeteries and another 22 to monuments and memorials. Additional details were not available from the BBB. (p. 11)
12. By comparison, the BBB received 654 complaints related to barber and beauty shops. However, the GAO noted that because there are a fewer number of consumer transactions related to the death care industries, a proportional assessment of complaints cannot be made. (p. 11)
13. The GAO surmised that consumers may not complain about the goods and services they receive from death care providers because they are satisfied. However, there are also factors that might inhibit complaints such as embarrassment or ignorance, or not wanting to reveal misjudgments to others. (p. 12)
14. A 1978 FTC Report on funeral industry practices stated that consumer complaints generally do not provide a complete gauge of consumer problems. (p. 13)
15. Although the Funeral Rule applies to all providers of funeral goods and services, including certain cemeteries, FTC has test- shopped only funeral homes. According to FTC officials, they have not identified the number of cemeteries that are covered by the Funeral Rule or performed any sweeps at cemeteries to date. (p. 17)
16. According to FTC, some proportion of all cemeteries provides funeral goods and services but may still be outside FTC's jurisdiction as nonprofit organizations. (p. 17)
17. In each of the selected states, the state regulatory agencies responsible for cemeteries had jurisdiction over only a fraction of the total cemeteries in the state because certain types of cemeteries, such as religious and municipal cemeteries, were exempt from state regulation. (p. 23)
18. Two of the five states, Florida and Texas, required sellers of preneed contracts to pay a fee to a state consumer protection fund for every preneed contract they sold. The purpose of such a fund is to compensate consumers for situations in which sellers of preneed contracts are later unable to perform the terms of the contract. (p. 24)
19. GAO recommends that FTC review possible approaches to determine the most cost-effective means to conduct sweeps that would result in a more convincing sample of funeral providers and a broader analysis of the various requirements of the Funeral Rule. (p. 25)
20. In the FTC's response to the GAO report, FTC Chairman Robert Pitofsky states, "It is also noteworthy that GAO reports that the number of Funeral Rule complaints received by the FTC, as well as other consumer protection agencies, is quite low. As GAO notes, there are a number of possible explanations for the low compliance level, although no firm conclusions can be drawn." (p. 69)
With respect to the FTC Funeral Rule, it may be worth noting that among the recommendations contained in the GAO Report, there is no suggestion that the Funeral Rule should be expanded to other sellers. This issue is currently being reviewed by the Commission. The report can be viewed at the GAO Internet site, www.gao.gov, under "Reports and Testimony" by searching for the title. ICFA members can also call Association headquarters at 1-800-645-7700 to request a copy without charge.
Copyright ICFA 1999.
|
