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Washington Report
June 1999
FTC Initiates Funeral Rule Review Proceedings
by Robert M. Fells, Esq., General Counsel
On Friday, April 30th, the ICFA received a courtesy call from Federal Trade Commission (FTC) staff stating that the long-awaited Funeral Rule review proceedings had been announced. As required by law, the FTC periodically reviews the costs and benefits of the Commission's trade rules and their regulatory impact in order to determine whether they should be repealed, amended or left unchanged. The FTC announcement, which was posted on its web site at www.ftc.gov and published in the May 5th edition of the Federal Register, seeks public comment on 30 separate issues regarding the Funeral Rule. The filing deadline is July 12th. (See last month's column for a report on a meeting between ICFA staff and the FTC Funeral Rule Review staff).
The ICFA has formed a new Government and Legal Affairs Subcommittee on the Funeral Rule Review, chaired by Diane Kauffman, to develop and coordinate the association's response.
Even prior to its publication, the issue receiving the greatest amount of attention from interested parties focused on whether the Rule's definition of "funeral provider" should be expanded. Currently, the definition applies to entities selling funeral goods and funeral services to the public, the term "funeral services" including the preparation of human remains for final disposition. The term "funeral provider," as currently used, applies almost exclusively to funeral homes, though other entities such as a crematory providing services directly to the public and selling urns would be considered a funeral provider for Funeral Rule purposes.
Several organizations, including AARP and some industry trade associations, have publicly stated their position that Funeral Rule coverage should be expanded to all sellers including cemeteries, monument retailers and third-party casket sellers. The ICFA is opposed to Rule expansion in the absence of substantial evidence, per FTC procedures, of widespread abuses that are addressed, prevented or remedied by the Rule.
Among other issues, the FTC is seeking comments on clarifying the casket handling fee prohibition. This fee, which was imposed by some funeral homes when the family bought a casket from a source other than the funeral home, has been prohibited by the Funeral Rule since 1994. The FTC expressed concern that some funeral homes may be evading the prohibition by offering "discounted packages" including a casket that are actually sold at the seller's regular prices. According to the FTC staff, "Some members of the funeral industry have alleged that because such 'discount packages' are often conditioned on the purchase of a casket, these packages are artificially constructed by certain funeral providers in order to eliminate competition in casket sales."
The FTC is also seeking comments on the practice of charging a non-declinable "basic services fee," which is currently lawful under the Rule. Concern has been expressed by at least one consumer advocacy group that this fee is unfair and should be prohibited. Comments are also sought on revising the General Price List to include additional items such as the price for private viewing without embalming, the price for body donation to a medical school, the price for the cremation process and the price for rental caskets.
Other issues for which comments are solicited include whether the Rule overlaps or conflicts with other federal, state or local laws or regulations; what effects, if any, changes in relevant technology or economic conditions have had on the Rule since it was issued; how, if at all, certain factors have changed such as the number of funeral providers, the ability of new providers to enter the industry and mergers and other types of industry consolidation.
FTC staff has also listed issues such as whether preneed consumers should be treated differently from at-need consumers (the Funeral Rule currently applies to both types of arrangements), and whether there exists widespread unfair or deceptive practices affecting prearrangement and pre-payment. The FTC stresses in all areas that comments should be backed by statistical data, especially information relating to the costs and benefits of the Rule.
At some point following the submission of written comments, the FTC staff will conduct a Public Workshop Conference whereby representatives from invited organizations will discuss the various comments received and explore opposing viewpoints on given issues.
ICFA members who would like a copy of the FTC Request for Public Comments should call association headquarters at 1-800-645-7700.
Copyright ICFA 1999.
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