There are a number of issues surrounding the handling of third-party caskets by funeral homes. Because the Federal Trade Commission (FTC) Funeral Rule does not specifically address many of these issues, funeral directors may be uncertain of their precise obligations in handling third-party merchandise. Adding to the confusion is the flurry of unfounded claims being made by third-party casket sellers and their organization, the National Casket Retailers Association.
To assist NFDA members in knowing their rights and obligations regarding third-party caskets, NFDA has prepared guidelines to help members deal with families using third-party caskets and with suppliers of third-party caskets. In addition, we have provided a guideline on permissible pricing methods involving third-party caskets.
Dealing with Families Using Third-Party Caskets
A funeral home should never refuse to service a family because they indicate they will be using a third-party casket. The funeral home may not discriminate in any manner against the family in the level or type of service provided. Do not attempt to dissuade a family from utilizing a third-party casket by disparaging the quality of the casket. Of course, a funeral home may try to persuade a family to purchase a casket from the funeral home by comparing prices and the quality of products offered.
Delivery of Casket
A funeral home may not require the family to be present when the third-party casket is delivered to the funeral home. The funeral home may, however, request the family to sign a form authorizing the funeral home to accept the casket on the consumer's behalf. We recommend using the NFDA form titled "Use of Third-Party Merchandise." This form authorizes the funeral home to accept the third-party casket and relieves the funeral home from any obligation to inspect the casket.
Defective or Damaged Casket
If the third-party casket is defective or damaged in any respect when delivered, the funeral home should point out the defect or damage to the third-party supplier (see next section). In addition, the funeral director should immediately alert the family to the defect or damage noticed. When discussing the condition of the casket with the family, do not disparage the quality of the casket. Rather, the funeral director should objectively point out the defects or the damage.
Inspection of the Casket
Prior to the visitation or a funeral service where the body will be present within the casket, the funeral home should have the family inspect the casket in order to verify that it is the casket they purchased from the third-party supplier. If the casket has any defects or damage that the funeral home has not previously pointed out to the family, do so at this time. Again, do not disparage the quality of the casket or the third-party supplier. Rather, in a very objective manner, the funeral director should indicate any defects or damage to the casket.
When a family indicates it will utilize a third-party casket, NFDA advises funeral directors to request the family sign NFDA's form titled "Use of Third-Party Merchandise" or a similar indemnification form. While the funeral home may request the family to sign the form, it may not require that the family sign the form as a condition of accepting the casket. In other words, never inform or suggest to the family that they are required to sign the indemnification form. If the family refuses to sign the form, the funeral home must still service the third-party casket without discriminating against the family in any manner. Upon the refusal of a family to sign the indemnification form, the funeral director should provide them with a copy of the unsigned form and should note on another copy of the form the date and time that it was provided to the family and the fact that the family declined to sign the form.
Rejection of Casket
If, in the objective opinion of the funeral director, the third-party casket is not structurally sound to hold and transport the body, or if it presents a safety risk to pallbearers or funeral home personnel, the casket may be rejected. However, because the decision by the funeral home to reject a third-party casket will undoubtedly draw scrutiny from the FTC and state officials, funeral directors are strongly advised to be cautious in rejecting any third-party casket. Prior to declining to use the casket, the funeral director should consult with the family and point out why the casket is defective and the risk it poses.
Dealing with Third-Party Casket Suppliers
Delivery of Caskets
When arranging to take delivery of a third-party casket, the funeral home may not impose on the third-party supplier any special restrictions on the time or manner of delivery. As a rule of thumb, NFDA advises that the funeral home should treat the third-party supplier as it treats its wholesale supplier of caskets. If the funeral home assists its wholesale casket supplier in unloading caskets, it should extend the same courtesy to third-party suppliers. However, no special concessions need be extended to third-party suppliers. For example, if the funeral home accepts delivery of caskets from its wholesale suppliers only during normal business hours, it can impose the same restriction on third-party suppliers.
Receipt of Third-Party Caskets
When the funeral home receives the third-party casket, NFDA recommends it provide the supplier with the NFDA form titled "Receipt of Third-Party Merchandise." On this form, the funeral home acknowledges receipt of the third-party casket and explains to the supplier that receipt of the casket does not constitute legal acceptance of the casket. Only the family may accept the casket in the legal sense since the contract of purchase is directly between the supplier and the family. "The Receipt of Third-Party Merchandise" form also provides the funeral director with the opportunity to record any visible defects in the casket at delivery. While the funeral home cannot require the third-party supplier to sign the form, it should provide the supplier with the form that has been signed by the funeral home. A copy of the form should be maintained in the funeral home files.
Inspection of the Third-Party Casket
As stated in the "Use of Third-Party Merchandise" form presented to the family and the "Receipt of Third-Party Merchandise" form presented to the supplier, the funeral director is under no duty to inspect the third-party casket when it is delivered. Nevertheless, to protect the funeral home from claims that it damaged the casket after delivery to the funeral home, it is recommended that the funeral home make an inspection of the casket upon delivery and note any visible defects. "The Receipt of Third-Party Merchandise" form may be used for this purpose.
No Handling Fees
The funeral home may not charge any type of fee for handling a third-party casket. There should not be an inspection fee, delivery fee, casket set-up fee or any type of charge imposed against the family who elects to bring a casket to the funeral home.
In order to encourage families to purchase the casket from the funeral home, a funeral home may offer discount packages to consumers who purchase a casket from the funeral home. Some third-party casket sellers have claimed that restricting discount package offerings to families who purchase a casket from the funeral home constitutes an unlawful sham discount. However, the United States Court of Appeals passed on this very issue when it distinguished a direct casket handling fee from a discount package that was only available to families who purchase a casket from the funeral home. In that regard, the Court found the latter pricing scheme to be legal. The Court ruled as follows:
"...the FTC distinguishes direct casket handling fees from offering discounts to people who buy caskets from the funeral home. The former is an anti-competitive penalty (the fee) and the latter is a method used to deal with competition from the third-party casket sellers which is pro-competitive. The fee essentially requires consumers to buy their caskets from funeral homes, or pay for it anyway. The other methods (e.g., discounts) represents a way to encourage consumers to buy their caskets from funeral homes."
It is clear from the ruling of the court that limiting discounted packages to consumers who purchase caskets from the funeral home is a legitimate competitive method against third-party casket sellers.
Prohibition Against Discounting the Non-Declinable Service Fee
While funeral directors are free to offer discount packages to families who purchase a casket from the funeral home, they should not offer to discount only the non-declinable basic service fee for those families who buy a casket from the funeral home. This is one discount that the FTC would challenge as an unlawful reverse handling fee. Therefore, the non-declinable basic service fee should be the same for consumers who buy caskets from the funeral home, as well as consumers who use a third-party casket.
While funeral homes are free to offer discounted packages to encourage families to select a casket from the funeral home, they may not make the discounts unreasonable. For example, if a funeral home raised its itemized prices for a typical funeral to $10,000 and then offered a $3,000 funeral package to consumers purchasing a casket from the funeral home, it would open itself up to a claim that it is employing sham discounts. The amount of the discount should have some reasonable relationship to the net income the funeral home expects to earn on the sale of the casket.
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