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Government Accountability Office Issues Report on State Regulation of Funeral Service

Posted: January 18, 2012

A just-released report by the General Accountability Office (GAO) concluded that state officials have a mixed opinion on the need for future federal involvement in regulating funeral service. The report is an update of a study GAO did in 2003 at the request of Sen. Charles Grassley (R-Iowa), who was then chairman of the Senate Special Committee on Aging.

The current study found that 94-95 percent of the states responding to the GAO survey (approximately 40 states) regulated some funeral homes and funeral directors, which was little change from the 2003 findings. In contrast the study found that the number of states regulating cemeteries increased from 77 percent in 2003 to 88 percent in 2011. Moreover, the study also found the state laws and regulations varied widely from state to state, especially in the regulation of cemeteries, preneed sales and third-party sellers.

The distinguishing factor was that only funeral homes are regulated at the federal level by the FTC under the Funeral Rule. The Funeral Rule sets basic rules and practice requirements for all funeral homes, regardless of state laws and regulations. This is not the case for cemeteries, crematories, preneed sales and third-party sellers.

When asked, about 25 percent of state negotiators believed that more federal and/or state regulation for funeral homes, crematories, preneed sales or third-party sellers was needed. The majority of these did not believe more regulation was needed or had no opinion.

It is clear from the report that for funeral homes, the FTC Funeral Rule establishes a uniform base standard of practice applicable to all funeral homes and that provides certain consumer protections for those families that seek funeral and related services from funeral homes. This basic uniform federal standard does not exist for consumers when they purchase goods and services from cemeteries, crematories or third-party suppliers.

The report's findings raise a basic question for Congress and the FTC: Do consumers need additional protections by establishing uniform basic federal standards when dealing with cemeteries, crematories and third-party sellers – similar to the Funeral Rule – regardless of any applicable state law.

NFDA is in the process of analyzing the full report and will provide that analysis to members when completed.

The full GAO report is available online: http://gao.gov/products/GAO-12-65