Introduction

The FTC has issued its Request for Comments listing 22 issues it is asking interested parties to comment on to determine if the Funeral Rule should be modified. The deadline for submitting written comments is April 14, 2020. The FTC Request for Comments as well as instructions for submitting comments can be found at www.federalregister.gov/documents/2020/02/14/2020-02803/funeral-industry-practices-rule.

The comments that the FTC is soliciting will be used to help it determine whether to open the Funeral Rule up for possible amendments. In essence, this is step one of a possible two-step process. If the comments that the FTC receives persuade it that the Funeral Rule may need to be amended, then it would take the second step and initiate a formal rulemaking by announcing what portions of the Rule it is examining for possible revision. That would entail another series of comments and possible testimony taken in formal hearings that the FTC would then consider when deciding if and how to amend the Funeral Rule.

NFDA is preparing comments based upon its long-held positions on the Funeral Rule’s price list distribution requirements, the need for a variable basic service fee, allowing funeral directors to charge a fee for coordinating the delivery of third-party merchandise, and various other items discussed below. NFDA’s comments will also capture deliberations and decisions made by the Policy Board last year in prioritizing NFDA’s goals for revising the Funeral Rule and opposing the mandatory posting of GPLs on funeral home websites.

While NFDA will be pushing for changes in the Funeral Rule that have been sought for many years, we will also recognize that the Rule, which was promulgated in 1982 and amended only once in 1994, is out-of-date. Back when the Rule was promulgated, the only ways to obtain price information from funeral homes or to purchase funeral goods and services was an in-person meeting with a funeral director or over the telephone. With the emergence of electronic communications in the past 25 years, we need to acknowledge the other ways that consumers can communicate with businesses. Opposing updated requirements to provide requested price information by fax or e-mail puts NFDA in an indefensible position. In addition, as outlined below, we propose to use the changes as a way to encourage, but not require, funeral homes to post GPLs on their website.

The primary positions NFDA will be advocating for in its comments include the following:

Proposed Revisions to Funeral Rule

1. Distribution Requirements for General Price List. Since the inception of the Funeral Rule, NFDA has complained about the vague and imprecise trigger for distributing the GPL. The Funeral Rule currently requires the GPL to be given upon “beginning a discussion” of funeral goods, services, arrangement or prices. NFDA has pointed out that this requirement can be triggered in many different situations and scenarios where the consumer has no interest in selecting funeral goods or services.

The FTC Staff, in its Compliance Guidelines and other commentary, has stated that the GPL distribution only applies when there is a discussion of price or the selection of funeral goods and services. When the Rule was first reviewed in 1990-1994, the FTC Staff initially agreed with NFDA that the distribution requirement for the GPL needed to be revised and clarified. The Staff proposed that the GPL distribution requirement be revised to provide as follows:

“Give a printed or typewritten price list for retention to persons who inquire in person about the prices or the selection of funeral goods or funeral services. The funeral provider must offer the list upon beginning discussion either of prices or of the selection of any funeral goods or funeral services, including the overall type of funeral services or disposition, whichever discussion occurs first."

NFDA will propose in its comments that the FTC use the clarification that the Staff proposed years ago. In that regard, we will advocate that the Rule be modified to provide that the GPL must be given out in any of the following circumstances:

• To any person who requests price information about funeral goods or funeral services from the funeral provider in-person. The General Price List must be distributed to the person making the inquiry in a printed or typewritten form.
• If the request for price information is not made in-person, the funeral provider shall provide the GPL to the person requesting it by sending it by one of the following ways: the U.S. mail, electronic mail, telefax, posting the GPL on its website, or placing the words “price information” or similar phrase that includes the word “price” with a link to the funeral home’s GPL on its website.
• If the funeral provider sells funeral goods or services over its website, it shall post its GPL on that website.
  
  

The purposes of the modifications proposed by NFDA are threefold. First, it updates the Funeral Rule by recognizing that technology is now available to transmit the GPL electronically which was not the case back in 1982 when the Rule was issued. Secondly, it makes it easier for consumers and companies that compile funeral price information to obtain that price data. The FTC and consumer groups will be in favor of greater access to price lists. Finally, the changes encourage funeral homes to place their GPLs online to avoid having to mail, fax or e-mail the GPL upon receiving a price request. While this may not satisfy the Funeral Consumer Alliance, it allows the FTC to claim that it updated the Rule and encouraged funeral homes to post GPLs voluntarily on their websites.

2. Distribution Requirements for Casket and Outer Burial Container Price Lists. NFDA’s comments would also propose that the distribution requirements for the Casket and Outer Burial Container Price Lists should mirror those for the General Price List with the exception that the Casket Price List and Outer Burial Container Price List would not have to be given out “for retention” in cases where consumers request them in person. The Rule would also be clarified to specify that Casket and Outer Burial Container Price Lists may take the form of a computer program rather than having to be a printed or typewritten list. The FTC Staff has already recognized that computer programs suffice under the Funeral Rule, but it would be beneficial to have that as part of the Funeral Rule.

3. Opposition to Mandatory Posting of GPLs on Websites. While NFDA’s proposals for price list distribution would allow funeral homes the option of posting price lists on websites to avoid having to transmit them electronically to consumers requesting them, it would not mandate that funeral homes post price lists on their websites unless they are selling funeral goods and services through their websites. The issue of mandatory posting of GPLs on websites appears to be the primary issues that the FTC will be focusing on during the review of the Funeral Rule.

While our positions on price list distribution do provide that the posting of price lists on websites is one method that funeral homes may use to distribute required price information, it does not mandate that funeral homes must post price lists. NFDA will strongly oppose any such mandatory requirement.

Our argument against mandatory posting of price lists on websites will first lay out the FTC’s own requirement that before a trade regulation can be amended to prohibit or remedy an existing practice, it must be shown that the practice is legally unfair or deceptive. The practice in this case would be the failure of funeral homes to post prices on websites. In addressing the question of whether that failure to post the GPL is unlawful or deceptive, the Commission must show that the failure causes significant harms to consumers. Moreover, the Commission has emphasized in more recent trade regulation rulings that consumer harm is to be determined by empirical survey evidence and not simply by anecdotal accounts from aggrieved consumers.

NFDA’s most recent consumer surveys showed that only 16.8% of respondents visited more than one funeral home when they planned a funeral. Of those 16.8% visiting more than one funeral home, 58% did so to compare prices. However, of the shoppers comparing prices, over 89% of them did so by in-person visits or by telephone. In fact, the survey reports that only 6.2% of those shoppers conducted a web search to find price information. Therefore, if we combine all of those stats, we would see that only 0.6% of funeral consumers are currently using the internet to price shop funeral homes. Moreover, NFDA’s consumer survey shows that over 85% of consumers who did shop for price found that obtaining price information was very easy, easy, or somewhat easy. Only 13.6% indicated any problem in obtaining price information from a funeral home.

This NFDA survey evidence conclusively demonstrates that price shopping is still done by only a distinct minority of consumers. And, of the minority of consumers who do price shop, the nearly 90% of them do so by visiting the funeral home or by calling to obtain price information. In addition, the consumers who do price shop by visiting the funeral home or by telephone overwhelmingly report that obtaining price information is relatively easy. Therefore, NFDA’s survey evidence conclusively demonstrated that there is no harm being suffered by funeral consumers because the majority of funeral homes do not post GPLs on their websites.

4. Variable Basic Services Fee. NFDA will also advocate that the Funeral Rule be modified to allow the adoption of a variable basic services fee. This will allow funeral homes to alter the basic services fee depending upon the complexity of the service. This would also permit funeral homes to offer options like short visitations or simple graveside services with immediate burial and direct cremation services without having to charge the entire basic services fee. The new provision that NFDA recommend be added to the Rule would simply provide that a funeral provider could provide on its GPL more than one price for the basic services of funeral director and staff as long as the funeral provider identifies on the GPL those principal basic services being provided for each of the quoted prices.

5. Third-Party Merchandise Labor Fee. NFDA is proposing that the Funeral Rule be modified to allow a funeral home to collect fees for services actually performed or expenses actually incurred by the funeral home in coordinating and accepting the delivery of merchandise provided by third parties. This section is tailored after a state law that prohibits a cemetery from charging a handling fee for third-party vaults, but does allow it to impose a fee for its actual services and expenses incurred in the delivery and installation of a third party vault. This labor fee would allow funeral homes to collect compensation for services actually provided and have those services paid for by the consumer that is receiving those services.

6. Direct Cremation Options. Currently, the Funeral Rule requires funeral homes to list the price of a direct cremation if the consumer provides his or her own container. In addition, the Funeral Rule requires funeral homes to list the price of direct cremation with each of the alternative containers offered by the funeral home. So, if a funeral home offers six alternative containers, it is currently required under the Funeral Rule to list at least six different direct cremation offerings. The funeral home is then to provide a price range of its lowest and highest priced direct cremation offerings.

When this portion of the Rule was written back in the early ‘80’s, most funeral homes only carried one or two alternative containers. Now, with cremation over 50%, many funeral homes carry multiple alternative containers. In addition, there are numerous containers on the market that are a hybrid between an alternative container and a casket. Therefore, for some funeral homes to strictly comply with this current requirement, they would have to list dozens of direct cremation offerings because they offer multiple alternative containers/cremation caskets to cremation consumers.

Rather than providing this confusing information to consumers, NFDA is proposing that the Rule be revised to require a funeral home to simply offer the price of a direct cremation using its least expensive alternative containers. This is the information that most direct cremation consumers are interested in. If a family wishes to select a better container, they can easily determine the price of the direct cremation with the upgraded container. In addition, the price range currently required by the Rule provides no practical information to a direct cremation customer since none of the customers have any interest in what the highest priced direct cremation option available using the funeral home’s expensive wood caskets. Therefore, NFDA is proposing to eliminate the price range. These same changes would be made with regard to immediate burial listings.

7. Elimination of Price Ranges. In addition to eliminating the price ranges for direct cremation and immediate burial, NFDA is also advocating to the FTC that the Funeral Rule be amended to eliminate the casket and outer burial price ranges on the GPL. Instead of listing the price range, the Rule should simply provide that the funeral home has to list on the GPL its least expensive casket and outer burial container which it sells. This is the information that consumers are interested in.

8. Modifications to Mandatory Disclosures. NFDA will be requesting the FTC to modify the mandatory disclosure regarding embalming. Currently, the mandatory disclosure explains that embalming is not required by state law except in certain special cases. That is not the case, embalming or refrigeration is required by over two-thirds of the states if disposition does not take place within a certain period of time. Therefore, NFDA is proposing to eliminate this confusing language and replace it with the option for funeral homes to place at the end of the mandatory disclosure what the legal requirements for embalming are in their particular state.

NFDA is also proposing that the mandatory disclosure regarding outer burial containers also be modified. That mandatory disclosure currently informs consumers that in most cases state or local law does not require the purchase of an outer burial container. Since we know of no state or local law that requires the purchase of an outer burial container, we would recommend that that language be deleted.

NFDA would also recommend modifying the mandatory disclosure describing what an alternative container consists of. Currently, it refers to an outer covering to an alternative container. The language has never made any sense and should be deleted.

9. Cash Advance Mark-Ups. The Funeral Rule requires funeral providers to identify on the Statement of Funeral Goods and Services Selected, any particular cash advance item that has been marked up. The FTC includes in the definition of a mark-up the receipt of any rebate, commission, or volume discount that the funeral home receives and does not pass on to the consumer.  

The problem with this design is that funeral homes often times do not know if they will qualify for a rebate, commission, or volume discount until well after the funeral is provided. Moreover, the requirement to identify the rebate, commission, or volume discount as a mark-up does not provide any benefit to the consumer since the consumer would not qualify for that rebate, commission, or volume discount if they decided to buy the cash advance item on their own. NFDA will be recommending that the definition of a cash advance item be modified to exclude any reference to discounts or rebates.

Conclusion

NFDA will be reporting on the comments submitted to the FTC at a Town Hall Meeting it has scheduled on April 29, 2020 at the Advocacy Summit in Washington, D.C. All are invited to that meeting to receive an update on the Funeral Rule review and to discuss the issues. Of course, if a member has any questions or suggestions regarding NFDA’s comments that we will be making to the FTC prior to April 14, 2020, please pass them on to Scott Gilligan at Scott@Gilliganlegal.com or by calling 513-871-6332.