As you are aware, the Federal Trade Commission (FTC) is undertaking a review of the Funeral Rule. NFDA has been your strongest advocate during this review process. The association, on your behalf, has submitted oral and written comments in response to the FTC’s requests and proposals. You can learn more about our efforts here.
NFDA has a long history of advocating for you and your interests with respect to the Funeral Rule. One aspect of the Rule that you may not know much about but, with which NFDA has been intimately involved, is the Funeral Rule Offenders Program or FROP.
History
When the Funeral Rule was first developed in the mid-1980s, if the FTC decided to pursue sanctions against a funeral home for alleged violations, its only option was litigation, which was extremely expensive, time consuming, and inefficient for the FTC, Department of Justice, and the funeral home in question.
In order to assist the FTC in increasing compliance with the Funeral Rule, while avoiding the protracted and expensive process of engaging the Department of Justice and filing a lawsuit in federal court, NFDA proposed a nonlitigation alternative for Rule violations in September 1995.
This proposal, which was approved in modified form and implemented by the FTC in 1996, is what we know today as FROP. This program, which is administered by NFDA on the FTC’s behalf, is open to all funeral homes in the United States, regardless of membership status.
The decision of which funeral homes are offered the opportunity to participate in FROP rests entirely with the FTC. NFDA is not made aware of the names of the parties until after they have agreed with the FTC to participate.
Per the FTC’s requirements of the program, neither NFDA nor the FTC will disclose the names of funeral homes that participate in FROP; though the FTC may be required to disclose information about participants via a Freedom of Information Act Request.
FROP Requirements
Funeral homes that choose to enroll in FROP must agree to make voluntary payments to the U.S. Treasury and/or state attorney general’s office equal to 0.8% of average annual gross sales.
For example, if a funeral home’s average annual gross sales for the last three years is $500,000, then the voluntary payment would be $4,000 ($500,000 x .008 = $4,000).
The firm also pays an initial fee to NFDA when they enter the program, which is the lesser of $1,200 or the amount of money paid to the U.S. Treasury or State Attorney General's office and an annual fee of $350 for the duration of its participation in the program.
Funeral homes that enroll in FROP also agree to the following terms:
1. Compliance with Program. Upon enrollment in FROP, NFDA sends the funeral home information on specific program requirements and deadlines that must be met for maintaining compliance with FROP requirements. On a quarterly basis, NFDA reports to the FTC all funeral homes participating in the Program and any that missed the deadlines established for compliance FROP requirements. NFDA is required to report the non-compliance to the FTC within 30 days of non-compliance or missed deadline.
2. Review of Price Lists. Upon admission into FROP, the funeral home must submit copies of its current General Price List, Casket Price List, Outer Burial Container Price List, and Statement of Funeral Goods and Services Selected for review by NFDA General Counsel, make all necessary corrections to the price lists as recommended by NFDA General Counsel and return the corrected price lists to NFDA. If the funeral home elects to make material revisions to its price lists (other than changes in the amount of prices) at any time throughout the duration of their participation in FROP, it must submit those revisions to NFDA for prior review and approval.
3. Price Information Distribution Policy. The funeral home must implement a written policy outlining the Funeral Rule requirements on distributing price lists and providing price information to consumers over the telephone approved by NFDA. A copy of the policy must be distributed by the funeral home to each of its employees who are engaged in selling of or offering to sell funeral goods and funeral services. Each employee receiving the policy must sign a statement warranting that he or she has received and read the policy. The funeral home must maintain all such signed statements of employees in a permanent file.
4. Training Programs. NFDA provides virtual training programs for all employees of the funeral home who are engaged in the selling of or offering to sell funeral goods and services. In addition, the funeral home is required to attend at least one of NFDA’s interactive Funeral Rule webinar training sessions presented with FTC Staff during its participation in the program. The training must cover pertinent requirements of the Funeral Rule with special emphasis placed on how, when, where, and to whom price lists are to be distributed by the funeral home. Following the training program, NFDA provides test materials for employees, which must be returned to and graded by an NFDA trainer. The funeral home must take any additional actions requested by the trainer to ensure that all employees engaged in the selling of or offering to sell funeral goods and funeral services have completed the test to the trainer’s satisfaction.
5. Terms of Program Participation. The funeral home must participate in FROP for at least three years AND successfully complete the Final Funeral Rule Quiz. On the third anniversary of the funeral home’s enrollment in FROP, NFDA will send the Final Funeral Rule Quiz to the firm and if it receives at least the 80% pass rate, NFDA shall notify the FTC that the funeral home’s participation in FROP has been successfully completed. If the funeral home fails to obtain a passing grade, it shall be notified by NFDA when it is eligible to be re-tested.
6. Annual Certification. Each year the funeral home must certify to NFDA that it is in compliance with the requirements of FROP.
If the Funeral Home fails to comply in any manner with the terms and conditions of FROP, it will be expelled from the program. Additionally, the FTC, in its discretion, may reinstate a Funeral Rule enforcement action against any FROP participant that is expelled.
If the FTC concludes that NFDA is not carrying out its administrative obligations, it may provide written notice to NFDA setting forth the actions NFDA must undertake to remedy its performance. If the remedial actions are not instituted to the reasonable satisfaction of the FTC, the agency may elect to terminate FROP.
Benefits to Funeral Homes
The vast majority of funeral homes that face alleged violations of the Funeral Rule do so because, in the opinion of an FTC secret shopper, a member of the staff failed to present a GPL or other price list in a timely manner.
The current requirement is that that price information be produced, “when you begin to discuss any of the following: the type of funeral or disposition that you can arrange; the specific goods and services that you offer; or the prices of your goods and services.” This requirement is vague, overbroad, and inconsistently interpreted by secret shoppers.
Most funeral homes that have participated in FROP did not intentionally violate the Funeral Rule. In nearly every case, the alleged violations may be a result of either the undercover shopper or the funeral director simply misunderstanding when a "discussion" actually triggers the requirement to hand out the price lists.
Of the more than 18,800 funeral homes in the United States, almost 90% are small and family-owned businesses, not corporate consolidators. The burden of facing a lawsuit in federal court and, a now $50,120 fine per violation plus legal expenses, would be fatal to many of these small, family businesses.
Additionally, FROP offers funeral homes a way to re-educate all staff about the requirements of the Funeral Rule and to get in compliance.
NFDA is proud of its many efforts to support your compliance with the Funeral Rule and, that that for 28 years, we have helped funeral homes understand and fulfill their obligations to consumers through FROP.