Industry News

FTC Conducts Undercover Inspections of Funeral Homes

WASHINGTON, D.C. –Investigators working undercover in eight states detected significant violations of Federal Trade Commission consumer protection requirements in 23 of 127 funeral homes they visited during 2012, according to a press release.

The FTC conducts undercover inspections every year to make sure that funeral homes are complying with the agency’s Funeral Rule. The Rule, issued in 1984, gives consumers important rights when making funeral arrangements. Key provisions of the Rule require funeral homes to provide consumers with an itemized price list at the start of an in-person discussion of funeral arrangements, as well as a casket price list before consumers view any caskets. The Rule also prohibits funeral homes from requiring consumers to buy any item, such as a casket, as a condition of obtaining any other funeral good or service. By requiring itemized prices, the Funeral Rule enables consumers to compare prices and buy only the goods and services they want.

Funeral homes with significant violations can enter a training program designed to increase compliance with the Funeral Rule. The three-year program is known as the Funeral Rule Offenders Program (FROP), and is an alternative to an FTC lawsuit that could lead to a federal court order and civil penalties of up to $16,000 per violation. It is run by the National Funeral Directors Association and provides participants with a legal review of the price disclosures required by the Funeral Rule, and on-going training, testing and monitoring for compliance with the Rule. In addition, funeral homes that participate in the program make a voluntary payment to the U.S. Treasury in place of a civil penalty, and pay annual administrative fees to the association.

FTC inspections during 2012 encountered varying levels of compliance:

  • In Everett, Wash., four of the 11 funeral homes inspected had significant violations
  • In Baltimore, Md., one of the 9 funeral homes inspected had significant violations
  • In Kansas City, Kansas/Mo., one of 21 funeral homes inspected had significant violations
  • In Bayonne and Jersey City, N.J. three of 26 funeral homes inspected had significant violations
  • In Montgomery and Opelika, Ala., two of 10 funeral homes inspected had significant violations
  • In the McAllen, Texas area, four of 18 funeral homes inspected had significant violations. In Brownsville and Harlingen, Texas, 8 of 21 funeral homes inspected had significant violations
  • In Denver, Colo., one of 11 funeral homes inspected had significant violations

All but one of the funeral homes with significant violations have entered the NFDA’s FROP program, and the one that has not remains under investigation. The names of homes that have entered FROP are not released under the terms of the FROP program, and the FTC does not identify businesses under investigation.

In addition, the FTC identified 43 funeral homes, within the eight states, with only minor compliance deficiencies. In such cases, the FTC contacts the funeral home and requires it to provide evidence that it has corrected the problems.

Since the FROP program began in 1996, the FTC has inspected nearly 2,700 funeral homes, 427 of which have agreed to enter the compliance program.

Posted July 24


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