FTC Announces Results of the First Year of the Funeral Rule Offenders Program

Compliance with the Funeral Rule has dramatically improved among funeral homes within the past year, the Federal Trade Commission staff announced today. Of the 239 funeral homes visited in 1996 as part of sweeps conducted by the FTC staff and five state Attorneys General to check for compliance with the Funeral Rule, only 26 were found to be in violation. This represents a substantial increase in compliance with the rule.

The sweeps, based on test shopping of funeral homes in Massachusetts, Oklahoma, Ohio, Colorado and Illinois, were conducted in connection with the institution of the newly-created Funeral Rule Offenders Program (FROP) -- a program developed jointly by the FTC and the National Funeral Directors Association (NFDA) to give funeral homes found to be in violation of the rule an opportunity to make voluntary payments and receive training rather than face possible enforcement action by the FTC and the state Attorneys General. The 26 funeral homes were offered participation in FROP as an alternative to litigation. Twenty-three accepted the offer and entered the program. As a result of these sweeps and entry into FROP, the enrolled funeral homes will make over $114,000 in voluntary payments to the U.S. Treasury or to appropriate state funds. In addition, the participating homes will receive training from NFDA in complying with the FTC's Funeral Rule.

The FTC administers the Funeral Rule, which requires funeral providers to provide consumers with information regarding funeral products and services and ensures consumers pay for only the products and services they want and need. Since the Funeral Rule’s inception in 1984, the FTC has engaged in traditional enforcement actions through investigation and litigation. In 1996, the Commission embarked on a new method of enforcement with the institution of the Funeral Rule Offenders Program. FROP was approved by the Commission in January 1996 as a joint effort by the NFDA and the FTC to increase compliance with the rule. Since then, Commission staff has conducted several test shopping sweeps and has offered FROP as an alternative to litigation. Under FROP, funeral homes make a voluntary payment to the U.S. Treasury or appropriate state fund for an amount less than what likely would be sought if the Commission authorized filing a lawsuit for civil penalties. In addition, the funeral homes participate in a compliance program run by the NFDA. The NFDA program includes a review of the price lists, on-site training of the staff, and follow-up testing and certification on compliance with the Funeral Rule.

Until recently, rule compliance remained at relatively low levels with one survey showing only 36 percent of the homes tested were in compliance. In the 1994-1995 sweeps, the Commission found that between 60 and 80 percent of funeral homes complied with the rule. The 1996 sweeps conducted after the institution of FROP, demonstrate increased compliance with the Funeral Rule.

In March 1996, the FTC’s Cleveland Regional Office and the Ohio Attorney General’s Office test shopped 32 homes in the Columbus, Ohio area. Staff found that five homes violated the Funeral Rule in test shopping visits. All five of the funeral homes voluntarily joined FROP.

In May 1996, the FTC’s Denver Regional Office and the Colorado Attorney General’s Office test shopped 26 homes in the Denver metropolitan area. Only one home failed to provide the required price list on two occasions, and it joined FROP.

In June 1996, the FTC’s Boston Regional Office and the Massachusetts Attorney General’s Office conducted test shopping at 40 homes in six Massachusetts cities. Ten of the homes shopped were considered in violation of the Funeral Rule. All ten funeral homes enrolled in FROP.

The highest degree of compliance was seen in Oklahoma, where the FTC’s Dallas Regional Office and the Consumer Protection Unit of the Oklahoma Attorney General’s Office test shopped 26 homes in the Oklahoma City area and found no violators. The test shopping was conducted in June 1996.

In September 1996, the FTC’s Chicago Regional Office, the Illinois Attorney General’s Office and volunteers from the American Association of Retired Persons (AARP) test shopped 119 homes in the Chicago metropolitan area, including Cook and Dupage Counties. Staff found ten homes violated the Funeral Rule in dealing with test shoppers. Six of these funeral homes have already opted to enroll in FROP as an alternative to litigation.

The test shopping conducted by the FTC staff and state Attorneys General consists of sending individuals to funeral homes to inquire about funeral arrangements. At the beginning of any discussion of funeral arrangements, the Funeral Rule requires funeral providers to provide consumers with an itemized price list. If a funeral provider failed to produce a price list to the initial test shopper, a second shopper visited the same funeral home on a different day to inquire about funeral arrangements. If a funeral home failed to provide the required information on more than one occasion, staff considered that home to be in violation of the rule. In traditional proceedings, further investigation and possible litigation would ensue at that point. Under the current program, violators are offered FROP as an alternative.

A free FTC brochure for consumers, titled "Funerals: A Consumer Guide," provides additional information about consumers’ rights and legal requirements when planning funerals. Copies are available from the FTC’s Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 202-326-2502. To find out the latest news as it is announced, call the FTC’s NewsPhone recording at 202-326-2710. FTC news releases, consumer brochures, and other materials also are available on the Internet at the FTC’s World Wide Web Site at: http://www.ftc.gov

Virginia Davidson,
Cleveland Regional Office
668 Euclid Avenue, Suite 520-A
Cleveland, OH 44114
216-522-4210

Pamela J. Wood
Boston Regional Office,
101 Merrimac Street, Suite 810
Boston, MA 20114-4719
617-424-5960