FTC Announces Results of Compliance Testing of Over 300 Funeral Homes

During the second year of the Funeral Rule Offenders Program (FROP), the FTC and state Attorneys General have test-shopped over 300 funeral homes nationwide and found that over 85 percent of the homes are substantially complying with the FTC's Funeral Rule. In 1997, the FTC and four state Attorneys General offices conducted sweeps in nine states and well over a dozen cities -- with the largest statewide sweep of funeral homes in Iowa -- to check to see if the funeral homes were providing consumers with a copy of an itemized general price list and showing consumers itemized casket and outer burial container price lists -- both key requirements of the Funeral Rule. Although the 1996 compliance rate neared 90 percent, the compliance rate has consistently remained at high levels since the institution of FROP. The 1997 sweeps also included several cities and areas in which all of the funeral homes test-shopped were found to be in substantial compliance with the Funeral Rule.

The sweeps, based on test shopping of funeral homes in New Jersey, California, Washington, Arkansas, Texas, Colorado, Iowa, Pennsylvania and Georgia, were conducted in connection with the Funeral Rule Offenders Program -- 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. In 1997, 44 funeral homes were offered participation in FROP as an alternative to litigation. Some of these homes are still in the process of evaluating the FROP alternative. To date, at least 16 of these homes have accepted the offer and have entered or are completing their entry into the program. Upon selecting the FROP alternative, the funeral homes will make voluntary payments to the U.S. Treasury or to appropriate state funds, and enroll in a Funeral Rule compliance training program administered by the NFDA.

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 FROP. Since the inception of FROP, a total of 574 homes have been shopped and FROP has been offered to 74 violators 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 would likely be sought if the Commission authorized filing a lawsuit for civil penalties. In addition, the funeral homes participate in the NFDA compliance program, which 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.

Prior to the institution of the FROP program, Funeral Rule compliance remained at relatively low levels, with one survey showing only 36 percent of the homes tested in compliance. In the 1994-1995 sweeps, the Commission found that between 60 and 80 percent of funeral homes complied with the Funeral Rule. The 1996 sweeps, conducted after the institution of FROP, demonstrated increased compliance with the rule, and the 1997 sweeps show a continuation of these high compliance rates.

The 1997 Funeral Rule sweeps began in January of 1997, when the FTC's New York Regional Office, with the assistance of volunteers from the American Association of Retired Persons (AARP), test-shopped 36 homes in New Jersey. Five homes were considered to be in violation of the Funeral Rule and all five of the homes voluntarily joined FROP.

In June of 1997, the FTC's Dallas Regional Office and the Arkansas Attorney General's office test-shopped 25 homes in Little Rock, Arkansas. Of the 25 homes shopped, five homes were considered to be in violation of the Funeral Rule. All five of the homes voluntarily joined FROP.

In July of 1997, the FTC's San Francisco Regional Office, with the assistance of volunteers from AARP, test-shopped 11 homes in the South Bay area of California, including San Jose. All 11 homes shopped substantially complied with the Funeral Rule. Staff of the FTC's San Francisco Regional Office also test-shopped four homes in Spokane, Washington. Again, all of the homes in Spokane complied with the FTC's Funeral Rule.

In July and September of 1997, the FTC's Denver Regional Office shopped a total of 23 funeral homes in Pueblo and Colorado Springs, Colorado. Five of the funeral homes visited failed to comply with the Funeral Rule. All five homes have agreed to enter into FROP.

In August of 1997, the FTC's Cleveland Regional Office and the Pennsylvania Attorney General's office conducted a large-scale Funeral Rule sweep in the city of Philadelphia and the surrounding counties. The staff of the FTC and staff from the Pennsylvania Attorney General's offices in Philadelphia, Bucks County and Delaware County, as well as volunteers from AARP, visited 67 homes in Philadelphia and the surrounding counties. Of the 67 homes shopped, 19 were found to be in violation. These 19 homes have the option of entering the FROP program or proceeding with a law enforcement action brought by the FTC or the state of Pennsylvania. Most of these homes are expected to enter FROP.

Also in August of 1997, the FTC's Atlanta Regional Office test-shopped 19 homes in the Atlanta area. Notably, all 19 homes were found to be in substantial compliance with the Funeral Rule.

The FTC's Los Angeles Regional office conducted a sweep of 13 homes in the Los Angeles area in August of 1997 as well. Three of the 13 homes test-shopped were considered to be in violation of the Funeral Rule and have been offered the FROP program. At least two of the funeral homes are expected to join FROP.

The FTC's Seattle Regional Office and the Washington Attorney General's office also conducted a Funeral Rule Sweep in August of 1997. Staff of the FTC and the Attorney General's office test-shopped 17 funeral homes in the Seattle, Washington area. All of the 17 homes visited were found to be in substantial compliance with the Funeral Rule.

In September of 1997, the FTC's Dallas Regional Office test-shopped 24 funeral homes in the Ft. Worth area. Staff found just one home that was in violation of the Funeral Rule and that home agreed to enter into FROP.

Finally, in the largest statewide Funeral Rule sweep, the FTC's Chicago Regional Office and the Iowa Attorney General's office, with the assistance of volunteers from the AARP, visited 62 funeral homes across the state of Iowa to enforce compliance with the Funeral Rule. Staff determined that a total of six homes violated the Funeral Rule. These homes have been offered FROP.

The test shopping conducted by the FTC staff and state Attorneys General consists of sending individuals to funeral homes to inquire about funeral arrangements. The Funeral Rule requires funeral providers to provide consumers with certain price lists. If a funeral provider failed to produce the price lists 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 1-866-653-4261. 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