FTC Sues Two Funeral Homes for Failing to Provide Price Lists; Undercover Inspections in Eight States Find Violations of FTCs Funeral Rule

At the request of the Federal Trade Commission, the U.S. Department of Justice has charged funeral homes in Chicago and Washington, D.C. with violating an FTC consumer protection rule designed to ensure that people have the information they need to compare prices and buy only the funeral services and goods they want. The FTC’s complaints are based on inspections by FTC staff posing as consumers seeking to make funeral arrangements. The FTC conducts undercover inspections every year to ensure that funeral homes are complying with the Funeral Rule. All funeral homes found with significant violations are offered a chance to enter a three-year training program designed to increase compliance, as an alternative to possible legal action that could otherwise lead to a court order and civil penalties of up to $16,000 per violation.

The FTC seeks civil penalties against the two funeral homes being sued, Carter Funeral Chapels, Ltd. and B.K. Henry Funeral Chapel, Inc., because they allegedly violated the FTC’s Funeral Rule by failing to provide consumers with itemized price lists. Among other things, the Rule requires 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.

The FTC alleges that Harry J. Carter III, doing business as Carter Funeral Chapels, Ltd., of Chicago, provided neither a general price list nor a casket price list during two inspections, as required by the Rule. The complaint against B.K. Henry Funeral Chapel of Washington, D.C., and its owners, Brian and Lisa Henry, alleges that they failed to provide a casket price list during two inspections. The cases are part of the FTC’s longstanding efforts to make sure consumers are treated fairly when going through the difficult process of arranging a funeral.

In 2010, undercover inspections of funeral homes in eight states found significant violations in 35 of the 126 homes inspected:

• In Santa Clara County, California, significant violations were found at one of 11 funeral homes inspected;
• In Wilmington and Newark, Delaware, seven of 17 funeral homes inspected had significant violations;
• In Louisville, Kentucky, three of 32 funeral homes inspected had significant violations;
• In the New York Tri-State Region (Connecticut, New Jersey and New York), six of 25 homes inspected had significant violations;
• In Greensboro and Charlotte, North Carolina, seven of 16 funeral homes inspected had significant violations;
• In Corpus Christi and Lubbock, Texas, 11 of 25 funeral homes inspected had significant violations.

These funeral homes will participate in the training program known as the Funeral Rule Offenders Program (FROP). The FROP program 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 ongoing training, testing and monitoring of their compliance. Funeral homes that participate in the FROP program must make a voluntary payment to the U.S. Treasury in place of a civil penalty, and pay annual administrative fees to the Association.

Since the FROP program began in 1996, the FTC has inspected more than 2,400 funeral homes and found that 396 were significantly out of compliance with the Rule. In conducting its annual enforcement sweeps, the agency has received assistance from several state attorneys general. This year, the FTC wishes to thank Kentucky Attorney General Jack Conway and his staff for their invaluable assistance.

In addition to the significant violations turned up in this year’s inspections, the FTC identified several funeral homes with minor compliance problems. In this situation, the FTC requires funeral homes to prove that they have corrected the problems.

The FTC educates consumers in English and Spanish about their rights under the Funeral Rule, and provides guidance to businesses in how to comply. During 2010, more than 140,000 consumers and businesses ordered copies of these publications – Paying Final Respects: Your Rights When Buying Funeral Goods & Services, Funerals: A Consumer Guide, and Complying with the Funeral Rule – or viewed them at www.ftc.gov.

The Department of Justice filed the two complaints on behalf of the Commission in the U.S. District Court for the Northern District of Illinois and the District of Columbia, respectively. The defendants in these cases are not participating in the FROP program. The Commission votes to refer the complaints to the DOJ for filing was 5-0.

NOTE: The Commission refers a complaint to the DOJ for filing when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaints are not a finding or ruling that the defendant has actually violated the law. The cases will be decided by the court.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook and follow us on Twitter.