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AG Nessel calls on FTC to require funeral service providers to standardize price disclosures

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Posted at 1:03 PM, May 06, 2020
and last updated 2020-05-06 13:03:12-04

LANSING, Mich. — Attorney General, along with 22 other attorneys general, are urging the Federal Trade Commission to enhance consumer protections around funeral home services.

The attorneys general warn that "insufficient pricing transparency in the funeral industry inhibits consumers from accurate comparison shopping and exposes them to being overcharged," sending a letter to the FTC about its 1982 Funeral Industry Practices Rule.

The coalition is calling on the FTC to require funeral service providers to standardize pricing disclosures and safeguard against the misuse of funds consumers pay to funeral homes in advance of a funeral, the attorney general's office said.

“The devastating reality right now for thousands of people here in Michigan and across this nation is bearing the responsibility of ensuring their loved ones are laid to rest properly and respectfully,” said Nessel. “The last thing they should have to worry about as they mourn is whether they’re being treated fairly financially. That’s why my colleagues and I are calling on the FTC to improve transparency of the funeral service industry so family members and friends can grieve without the worry of being ripped off.”

Nessel's office said the current version of the FTC's rule requires funeral providers to give up-front itemized price information along with explanations for those prices although there is no standard format providers must follow to offer easy price comparison for consumers.

Additionally, the FTC's rule also allows consumers to use caskets purchased elsewhere at no added expense, to pay for only the goods and services they want and need and offers some protections from misrepresentations around services such as embalming, but it doesn't require providers to post this information online or offer consumers context around average funeral costs. the attorney general's office said.

The FTC's rule also makes those who are paying for services in advance, such as through a life insurance policy, "vulnerable to overpayment or fraud," the attorney general's office said.

In a letter sent to the FTC, the coalition is urging for the following to be done:

• Publicize itemized price lists online: Prices on goods and services can vary widely between funeral homes in an area. Requiring providers to post their prices online would enable consumers to easily comparison shop and make informed decisions about the costs of the funeral services they are purchasing.
• Disclose the average cost of funeral services on its online price list: When a family opts to pay for funeral services using a life insurance plan, funeral homes or third parties will advance funds in exchange for the assignment of the policy. This arrangement may tempt funeral service providers to engage in price-gouging or outright theft in order to recover more funds from the policy. Requiring providers to inform consumers of the average costs of their services would give consumers a clearer sense of how much money they should expect to allot from a life insurance plan.
• Provide consumers electronic copies of price lists before they select services: The AGs suggest a requirement that upon request providers send consumers an electronic price list following an initial solicitation of the provider’s services. This would provide documentation to consumers about the costs, and would also allow them to consider whether they want to pay for cash-advance items—such as clergy, crematory and burial services, or flowers, themselves, rather than through the home.
• Standardize the format for price lists and other disclosures: A standardized format for price lists, along with standardized disclosure requirements around funeral services such as viewings and visitations, would ensure transparency and clarity for consumers. It would also inhibit funeral homes from charging unlawful or unreasonable fees. At the same time, standard forms would make it easier for funeral homes to assess whether they are complying with regulatory requirements.
• Provide receipts for services paid to third parties and repay any funds in excess of final costs: To ensure that funeral service providers do not pad charges for payments to third parties, the coalition suggests that the FTC requires a funeral home to provide receipts for any such payments within one week of the funeral. Additionally, if the consumer has paid an amount for a third party’s services that exceed the final bill, the attorneys general urge the FTC to require providers to refund consumers within one week of providing the receipts.
• Protect pre-need funeral payments: The letter recommends funeral providers keep any pre-needs payments in separate escrow accounts and that funeral homes provide annual bank statements to consumers showing the amounts in these escrow accounts.

You can read a full copy of the letter by clicking to the right of this article.

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