ESTATE AND FINANCIAL PLANNING
Scamming the Elderly: A Look into Funeral Fraud

By Tracy E. Smith

The funeral industry is federally regulated by the Federal Trade Commission (FTC). The federal funeral industry regulations, commonly known as “The Funeral Rules,” regulate certain pricing and sales practices by providers of funeral services. When consumers call a funeral home to inquire about the goods and services offered, the staff must disclose that prices are available over the telephone and then provide them as requested. When consumers inquire in person, the funeral home must provide a general price list describing the cost of each good and service available. The consumer must be informed that embalming is required by law only in certain circumstances and that direct cremation or immediate burial are options that do not require embalming. The funeral home staff may not imply that embalming or sealing the casket will indefinitely preserve the remains. If the funeral home adds a service fee to the price of cash advance items or receives a refund, discount, or rebate from the supplier, that information must be disclosed to the consumer. The consumer has a right to purchase only the goods and services desired. A written statement of the goods and services selected that includes an explanation of any items required by law must be provided.

Many things can go wrong with prepaid funeral arrangements.

The sealed casket scam. 16 CFR § 453.3(3) states, “In selling or offering to sell funeral goods or funeral services to the public, it is a deceptive act or practice for a funeral provider to: (1) Represent that funeral goods or funeral services will delay the natural decomposition of human remains for a long-term or indefinite time.”

An undercover investigation by the Connecticut Attorney General revealed that “19 percent of the funeral homes implied that the remains would be protected indefinitely” by a sealed casket. Although some funeral homes tactfully emphasized the fact that the sealed casket would not actually preserve the body for longer than a standard casket, most did not.

The mandatory embalming scam. Embalming is required by some states in certain instances. It is a practical necessity when the remains are to be held longer than 48 hours or an open-casket ceremony is planned. Yet many times funeral homes inform consumers they must have the body embalmed because the law requires it. This clearly goes against the FTC regulation regarding embalming, which states: (1) the customer has a right to choose a funeral without embalming, and (2) the provider may not embalm for a fee unless it is required by law or expressly approved by the customer.

Surprisingly, during the Connecticut Attorney General’s investigation into funeral home compliance with FTC regulations, it was discovered that “all funeral homes indicated in writing that embalming is not required by law, except in special circumstances.” The caveat to this staggering statistic is that 31 percent of the funeral homes failed to mention less-pricey options such as direct cremation or immediate burial and, of those homes that did mention less-expensive alternatives to embalming, 6 percent actively discouraged the consumer from selecting those options.

The pay-in-advance scam. In 1989, 85-year-old Gladys Bohn decided to arrange and pay for her funeral in advance. She picked out an elegant casket and a dress and shoes to be buried in and gave them to the funeral home. When she died 11 years later, her family, well aware of her careful preparations, was in for quite a surprise. After witnessing the funeral, “little more than a simple graveside ceremony,” they feared something was amiss. There were “no flowers, no elegant casket and, they would later learn, no pretty dress.” On seeing the basic arrangements, Bohn’s family had the ceremony stopped and came on a shocking revelation: “Bohn’s body, clad in a hospital gown, had been put in a body bag and placed in a Styrofoam box for burial.” Although Bohn’s family went on to file suit against the funeral home, alleging breach of contract and fraud, no amount of damages could ever compensate them for the emotional scars left behind from seeing their loved one’s wishes and body treated with such disrespect.

Prepaid funerals, like the one Bohn tried to arrange, are becoming increasingly common. When a consumer engages in a prepaid contract, he or she preselects the goods and services desired and sets money aside equal to the total of those goods and services at their current rates. In exchange, “the funeral home promises to use those funds to provide the selected goods and services upon the consumer’s death.”

Although many focus on the advantages of prepaying for funeral needs, such as sparing the family the difficulty and expense of making arrangements and allowing individuals entering nursing homes “to reduce their assets while ensuring they receive the funeral arrangements they desire,” there are quite a few disadvantages as well.

Because the FTC’s “Funeral Rule” does not specifically address prepaid funeral arrangements, it is up to the states to regulate this area as they see fit. Although nearly all states regulate prepaid funeral contracts either by statute or administrative regulation, the amount of protection afforded to the consumer varies greatly from state to state.

Many things can go wrong with prepaid funeral arrangements. The funeral home, because of formal or informal ties with particular financial institutions, may push consumers into setting the funds aside at those institutions. The funeral home may also choose to provide only some of the selected goods and services to compensate for the effects of inflation on prices. At worst, the funeral home may embezzle the customer’s funds, leaving the family to pay a second time for funeral arrangements.

In its investigation, the Connecticut Attorney General found that funeral homes “do not readily discuss the details of prepaid funeral arrangements” and tend to “offer limited options to consumers regarding the finances related to their preselected goods and services.” Although only half the funeral homes surveyed even mentioned that prepaid contracts were available, the Connecticut Attorney General’s investigation discovered that, even when the consumer directly inquired about them, he or she “may still learn little about this option.”

Some consumer protection tips. Before setting foot in a funeral home, do some preliminary research online to gauge price points of basic goods and services. When actually at the funeral home, remember that all funeral homes are required by federal law to provide a price list on any customer inquiry regarding funeral arrangements. Bring someone with you “who is not as emotionally invested” to separate the financial from the emotional. Do not spend extra money on a “sealed” or “protective” casket; such caskets do not protect the body any better than a normal casket. When deciding which products and services to purchase, think about what is truly needed and purchase each individually. Generally, package deals are padded with many services that would not have been purchased individually. Try to avoid paying in advance. The consumer should elect a pay-in-advance plan only if he or she is completely satisfied with the protections afforded.

is a 2006 graduate of the University of Kansas School of Law.

Copyright 2007

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This article is an abridged and edited version of one that originally appeared on page 60 of Probate & Property, March/April 2007 (21:2). For more information or to obtain a copy of the periodical in which the full article appears, please call the ABA Service Center at 800/285-2221.

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