Ten years after our efforts on behalf of Mr. H., I discovered that Commissioner Bailey and I had been victims of a similar stratagem: evidently the alleged “appropriate admonishment” of some imaginary staff member was a convenient fiction adopted to shut us up.
In February 1995 I sought out Gerald Wright, the attorney responsible for enforcing the Funeral Rule in the San Francisco regional office of the FTC. What would happen today, I asked him, if an individual wrote to his office with a complaint like that of my long-ago Palo Alto correspondent? Mr. Wright produced a form letter, dated February 3, 1995, which read:
Unfortunately, we have only limited resources to take formal action against possible violators. Our actions are taken only on behalf of the general public and are designed to correct those violations which affect a significant number of consumers.
Plus ça change …
Further on enforcement, Mr. Wright told me that from 1984 to February 1995 there had been a total of thirty-eight cases “formally filed” against funeral directors; of those, only two had gone to trial. Fines imposed for violations range from $10,000 to $100,000; the average is about $30,000.
He estimated that it takes eight months to a year to finish a case. An average of a little over three cases a year for eleven years seemed very slim pickings. I asked Mr. Wright how the assignments for any given FTC project are handled—how much staff time would be allotted to enforcing the rule? Reverting to the bureaucratic idiom of his calling, he explained that the FTC employs some six hundred attorneys nationwide and three hundred economists; “about half of them will cover consumer protection measures. When you get down to enforcing the Funeral Rule, maybe two work years out of six hundred will be delegated to covering that particular rule,” but he was unable to estimate how much time he personally devoted to enforcing the Funeral Rule.
In 1990 the FTC, after a review by its Bureau of Economics Analysis, concluded—to no one’s surprise—that “the Rule has not contributed to a general reduction in the price of funerals.” By a subsequent series of capitulations to industry lobbyists, the agency has abandoned any pretense of consumer protection and has cleared the way for an era of unprecedented profitability.
In June 1994 the commission adopted an amendment to the rule to permit sellers to add their overhead to a nondeclinable fee, to cover a laundry list of items such as insurance, taxes, staff salaries, maintenance of common areas including the parking lot, and, not least, an unrestricted allowance for profit. The FTC thereby, in a single stroke, obliterated the import of itemization and the consumer’s right to choose established only a decade earlier. Package pricing, under the guise of the now FTC-endorsed nonnegotiable fee, has come back with a vengeance, and with it, for the funeral director, an exhilarating upward spiral of prices and profits.
The added fee is another device to enable the funeral seller to further confuse his already befuddled customer. In the bad old days—before there was any FTC rule and when package pricing was the norm—the consumer at least knew that the price of the casket was the cost of the entire funeral. Now, however, the standard general price list looks like this:
Pumphrey Funeral Home General Price List
Basic services of funeral director and staff $1,525
Transfer of remains to the funeral home $ 255
Embalming, or $ 370
No embalming, refrigeration $ 375
Dressing, cosmetics, casketing $ 215
Use of facilities for Viewing, per day $ 290
Use of facilities for Funeral Ceremony $ 315
Hearse $ 235
Flower Car $ 85
Sedan $ 115
Limo $ 120
Total for services and use of premises $3,375
To this must be added the cost of the casket—quoted by this mortuary in the $500 to $25,000 range—and the cost of the outside burial container or vault (required now by almost all cemeteries)—quoted range, $525 to $6,500.
The price list of the Pumphrey Funeral Home, Washington, D.C., is taken as an example because its prices fall within the middle range nationwide.
If the price of the cheapest steel casket—$2,000—is added, the funeral director’s bill comes to $5,375—exclusive of cemetery and outer container costs.
In the Houston, Texas, area, for example, the identical goods and services (cemetery and vault charges not included) can be had for as little as $1,585 or as much as $8,420.
The FTC makes no effort to ascertain whether funeral establishments are complying with the rule, Mr. Wright told me. However, in scattered parts of the country there are stalwart souls, mostly unpaid volunteers, who for some reason—often a firsthand run-in with an undertaker—have become obsessed with righting the wrongs inflicted by the industry. Such a one is Lisa Carlson, longtime consumer advocate on funeral issues and active in the nonprofit Vermont Memorial Society.
Vermont, with about five thousand deaths a year, is blessed or afflicted—depending on one’s point of view—with seventy funeral homes to handle these, meaning that each “home” averages just under 1.4 customers a week. In 1994 Lisa Carlson conducted a price survey covering 87 percent of the state’s funeral establishments: she found that none were in full compliance with the FTC’s Funeral Rule. After the FTC announced its new watered-down rules, the price situation deteriorated fast. In 1995 Ms. Carlson wrote a furious letter to the FTC saying that “the changes have left consumers at serious risk” and had “effectively gutted consumer protection,” since the new Funeral Rule now permits “bundling” of charges that the original rule had banned. Statewide, the already bloated nondeclinable fee had increased 28 percent in the year after the rule was amended. She cited the case of a Swanton woman whose mother’s funeral in 1993 cost $2,900. When her father died in June 1995, the identical funeral was billed at $7,100.
Five months after Gerald Wright had assured me that the FTC makes no systematic effort to discover whether funeral establishments are complying with the rule, suddenly—surprise, surprise—on July 6, 1995, the FTC came out with guns ablazing in the form of a press release headlined NATIONWIDE CRACKDOWN ON FUNERAL HOMES THAT FAIL TO PROVIDE REQUIRED CUSTOMER INFORMATION LAUNCHED BY FTC WITH STATE ATTORNEYS GENERAL. Jodie Bernstein, director of the FTC’s Bureau of Consumer Protection, is quoted as saying that “the Commission has joined forces with state Attorneys General to switch from targeting violators based on complaints to a proactive approach designed to send a no-tolerance message and follow it up with quick and sure enforcement action.”
The proactive approach, it develops, was to send “test shoppers into funeral homes in a given area to determine whether the homes provide consumers with copies of itemized price lists.” This, of course, is precisely what Lisa Carlson and memorial society colleagues around the country had been doing for years while the FTC was soundly sleeping (in fact, of the thirty-eight actions against violators resulting in fines since promulgation of the Funeral Rule fourteen years ago, over half had been turned in by members of the consumer funeral watchdog group).
So far so good, although when one reads further it turns out that the crackdown wasn’t all that nationwide, since it involved only seven of Tennessee’s 436 funeral homes, all in Nashville; nor was it all that much of a crackdown, as only three were fined, ranging from a measly $4,000 to $16,000—sums that could handily be recouped by the funeral homes from the profits of a funeral or two.
For the next six months the FTC, perhaps exhausted from its efforts in Tennessee, lay low and said nothing. On January 16, 1996, there came another press release stating that five of Florida’s 794 funeral homes—all in Tampa—were the latest to be identified in the FTC’s response to low compliance: a nationwide “crackdown.” Four of these received fines ranging from $4,000 to $35,000; one escaped any penalty by pleading poverty. The next episode in the great nationwide crackdown came shortly thereafter, when the FTC announced a “sweep” conducted in the Delaware area. This netted five violators, four of whom were fined from $3,200 to $7,700
, and the fifth again let off because of the defendant’s “financial situation.”
This, then, was the sum total of the “nationwide crackdown,” which in the course of a full year had managed to miss forty-seven states altogether, had discovered no more than seventeen of the nation’s funeral homes in violation (although the FTC had reported in 1990 that less than 30 percent of all mortuaries nationwide were in compliance), and had recovered a total of $104,000 in fines.
The question remains: Why, after years of inactivity, was the “nationwide crackdown” suddenly announced in 1995? Whose idea was it?
According to Tom Cohn, one of the FTC lawyers in charge of the “sweeps,” these questions cannot be answered: “That is not public information,” he said. One could, of course, speculate that somebody—or bodies—in the FTC had begun to feel a wee bit nervous about renewed public scrutiny: Lisa Carlson and her assiduous surveys; parallel activity in many parts of the country by other consumer advocates; a documentary about funerals on “20/20”; my interview with Gerald Wright, plus numerous calls to the FTC by Karen Leonard, my persistent research assistant.…
Was the FTC’s tepid burst of activity intended to assure Congress and the consumer watchdogs generally that the commission was in the arena protecting the public interest? Or was it nothing more than a maneuver to distract attention from the agency’s shameful failure to take even a single step to curb the fraud and criminal misconduct that have become endemic in an industry engaged in fixing prices at ever higher levels and profiteering at the expense of bereaved families, and that has misappropriated hundreds of millions of dollars in funds entrusted for prepayment of funerals and cemetery property?
Here, for once, was government action which produced no outcry from the industry. The reason became clear when the Funeral Monitor, a privately circulated offshoot of Mortuary Management, in its January 29, 1996, issue reported:
NATIONAL FUNERAL DIRECTORS ASSN. AND FTC STRIKE UP A DEAL:
Funeral professionals will be pleased to know that the only national organization with the size and clout to make a deal with the federal government has negotiated a bold and innovative agreement regarding enforcement of the Funeral Rule. The old confrontational enforcement approach wasn’t a notable success, so somebody said let’s try something new.
Apparently that somebody was none other than the NFDA itself, for an FTC release of January 19, 1996, announcing the plan, says:
The programs were developed by the National Funeral Directors Association and will be implemented jointly by the NFDA and the FTC.… [T]hrough these programs, the funeral industry will be working together with the FTC in a committed way to resolve low compliance with the Rule’s price disclosure requirements.
Under the new plan, no longer will funeral homes be subject to a fine for violating the rule. The FTC release states that “funeral homes that failed to give test shoppers the general price lists may have the option to enter the Funeral Rule Offenders Program. Under the program, the funeral home will make a voluntary payment to the U.S. Treasury that is lower than the civil penalty the FTC can obtain for Rule violations.… Funeral home participants will benefit from reduced legal fees, reduced and tax-deductible payments to the Treasury, and free training.”
So much for the FTC’s official concession. The Funeral Monitor’s account is a far better read, and it includes some significant items omitted from the FTC’s announcement for public consumption. Here we learn that
specifics of the FTC offenders program include: The FTC will no longer publicize the names of funeral homes accused of violating the rule. Funeral homes which violate the rule will be able to avoid a complaint filed in federal court, as well as an injunction against the funeral home and owner. And to top it off, violators will receive an emblem telling consumers that the establishment is a program participant and has voluntarily agreed to comply with the provisions of the Funeral Rule.
No wonder that NFDA executive director Robert Harden exultantly told the Monitor, “These programs create a win-win situation!”
But will the FTC be able to assure the anonymity of its favored offenders—known now only as “FROPees”—under its Funeral Rule Offenders Program? Not if the ever-troublesome band of “Memorialites”—as one industry writer has dubbed them—has its way. Exercising rights under the Freedom of Information Act to obtain the names of FROPees, the Funeral and Memorial Societies of America (FAMSA) is posting the names of offending funeral homes on its Web site: www.funerals.org/famsa/frop.htm.
But that is a small gesture compared with the current goal of FAMSA—the umbrella organization for the 125 nonprofit funeral and memorial societies in the U.S.—which is nothing less than to recast the FTC rule altogether to make it truly, in the FTC’s own words, “proactive” on behalf of the long-neglected consumer. High on the list of changes being sought are elimination of the nondeclinable fee and bringing cemeteries under coverage of the rule.
16
A Global Village of the Dead
Of all the changes in the funeral scene over the last decades, easily the most significant is the emergence of monopolies in what the trade is pleased to call the “death care” industry. Leaders in the drive to upgrade and up-price funerals, the principal beneficiaries of the Federal Trade Commission’s ignoble retreat, are the multinational corporations that have put their imprint on every facet of the business. Of the three publicly traded major players—Service Corporation International (SCI), the Loewen Group, and Stewart Enterprises—SCI, incorporated in 1984, is the undisputed giant.
To trace its brilliant trajectory, a good starting point is its 1995 annual report to stockholders, which vibrates with pride of accomplishments: “SCI experienced the most dynamic year in its history in 1994, reaching new milestones in revenue and net incomes while establishing a solid presence in the European funeral industry.” Revenues exceeded the $1 billion mark for the first time. Its crowning achievement was the takeover of some 15 percent of British funeral establishments added to its existing 9 percent in the U.S. and 25 percent in Australia.
Ever on the prowl, by mid-1995 SCI had devoured yet another large U.S. holding, Gibraltar Mausoleum Corporation, with its 23 funeral homes and 54 cemeteries, and had obtained a foothold in Europe with the acquisition of France’s largest funeral chain, Lyonnaise des Eaux, comprising 950 funeral homes in France and others in Switzerland, Italy, Belgium, the Czech Republic, and Singapore.
SCI’s annual revenue for 1995 exceeded $1.5 billion. By 1996 its prearranged funeral revenue surpassed $2.3 billion and its prepaid cemetery sales accounted for an additional $251 million.
Given these outstanding accomplishments, much now depends on the level of performance of the Grim Reaper. Can he be counted on to do the job? Mortuary Management was gloomy on this score, noting that due to medical advances in the treatment of cancer and heart disease, the death rate was bound to decline.
Not so the brokerage houses and investment analysts, who are showing much interest in the new “consolidations,” as they are called. The Goldman, Sachs brokerage house, analyzing their prospects, predicts a rosy future:
Aggregate deaths have increased at roughly 1.1 percent on a compound basis since 1940.… Going forward, the continued aging of the baby-boomers, coupled with an increasing proportion of people over age 65, should keep aggregate deaths rising.… The aging of America should enable the death care industry to experience extremely stable demand in the future.
The Chicago Corporation is equally sanguine. “The addition of well-chosen death care stocks to an investment portfolio can increase the value of that portfolio nicely.” One advantage cited: “Consumers rarely comparison shop due to the infrequency of purchase, which averages once in every 14 years. In many instances, a deceased’s survivors will trade up for more expensive options than what may have already been prearranged.” There is also a word of caution:
Cremation, which is becoming an increasingly popular option, is seen as the biggest risk to the indust
ry. We agree that it is a risk, but do not believe that it is as great as perceived—and it may even yield some opportunities. Moreover, there are risks inherent in the aggressive strategies and tactics favored by industry participants. Industry pricing practices could be subject to greater scrutiny.
In February 1996 Merrill Lynch noted that
operating results were strong in the fourth quarter.… However, the year-over-year increase was below our 51% estimate. The shortfall is attributable to continued softness in the U.S. death rate.
J. P. Morgan in February 1996 carries an optimistic headline: SERVICE CORP. INTERNATIONAL: A STRONG 1995 AND POSITIONED FOR 1996. Here also the continued softness in the death rate is perceived as a bit of a problem:
Throughout 1995, the death rate in North America was lower than the historical trend. Case volume was down 3% year to year.…
But there was a silver lining. As John Betjeman wrote in his poem “For Nineteenth Century Burials,” “This cold weather/Carries so many old people away.” The J. P. Morgan bulletin continues:
With extremely cold weather in North America during the first two months of 1996, the first quarter death rate should be closer to the historical trend of approximately 8.8 deaths per thousand. It is our understanding that where extreme weather conditions have been experienced in Europe and North America, volume did, in fact, increase during the first five weeks of 1996, and Europe appears well on its way to meeting or exceeding its plan for the first quarter.
The twin strategies that go far to account for SCI’s phenomenal success, both concepts entirely new to the funeral industry, are “clustering” and anonymity.
Of the twenty-two thousand funeral homes in the United States, the vast majority are small operations doing somewhere between fifty and one hundred funerals a year. Critics of the industry attribute high prices to this factor; they point out that the owner who performs one or two funerals a week must nevertheless maintain a full complement of embalmers, equipment, hearses, funeral cars, and sales personnel to serve these few customers. “It’s full-time pay for part-time work,” as one analyst put it.
The American Way of Death Revisited Page 23