The high cost of saying goodbye (pg. 2)

  @Money November 9, 2012: 9:25 AM ET

Funeral homes: Know your rights

It's the Funeral Rule's most basic requirement: Provide cost information over the phone and an itemized price list in person so that consumers can pick the specific goods and services they want and compare costs.

That's important given the wide disparity in funeral-home prices, even in the same area. An analysis of 10 major cities by Everest, a funeral-planning service, found that the difference in cost for a traditional funeral between the least and most expensive establishments within five miles of each other averages 164%. (See chart on the first page)

Yet a surprising number of funeral homes still fail to follow the rules -- 27% of the 507 locations visited by the FTC in the past four years, up from an average noncompliance rate of 13% over the four years prior.

In New York City, one of the few cities or states with their own regs, 30% of facilities visited earlier this year did not have readily accessible price lists.

And when a city investigator, posing as the daughter-in-law of a terminally ill man, phoned funeral homes for pricing, 60% didn't provide it, as required by New York City law. "Stunning," says consumer affairs head Mintz. (The violators paid fines.)

The Funeral Rule also gives you the right to buy only the specific goods and services you want. Many families complain, though, that funeral directors pressure them to buy a package, says Lisa Carlson, executive director of the Funeral Ethics Organization, a nonprofit advocacy group.

"Often these packages include a lot of stuff you don't need, as a way to get you to pay more," she says. Extras such as grief counseling, digital tributes, and expensive floral displays can easily ratchet up the price.

A common tactic in selling such bundles, says Ed Markin, author of "An Affordable Funeral" is to present three price points. "Most people don't want to be considered cheap or overly extravagant," he says, so funeral directors know the family will typically choose the middle option and price accordingly.

Related: Senior victims lose big money to financial abuses

And while federal law requires the price list to be presented to the customer, Carlson says it's not uncommon for it to be included within a jumble of other package pricing in an effort to "confuse the consumer with too much information."

Scott Gilligan, general counsel of the NFDA, says that more choice is not meant to confuse the customer, and often packages are offered at a discount. "It's the same thing that McDonald's does on its value menu," he says.

A funeral home may also imply that state or local law requires a particular service, such as embalming, according to consumer advocates. The truth is most states almost never require embalming, and if a body does need to be preserved, refrigeration is just as effective, says Josh Slocum, executive director of the Funeral Consumers Alliance.

Because embalming brings in nearly $700 on average (and as much as $3,000), however, a funeral director might just forget to enlighten you about the facts, says Slocum.

Dan Rohling, a consumer advocate and former cemetery investigator from California, says homes are under pressure "to squeeze as much profit from every customer they can."

With 43% of funeral shoppers now choosing cremation over traditional burial, vs. just 26% in 2000, the profit per sale earned by independent funeral homes -- the vast majority of the business -- has fallen 27% in the past 10 years, the Federated Funeral Directors of America reports. Exacerbating the crunch: The industry has high fixed costs, including for embalming rooms, which are required by 37 states.

Related: Seniors: Beware the sales pitch

Financial pressures are also one reason the FTC has filed so few lawsuits against violators of the Funeral Rule -- only six enforcement actions have been taken in the past 12 years. With limited resources to pursue costly litigation, the agency instead mostly diverts offenders into a three-year program that provides ongoing training and monitoring for compliance; they also pay fines (average: $6,000 per violator).

Given the scope of the problem relative to identity theft and other consumer complaints, "we are absolutely doing enough," says Roberto Anguizola, assistant director of the FTC's marketing-practices division.

Consumer advocate Slocum says since the FTC doesn't release the names of offending funeral homes or details about the violations, the agency's effectiveness is hard to judge.

WHAT YOU SHOULD DO

Check prices at three homes, minimum. Four out of five consumers don't shop around when planning a funeral, AARP reports. Don't feel pressured to go with the first place you see or the one everyone you know used; you can compare costs by phone or online in less than a day.

Ask about both the mandatory basic-services fee, which covers the time and overhead of the funeral director and staff, and itemized charges for the additional services you select.

Get help with the search. If collecting multiple quotes feels too daunting, try efuneral.com or Everest's Price-Finder tool, good for pricing up to eight homes in your area ($29, everestfuneral.com).

You can also sometimes get discounted rates through your local branch of the Funeral Consumers Alliance (funerals.org).

NEXT: Beating the high cost of caskets

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