The Mourning After: Funeral Home Rip-Offs

Experts say it’s difficult to compare funeral-home prices, and consumer-advocacy groups are asking Federal Trade Commission to require funeral homes to provide detailed prices online. Meanwhile, funeral homes are scrambling to make up for lost revenue.

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Eight years ago, California lawyer Ed Howard learned that his 78-year-old father was diagnosed with stage 4 liver and pancreatic cancer and had 6 months to live. Howard’s sister, Kathryn, took on the task of finding a funeral home for their father. One afternoon, she called Howard near tears, which was “extremely out of character” for the high-school principal, he says.

“She had been on the phone and internet all day and couldn’t get a coherent list of prices or options,” Howard says.

Howard, who is the senior counsel at Center for Public Interest Law, which is an advocacy organization, took over for his sister under the belief that finding a funeral home would be easy. After 1 day, he was angry and exhausted, with more questions than answers.

Federal Trade Commission’s 1984 “Funeral Rule” mandates that funeral directors must provide an itemized list of prices and services, which is called a general price list (GPL), to anyone who asks for one in person or over the phone. However, Howard says that after he spent 8 hours on the phone with nine different funeral homes, no one gave him a GPL. When he requested that a list of prices be emailed or faxed to him, funeral-home employees failed to follow through. In a few cases, he received different price quotes from the same funeral home when he talked to two different employees.

Howard vowed that he would make sure that other grieving consumers wouldn’t share his frustrating experiences. Two years later, in 2011, Howard worked with California lawmakers to pass a law that requires funeral-home directors to provide an itemized list of products and services on their websites.

Unfortunately, California still is the only state that requires funeral homes to post their products and services online. Consumer advocates hope that this will change. Consumer Federation of America (CFA) and Funeral Consumers Alliance (FCA), which are consumer-rights groups, filed a petition in July 2016 that urges FTC to update the Funeral Rule to require online price lists. An FTC spokesperson tells us that the Funeral Rule isn’t slated for review until 2019 but that the petition “might be addressed sooner.”

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“We don’t shop the way we did in 1984, and it’s time for the Funeral Rule to be brought up to speed,” says Joshua Slocum, who is the executive director of FCA.

Three of the industry professionals whom we interviewed agree with Slocum. One of them, Bob Biggins of Magoun-Biggins Funeral Home, says he has posted prices on his website for a decade and that “educated consumers deserve this information.” However, we found that most funeral homes don’t post their prices online.

What’s more, because of antitrust mandates that should protect consumers from inflated price fixing, funeral homes are discouraged from discussing prices with one another. How do they come up with competitive rates? The truth, Slocum says, is that they don’t.

“[Funeral homes] don’t want consumers and competitors to know their prices, because then they’re going to have to start reacting to pressures to be competitive,” he says.

In other words, experts say it typically is difficult for consumers to make an educated price comparison unless they visit at least four funeral homes in person and ask for prices. We believe that that’s a daunting, stressful process for someone who grieves over a loved one, yet it’s imperative to find a fair price. Unfortunately, none of the consumers whom we interviewed actually took on this task.

RISING COSTS. Frazier W. Langley, whose wife died of a heart attack just over a year ago, used J.F. Floyd Mortuary, because his in-laws used that home for another family member’s funeral.

“It’s a very emotional time, and [funeral directors] use subtle sales pitches to steer you into selecting something a little more expensive,” he says. “Like the greeting register that guests sign: They cost between $50 and $200, but the quality jumps tenfold with the more expensive book.”

Langley found a similar price discrepancy when he chose a casket: They ranged in price from $1,000 to $10,000. He chose one that he felt was “the most beautiful eternal resting place,” which was a $3,500 oak box that had a cross on top. Ultimately, Langley was satisfied enough with J.F. Floyd Mortuary to preplan his own funeral with the mortuary.

CONFUSING OPTIONS. California is the only state that requires funeral homes to post their products and services online. Consumer advocates hope that this will change.

CONFUSING OPTIONS. California is the only state that requires funeral homes to post their products and services online. Consumer advocates hope that this will change.

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In 2010, FTC’s spot check of funeral homes found that 28 percent violated the Funeral Rule by failing to disclose prices properly and misleading buyers about federal and state law.

“Most consumers believe incorrectly that they’re required to buy services, such as embalming or certain types of caskets,” Slocum tells us. “Almost nothing is required at death except the body be buried, cremated or donated to science within a few days—and get a death certificate. If someone is telling you anything else is required, make them back that up, because it’s usually misinformation.”

We believe that funeral-cost transparency is necessary, because funeral services are among the highest priced services that most people will incur, and they’re incurred at a time of great stress.

The median cost of an adult funeral with burial and viewing was $7,181 in 2014, according to National Funeral Directors Association (NFDA). We found that the total cost of services at two funeral homes in the same region typically varies greatly. In Washington, D.C., for example, a full-service funeral, which includes burial, embalming, viewing and a graveside ceremony, costs $3,770–$13,800.

“We’re very concerned that consumers don’t know that the range of charges for the same services in their town is much greater than they’re aware,” Slocum says.

Considering the high costs of burials and the accompanying services, it isn’t surprising that more consumers now choose less expensive cremations. Cremations outnumbered burials 49 percent to 45 percent in 2015, according to NFDA. NFDA predicts that by 2030, the cremation rate will reach 71 percent.

The average cost of a cremation and related services also is rising at a rate that’s similar to the average cost of a burial and related services. Trade magazine American Funeral Director reports that the average price of cremation with service at a funeral home (before the crematory fee, which can add from $200 to $1,000) was $3,691 in 2015, compared with $3,141 in 2011. This price doesn’t include an urn.

Experts tell us that cremation prices typically vary as much as do those of funeral services that include burials. In our research, we found companies that offer direct cremations (no ceremony or casket) for as little as $490. In Washington, D.C., the price of a direct cremation ranges from $1,295 to $7,595 for essentially the same product, CFA says. Why does it vary so much? We found that businesses that solely offer cremations (and are unaffiliated with funeral homes) simply charge much less for a cremation than does a funeral home, presumably because they have a smaller overhead.

Experts tell us that cremation costs will continue to rise while funeral homes try to offset the revenue that’s lost from fewer burials. David Nixon, who is a consultant for the funeral industry, says cremations bring in only “half the revenue of that of a burial.” Lloyd Swint of Olinger Hampden Mortuary says funeral directors also try to make up for lost revenue by offering cremation packages that include services that are similar to (and beyond) those that you’d expect from a traditional funeral that includes a burial. (More on those services later.)

“You’ve got to raise your price, because you’ve got to cover your cost,” Swint tells Consumers Digest. “What are you doing for that price that’s going to be something that families want to take advantage of, that’s going to add respect to their loved one?”

Amid the steady rise in cremations, the funeral industry saw a revenue decline in 2015. Nixon predicts that funeral homes will have to consolidate or shut their doors because of lost revenue. Dan Isard, who is the president of Foresight, which is a business-management and consulting company for the funeral industry, agrees.

“You might find that two funeral homes have to merge their businesses, so both of those owners can make a living,” Isard says. “Maybe they only have one building.”

In other words, you’ll continue to see fewer funeral homes. The number of reported U.S. funeral homes was 19,390 in 2015, compared with 20,557 in 2009, according to National Directory of Morticians. Nixon expects that the number of funeral homes will shrink by another 25 percent by 2025. Less competition almost certainly will lead to higher prices, Nixon says.

Nixon says we should look to Canada, which has a cremation rate of 69 percent, for clues about the future of funeral services in the United States.

“In some cases, [Canadian funeral homes] have put in reception rooms and cafes and offer food services to client families in order to bring in what they call ‘replacement revenue,’” Nixon tells Consumers Digest.

Smaller, independent funeral homes have embraced this approach for years by providing customized concierge services that are tailored to the lives of the deceased. In 2013, Biggins enlisted a body shop to paint a casket to look like a school bus for a longtime local bus driver. The metal casket used normally would have retailed for $1,100, Biggins says. The additional cost “to make it special” was $750.

Biggins also coordinated a funeral procession for “Sonny,” who was the town’s ice cream man, in which the hearse and other vehicles followed behind his iconic truck. During the church service, Biggins sent his staff to buy surprise popsicles. After the burial, attendees were invited back to Sonny’s truck for one last treat.

Fortunately, using Sonny’s truck and providing guests with popsicles didn’t cost the family anything extra, Biggins explains.

Even corporate giants are rethinking their sales strategies in response to the fact that consumers are turning to caterers and event venues when they plan a memorial service for a cremated loved one. (What’s good news is that, unlike the rampant price inflation that we found with respect to weddings, we found that caterers typically don’t inflate prices for funerals and memorials.)

In October 2016, we joined 200 Service Corporation International (SCI) employees at Olinger Hampden Mortuary for a mock funeral. As guests flooded through the doors, they were handed a scorecard for disc-golf (the deceased’s favorite sport) and were asked to sign a guest book that was made of four white disc-golf discs. A caterer served hamburgers and french fries in brown paper bags. Every corner of the building was equipped with the deceased’s belongings: camping tools, an Iowa State University blanket, disc-golf gear and a worn snowboard.

The mock funeral served as a launch party for Life Well Celebrated, which is SCI’s marketing initiative to become a one-stop shop for customers who want to host celebratory memorials.

“Families have been going this direction for a long time but didn’t know where to go to get it done,” says Tim Williams of SCI, which is the largest provider of funeral services in North America. SCI hopes that by offering these a la carte services under one roof, it will recoup some of the business that has been lost to outside vendors.

TECH-SAVVY SEND-OFFS. Biggins and 12 other funeral directors and industry experts whom we interviewed say social media and technology increasingly influence how final farewells are carried out. Funeral homes now provide digital guest books, video tributes and slideshows and live webcasts of funeral services, but experts tell us that these services represent only minor revenue streams for most funeral homes, and their prices aren’t required on the GPL, per the Funeral Rule.

“Technology has definitely influenced the end-of-life space, from the actual funeral-planning process to grief and memorialization,” says Jessica Koth of NFDA.

Live-streaming of funerals began in the mid-1990s, but it slowly gained momentum over the past decade. In October 2012, Mathew Ingram live-tweeted his friend’s funeral. Ingram believed that his friend, who was an avid Twitter user and public-relations veteran, would have gotten a kick out of it.

“Not only did many of Michael’s friends thank me for doing it, but members of his family who live in Ireland and elsewhere also said how much they appreciated me posting details of the service,” Ingram says. However, a few who found it distasteful or disrespectful reacted with a combination of disapproval and shock, he adds.

Live-streaming of funerals is growing slowly, because the medium is rife with issues from privacy to interruptions in the feed, Nixon says.

Funeral homes also are seeing increased demand for sustainable funeral services, such as biodegradable caskets, clothing and shrouds instead of concrete vaults and embalming. Biodegradable caskets typically cost $500–$2,000, while conventional caskets typically cost $2,000–$10,000.

As of press time, alkaline hydrolysis, which uses heat, water and an alkali solution of potassium hydroxide to dissolve the body instead of burning the body during a typical cremation, was permitted in 11 states (Colorado, Connecticut, Florida, Illinois, Kansas, Maine, Maryland, Michigan, Minnesota, Oregon and Wyoming). Bone fragments are retained in a form that’s similar to cremated ashes, while other body components are reduced to a liquid solution of amino acids, peptides, soaps and sugars that can be disposed of safely through sewage systems.

Experts say alkaline hydrolysis uses one-seventh of the energy that’s required for a traditional cremation. Prices vary among providers, but in general, experts tell us that it costs the same as does cremation.

Lindsay Tucker has written for Boston magazine and Newsweek, among others.

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