ABC-NEWS June 23, 2012Funeral homes charged with long-term FraudIt sounds like a simple way to make the inevitable more manageable: Prepay forfuneral services, so your loved ones have one less thing to worry about when theday comes."Ive just had so many families mention to me, Mike, I am so glad that we did thisyears and years ago, because everything was taken care of exactly as we wanted itto be done," says Mike Ruck of the National Funeral Directors Association.But there have been numerous consumer complaints about pre-paid funeralcontracts, specifically complaints about fraud, abuse and high-pressure sales tacticsaimed at the elderly."Theyre after money and they just see this population as out there and vulnerableand easy to get at," says Tess Canja, the national president of the AmericanAssociation of Retired Persons (AARP).Irwin Karp agrees — and he should know. The former salesman recently testifiedbefore Congress from a California prison where hes serving time for mishandlingfunds from pre-paid contracts.He told ABCNEWS: "The salespeople obviously have mortgages, have car payments,etc. So if they get somebody who is not completely aware of everything or is not thatintelligent, they go for as much as they can get."Salespeople often fail to tell their elderly customers the contracts — whichsupposedly cover every detail — often dont cover flowers, burial costs, vaults andpolice escorts.Once Bought, Contract is Binding"My mother and daddy purchased this policy in 1971 to relieve me of any financialresponsibility since I was their only child," explains Bush.But when her mother died 28 years later, Bush had to use a different funeral homebecause they had moved to a different city. The original funeral home returned heroriginal investment but kept 28 years worth of interest.And its perfectly legal. In most states, it is the funeral home — not the customer —that owns the interest on pre-paid funeral contracts. Whats more, the family has topay the taxes on that interest.
"What this seems like to me is more of an institutionalized scam," says RobSchneider of the Consumers Union, "where state laws give earnings that rightfullybelong to consumers to the funeral services industry."When Ruck was asked how he makes the case that this isnt a bad business decisionon the part of families, he finally answered after a long pause: Peace of mind.The funeral industry says its pushing new guidelines to protect consumers of pre-paid contracts. But consumer groups say if you really want to plan ahead for yourfuneral, just open a savings account.WASHINGTON June 24, 2012Dems attack Southerland funeral legislation as self-servingWASHINGTON — As a third-generation funeral-home owner, Steve Southerlandsaid he understands how the rising cost of burials can squeeze low-income families.As the congressman from Florida’s second district, he’s in a position to do somethingabout it.So when the National Funeral Directors Association approached him last year with alegislative proposal to help low-income families who want to preplan a funeral, thefreshman Republican from Panama City signed on.The bill Southerland has sponsored would codify an existing rule that exemptscertain prepaid burial plans from being counted as an asset for people who apply forpublic assistance. Southerland says the rule makes sense and should become law tokeep preplanned funerals a viable option for poorer Americans.“The primary reason people do this, having done this with hundreds and hundredsand hundreds of families, is for peace of mind,” Southerland said in a recentinterview.Democrats pounced.The bill, they said, would benefit the congressman’s business, Southerland FamilyFuneral Homes. They also noted that the proposal is the only bill Southerlandintroduced in 2011. They brought up the $5,000 contribution the National FuneralDirectors Association gave his campaign last year. And they cited skeptics whoquestion whether prepaid funerals really are a good deal for consumers.“Congressman Southerland campaigned on reforming Washington, but it’s clear thatall he’s done is gone Washington,” said David Bergstein, a spokesman with theFlorida Democratic Party. “While he was supposed to be working for us, Southerlandhas spent his time pushing legislation that benefits himself, his company and hiscampaign contributors, and this self-serving agenda perfectly demonstrates what’swrong with Congress.”
The issue speaks to the election-year partisan rancor that permeates congressionalpolitics: A largely technical bill that has bipartisan backing and would maintain thestatus quo is bashed by opponents as a nest-feathering opportunity.PageIt also suggests that Democrats believe Southerland, elected in 2010 in an anti-Democratic wave, is vulnerable in November. Democratic Congressional CampaignCommittee officials already have reserved $828,000 of television air time for useafter Labor Day for possible ads aimed at unseating him.The funeral controversy revolves around irrevocable funeral trusts, plans wherefamilies or individuals sign a binding contract to cover the costs of a future burial orcremation.The plans have grown in popularity as the elderly have tried to take more control oftheir funeral arrangements and shield their children from having to make expensive,last-minute decisions while dealing with grief.Irrevocable prepaid funeral plans are often valued at several thousand dollars and,unlike traditional plans, cannot be cashed in or canceled. If they were to count as anasset, many who bought them might fail to qualify for certain types of means-testedfederal subsidies such as Medicaid assistance for nursing home care.In Florida, for example, someone whose monthly income is $820 or less wouldn’tqualify for nursing home assistance if the value of their assets exceeded $5,000.Individuals whose monthly income is no more than $2,094 would not be eligible iftheir assets exceeded $2,000. Primary residences are not counted in the assetcalculation.“It sounds like a self-serving bill, doesn’t it?” Southerland said sarcastically.Southerland and other supporters of the prepaid plans say they also save taxpayermoney. Such plans keep local and state governments from having to cover the costof body disposal - governments often opt for the cheaper option of cremation - whenrelatives can’t afford to do it themselves.“This makes sense because it rewards fiscal responsibility,” said Chris Averill, aspokesperson for Sen. Olympia Snowe, a Maine Republican who is sponsoring thesame bill in the Senate. “It encourages people to protect their families and thetaxpayers from the costs of their burials.”But some consumer groups and personal finance experts warn that prepayingdoesn’t make much sense and that unscrupulous funeral homes or cemeteries mighttry to take advantage of mourning families by charging more.Some states allow funeral homes to charge exorbitant, non-refundable commissions- up to 30 percent in Florida - for prepaid plans that are often poorly regulated andleave consumers little room if they want to change their funeral arrangements lateron, said Joshua Slocum, executive director of the Vermont-based Funeral ConsumersAlliance.
“Our position is please preplan but please don’t prepay,” Slocum said. “The onlypeople who endorse prepaid funerals wholeheartedly are those who have an interestin selling them.”A typical funeral costs about $7,000, not including burial at a cemetery, he said.And Democrats say Southerland is motivated by greed.The more prepaid funeral plans he sells, they say, the better for his business.Southerland made more than $22,000 in commissions in 2009 and 2010 fromForethought Life Insurance Company, which handles prepaid funeral insurance,according to Southerland’s financial disclosure reports.Southerland says he actually loses money on the vast majority of prepaid funeralsbecause the money paid in advance rarely grows fast enough to cover the cost of thefuneral by the time it’s held. In those cases, his business usually covers thedifference. He said the loss is “significant” but declined to go into details.“It’s a problem in our industry,” he said. “Our situation is consistent with theshortfalls of funds in funeral homes everywhere. Ours is not unique.”Southerland said he has not collected any insurance commissions since he waselected and said he gave up his insurance license when he ran for Congress.His company, which was valued at between $250,001 and $500,000 in his 2010financial disclosure report, operates funeral homes in Panama City, Lynn Haven andPort Saint Joe.Supporters of making the asset exemption for pre-planned funerals permanent havepersuaded lawmakers in the past to sponsor the legislation. But it’s usually beentucked into larger, more controversial bills that have died in Congress.So the supporters, led by the funeral directors’ trade group, tried a different tack thisyear: backing a stand-alone measure.John Fitch, chief Washington lobbyist for the National Funeral Directors Association,approached two people he thought would be willing and suitable sponsors: Snowe,representing a state where many funeral homes had raised concerns, andSoutherland, whose background in the business made him “a natural,” Fitch said.The bill has gone nowhere, even though Southerland and Snowe have signed upDemocrats to help the effort. That’s not a surprise, considering that relatively fewbills move forward in a Congress marked by partisan rancor.Fitch said there’s no sign the rule saying prepaid funerals aren’t counted as an assetin calculating government assistance will change anytime soon. But funeral homesdon’t want to take that chance.“The biggest fear is that you have an election coming up and have the possibility of achange in administration,” he said.
Everest Accuses Funeral Directors of Violating Funeral RulePosted: June, 20 2012Everestfuneral.com is a funeral planning and concierge service that sells funeralpricing reports to consumers based on information obtained from funeral homes.Over the years, Everest has contacted many NFDA-member funeral homes askingthe funeral home to provide pricing information.In recent weeks, NFDA has received numerous reports from funeral homesthroughout the country that received letters from Everest accusing them of notcomplying with the FTC Funeral Rule because they did not respond to the companysattempts to obtain pricing information. Everest has employed this same tactic manytimes in recent years.According to advice previously given by NFDA General Counsel Scott Gilligan, if youreceive a call from Everest, or anyone else, asking for pricing information, you havecertain obligations under the Funeral Rule: • Disclosing Prices Over the Phone: The Funeral Rule requires funeral directors to answer telephone inquiries regarding funeral services and prices. Therefore, if you receive a call from an Everest representative - or any consumer, for that matter - inquiring about the cost of various goods and services, you MUST provide that information over the telephone. This requirement applies even though Everest is not a consumer; you are required to provide this information to anyone who calls regardless of whether the caller is a consumer. • Mailing or Faxing a Price List: The Funeral Rule only requires funeral homes to distribute a GPL if there is a face-to-face discussion involving funeral prices, arrangements, services or goods. Therefore, you are not required to mail or fax your GPL to Everest or anyone else who calls and requests a price list. It is up to you to determine whether you want to honor that request, but you are not required to do so.Should you have questions or concerns, NFDA members can contact Gilligan for afree consultation on their obligations to provide pricing information. Gilligan can bereached at 513-871-6332.FTC Sues Funeral Home for Continuing Failure to Disclose PricesPosted: June 11, 2012Less than a month after releasing data about its 2011 undercover inspections, theFTC announced that it was charging a funeral home with violating the Funeral Ruleand seeking $80,000 in civil penalties.According information released by the FTC, on two occasions, the defendant,Harrison Funeral Home Inc. in Harrison, N.Y. (not an NFDA member), allegedly failedto provide an itemized price list at the start of an in-person discussion of funeralarrangements, and a casket price list before showing caskets, as the Funeral Rulerequires. According to the FTCs complaint, the defendants also violated the Rule byfailing to provide an outer burial container price list before showing any outer burialcontainers.This was the second FTC enforcement action against Harrison Funeral Home;allegedly, the firm committed these latest Funeral Rule violations after being givenan opportunity to take compliance training to resolve prior price disclosure citations.
The FTC conducts undercover inspections across the country every year to ensurethat funeral homes are complying with the Funeral Rule. In 2011, the FTC detectedsignificant violations of Federal Trade Commission consumer protection requirementsin 23 of 102 funeral homes they visited; additionally, 33 funeral homes were foundto have minor compliance deficiencies. Since the FROP program began in 1996, theFTC has inspected more than 2,500 funeral homes and found fewer than 400engaged in significant Rule violations.June 21, 2012FTC Sues Funeral Home for Continuing Failure to Disclose PricesNew York Funeral Home Previously Cited for Price List Violations in 2001The Federal Trade Commission has charged a funeral home with violating the FTCsFuneral Rule, which helps people compare prices and buy only the funeral servicesand goods they want. The case is part of the FTCs continuing efforts to make sureconsumers are treated fairly when arranging a funeral. It is the second FTCenforcement action against a funeral home that has allegedly committed FuneralRule violations after being given an opportunity to take compliance training toresolve prior price disclosure citations.The government seeks $80,000 in civil penalties from Harrison Funeral Home Inc. inHarrison, New York, and its owner, John Balsamo. On two occasions, the defendantsallegedly failed to provide an itemized price list at the start of an in-persondiscussion of funeral arrangements, and a casket price list before showing caskets,as the Funeral Rule requires. According to the FTCs complaint, the defendants alsoviolated the Rule by failing to provide an outer burial container price list beforeshowing any outer burial containers.The FTC conducts undercover inspections across the country every year to ensurethat funeral homes are complying with the Funeral Rule. First-time offenders citedfor such significant violations are offered a chance to enter the Funeral RuleOffenders Program (FROP), a three-year training program designed to increasecompliance, as an alternative to possible legal action, a court order, and civilpenalties of up to $16,000 per violation. The FROP program is run by the NationalFuneral Directors Association and provides participants with a legal review of theprice disclosures required by the Funeral Rule, and ongoing training, testing andmonitoring of their compliance. Participants must make a voluntary payment to theU.S. Treasury in place of a civil penalty, and pay annual administrative fees to theAssociation. The defendants are not currently eligible to participate in the FROPprogram because in 2001, when they were cited for failing to provide price lists asrequired by the Rule, they agreed to enter the program but never participated.The Funeral Rule, enacted in 1984, gives consumers important rights when makingfuneral arrangements. Key provisions of the Rule require funeral homes to provideconsumers with an itemized price list at the start of an in-person discussion offuneral arrangements, as well as a casket price list before consumers view anycaskets. The Rule also prohibits funeral homes from requiring consumers to buy anyitem, such as a casket, as a condition of obtaining any other funeral good or service.
The Rule requires funeral homes to provide itemized prices so that consumers cancompare prices and buy only the goods and services they want.For more information about the Funeral Rule, read Paying Final Respects: YourRights When Buying Funeral Goods & Services, Funerals: A Consumer Guide,and Complying with the Funeral Rule.The Department of Justice filed the complaints on behalf of the Commission in theU.S. District Court for the Southern District of New York on May 10, 2012. TheCommission vote to refer the complaints to the DOJ for filing was 5-0.NOTE: The Commission refers a complaint to the DOJ for filing when it has "reasonto believe" that the law has been or is being violated, and it appears to theCommission that a proceeding is in the public interest. The complaints are not afinding or ruling that the defendant has actually violated the law. The cases will bedecided by the court.The Federal Trade Commission works for consumers to prevent fraudulent,deceptive, and unfair business practices and to provide information to help spot,stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’sonline Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTCenters complaints into Consumer Sentinel, a secure, online database available tomore than 2,000 civil and criminal law enforcement agencies in the U.S. andabroad. The FTC’s website provides free information on a variety of consumertopics. Like the FTC on Facebook, follow us on Twitter, and subscribe to pressreleases for the latest FTC news and resources.National Funeral Directors Association Statement: 60 Minutes Story onCemetery PracticesFor Immediate Release: May 21, 2012Brookfield, Wis. – On May 20, 2012, the CBS program 60 Minutes aired a story thathighlighted the disgraceful treatment of human remains at some cemeteries in theUnited States. The members of the National Funeral Directors Association (NFDA)extend their condolences to all those whose loved ones were not properly cared forby a cemetery. NFDA members believe that funeral professionals have an ethicalobligation to treat each deceased person with the highest respect and dignity at alltimes.The 60 Minutes story reinforces NFDAs long-held position that the Federal TradeCommissions (FTC) Funeral Rule, a federal consumer protection regulation that allfuneral homes must abide by, should be revised and updated so that key consumerprotection elements also apply to cemeteries, crematories and all third-party sellersof funeral or burial goods and services. To that end, NFDA supports Rep. BobbyRushs (D-IL) legislative efforts to direct the FTC to adopt regulations that wouldgovern other providers of deathcare goods and services.This change is long overdue. Given a dramatically changed marketplace – with newand non-traditional sellers offering consumers many more options for purchasingfuneral or burial goods or services – consumers face risk when dealing with sellersthat operate in a lightly, or even unregulated environment.
An updated Funeral Rule would bring the essence of what funeral directors do – andthe high ethical and professional standards that NFDA members live by every day –to a federal level for all providers of funeral and burial goods and services. It wouldprovide minimum, uniform standards, regardless of state law, and, most importantly,help protect consumers.FTC Conducts Undercover Inspections of Funeral Homes in Nine States toPress Funeral Homes to Comply with Consumer Protection LawFTCs Funeral Rule Requires Funeral Homes to Provide Price Lists toConsumersInvestigators working undercover in nine states detected significant violations ofFederal Trade Commission consumer protection requirements in 23 of 102 funeralhomes they visited during 2011 and 2012. The FTC conducts undercover inspectionsevery year to make sure that funeral homes are complying with the agencys FuneralRule. The Rule, issued in 1984, gives consumers important rights when makingfuneral arrangements. Key provisions of the Rule require funeral homes to provideconsumers with an itemized price list at the start of an in-person discussion offuneral arrangements, as well as a casket price list before consumers view anycaskets. The Rule also prohibits funeral homes from requiring consumers to buy anyitem, such as a casket, as a condition of obtaining any other funeral good or service.By requiring itemized prices, theFuneral Rule enables consumers to compare pricesand buy only the goods and services they want.Funeral homes with significant violations can enter a training program designed toincrease compliance with the Funeral Rule. The three-year program is known as theFuneral Rule Offenders Program (FROP), and is an alternative to an FTC lawsuit thatcould lead to a federal court order and civil penalties of up to $16,000 per violation.It is run by the National Funeral Directors Association and provides participants witha legal review of the price disclosures required by the Funeral Rule, and on-goingtraining, testing and monitoring for compliance with the Rule. In addition, funeralhomes that participate in the program make a voluntary payment to the U.S.Treasury in place of a civil penalty, and pay annual administrative fees to theAssociation.FTC inspections encountered varying levels of compliance: • In Northwest Indiana, one of 12 funeral homes inspected had significant violations; • In Maui, Hawaii, none of the four funeral homes inspected had significant violations; • In the New York City area, as well as parts of Connecticut and New Jersey, one of 22 funeral homes inspected had significant violations; • In Cleveland, Ohio, four of 16 funeral homes inspected had significant violations; • In Columbia, South Carolina, five significant violations were found in 10 funeral homes inspected; • In Austin, Texas, four of 19 funeral homes inspected had significant violations; and • In Richmond and Fredericksburg, Virginia, eight of 19 funeral homes inspected had significant violations.
In addition, the FTC identified 33 funeral homes, within the nine states, with onlyminor compliance deficiencies. In such cases, the FTC contacts the funeral home andrequires it to provide evidence that it has corrected the problems.Since the FROP program began in 1996, the FTC has inspected more than 2,500funeral homes and found fewer than 400 engaged in significant Rule violations. Inconducting its annual enforcement sweeps, the agency has received assistance fromseveral state attorneys general. This year, the FTC wishes to thank Ohio AttorneyGeneral Mike DeWine for the valuable assistance provided by his office.Re-released updates on defendants in IFDA fraud case. June 14, 2012The National Funeral Directors Association Executive Secretary, hasbeen named in a fourth lawsuit for Fraud. Randal L Earl of Britlinger and EarlFuneral Homes in Decatur, Illinois is on the executive board of the National FuneralDirectors Association (NFDA).One individual may eliminate the integrity of the professionalorganization for Funeral Directors in America. How can the Board of Directors ofthe NFDA stand for it? How can the CEO of the National Funeral Directorsallow this? Certainly Christine Pepper the CEO should be concerned. For one manshe is risking the organization? Why risk the same fate as the Illinois FuneralDirectors AssociationHere is the Link to the latest lawsuit submission.Here are the names of the defendants listed in the Court Document:“I.F.D.A. Services, Inc., Illinois Funeral Director’s Association, Linda Allan,James D. Bosma, Kevin Burke, Charles S. Childs, Jr., Mark K. Cullen, Brent M.Davis, Dennis R. Davison, Steven Dawson, Vickie Diedrich, Paul G. Dixon,Randall L. Earl, Michelle Harrison, Donald Henderson, Geoffrey W. Hurd, Derek S.Johnson, Robert Konzelmann,Jack R. Kynion, David M. McReynolds, Robert W.Ninker, Michael Sayles, Edward Schainker, King Sutton, Eric R. Trimble, ChrisWooldridge, Richard D. Yurs, Merrill Lynch Pierce Fenner & Smith, Inc., U.S.Bancorp and Sikich LLP”If you hug a Funeral Director make sure he/she is not named in a lawsuitTake it as you will, Randall L Earl, should resign in the interest of all the FuneralDirectors in the Land.