Comparison shopping Encourage customers to shop around and contact other service providers in the area. Prices for goods and services vary widely among homes. It is estimated that large chains charge up to 37% more for funeral services than independent or privately owned establishments. Connecticut, Massachusetts, and Minnesota require funeral homes to prominently disclose who owns the home; however, in the majority of states, a home does not need to disclose whether or not a chain has acquired it. (Chains usually have no incentive to reveal their ownership, wanting to capitalize on the “goodwill” of the name of a long- standing funeral provider, and not wishing to be linked with a chain. Therefore, when a town has a few homes, several which are owned by a large corporation, customers Advise consumers to choose carefully In a case that shook the funeral industry and its ability to treat people fairly, one preneed-funding provider had to inform 9,500 preneed contract holders that because of poor investments and fund mismanagement, the contracts might pay 12% less than face value. Funeralwire offers the following tips for consumers choosing a provider: ● Make sure the insurance or trust provider that your funeral home or agency is using has an A.M. Best rating of “A–” or better. ● Don’t use a company that allows its capital and surplus to fall below 7% of its total assets. Trust deductions and interest State regulations differ, as do the positions of the NFDA and CFA. Most states limit access by the provider until the customer dies. The FCA wants trustee fees or administrative costs deducted to be 25% or less of net annual interest earned. Minnesota prohibits the provider from charging any Equal quality Consumer complaints often occur if the merchandise the customer selected is no longer available when he or she dies. An example posted by AARP went so far as to characterize the following example as “bait and switch,” or advertising one product with the intent to substitute an inferior one. The AARP reported the story of a woman who chose a lavender casket when she made her preneed contract. After she died, the provider told the family that the lavender casket would require a special order and would take 10 days to arrive. The family unhappily accepted an “iridescent pink” casket. This is a controversial point given the fact that the time between an advanced planning contract signing and the customer’s death could be many years. By then, the merchandise may no longer be manufactured or the provider may discontinue the offering because of its unpopularity. Consumer restitution funds The NFDA advocates that states provide for the funding and the administration of a consumer restitution fund to pay back an advanced-planning customer if the seller defaults. A provider, however, could not advertise the fund’s existence to induce a customer to purchase a preneed contract. In such a case, the customer would pay a small fee, and the provider would deposit the money into the government fund. If the provider defaults, the customer could file a
“shopping around” may not know that they’re visiting homes owned by the same company.) Discuss options other than advanced-planning contracts. Consumer publications often advise preplanning without prepaying. If one facilitates a thorough advanced planning session with a customer and his or her family, assuring him or her that the provider or agent will keep the information, then the family will use this home when the customer dies. Since at-need funerals tend to be more profitable than preneed ones, whether or not the preneed contract has guaranteed prices, preplanning (instead of prepaying) may financially benefit the provider or agent. ● Treat any nonmainstream company that offers a great deal with skepticism: Funeral directors agree that the products with the highest commissions turn into trouble later. ● Check how the company determines its preneed policy growth rate: Is it guaranteed at a certain annual percentage for the long-term future by the Consumer Price Index, or by another index? Or, do the company directors themselves determine the growth rate?
finance charges. The NFDA simply recommends that the provider disclose to the customer how much interest the provider will receive and whether or not trustee funds or other administrative charges will be deducted.
In order to avoid occasional customer dissatisfaction about discontinued items, it is critical to explain to the customer that there is a chance that an item he or she has chosen might be discontinued or otherwise unavailable when needed. Ordering the item when the contract is signed could be expensive for the customer, especially since the FTC recently affirmed that a provider can charge if it stores an item for a long time—specifically mentioning at-need caskets. In addition, instead of language simply saying that an item of equal quality will be substituted in the contract, specify that: ● Goods and services of equal or greater value will be substituted at no extra cost; and ● The decedent’s disposition agent may inspect the items and shall approve them if they are of the same disposition and quality as those included in the preneed contract (FCA recommendation). written complaint. The agency would investigate and order restitution or dismissal. A handful of states have consumer restitution plans. It seems likely that these plans will become more common, given the media reports of defrauded preneed consumers. One drawback of restitution funds, however, is that they might not contain enough money to fully refund customers.
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