Funeral Industry Fraud and Scams

Most people in our society don't want to even think about death, much less discuss it, but with the exorbitant costs of today's funerals, and the funeral industry fraud that is being exposed, it would be a good idea for every family to become educated concerning the business of death. And make no mistake about it, it is big business. When a death occurs, the bereaved are usually not prepared for all the confusing decisions that await them, and sad to say, many unscrupulous funeral directors take advantage of this time of vulnerability. Julie Porter, in her article We All Have to Die: But Does It Have to Cost So Much, writes of how the dishonest in the American funeral industry try to exploit grieving relatives with underhanded scams, and "seek to equate one's love for the dead as directly proportional to dollars spent." Emotionally overwrought family members are usually in no frame of mind to argue over costs, and as a result, are quite often the victims of shady dealings and high pressure tactics. This frequently results in impulse buying, because of sorrow and misinformation.

The "Funeral Rules" were established in 1984 by the Federal Trade Commission, creating a national standard for the funeral industry. Funeral directors are required to tell telephone inquirers what goods and services are available, and how much they cost. When visiting a funeral home in person, the funeral director is required to present the consumer with a general price list. They must also explain what the state legal requirements (if any) are for embalming, cremation and vaults. However, there is little oversight by the FTC, and most people don't know about the requirements.

One of the most outrageous scams perpetrated by funeral homes had to do with casket seals. Instead of preserving a loved one's body, as promised, these actually contributed to the faster decomposition, and resulted in the seals and caskets actually exploding, due to activating anaerobic bacteria. There have been class action suits involving millions of dollars awarded due to body destruction.

In the latest issue of AARP, in an article titled, R.I.P. Off, Barry Yeoman outlines some of the scandals pertaining to pre-paid funeral plans. Imagine being greatly relieved because you have your funeral completely paid for, including the casket, funeral arrangements, and plots. (Many people are doing this to protect against inflation, and to avoid being a burden to their children.) So now you are assured that nothing can possibly go wrong. Unfortunately, many things are not what they seem. Audrey and Carl Brewer, of Memphis, thought they had purchased security and peace of mind for their family, only to have one of Forest Hill South's new owners initiate a press conference to announce that he was invalidating 13,500 prepaid funeral contracts, and even if the plan was paid in full, customers would have to pay an additional $4,000. Oklahoma oilman, Clayton Smart, explained, "Obviously, things were a lot cheaper in 1965. I wouldn't have bought the business if I thought I'd have to honor those contracts." (Police were on hand to prevent a riot.) It turns out, according to the Tennessee attorney general's office that the pre-need trust funds of $20 million dollars were depleted, and the money was diverted into worthless hedge funds and loans, in a company controlled by Smart's family. About a year later, he was finally charged with theft, conspiracy and money laundering in Tennessee, and he also faces charges in Michigan, where he owned cemeteries, and an audit showed $70 million missing from trust funds there. There is a happy ending though. Forest Hill is now under the control of the state of Tennessee, and has agreed to accept the pre-need contracts, and to refund any additional fees that were collected by Smart.

Those within the industry say that the problems with pre-need plans are so prevalent that they can't be overlooked. Joshua Slocum, executive director of the Funeral Consumers Alliance, warns consumers to be cautious because funeral homes do change owners, close down, or drain their trust funds, and because of problems with inconsistent state regulations, sometimes there is no remedy for those harmed by such actions. Even the funeral industry itself is aware that fraudulent practices by some are giving all funeral directors a bad name. One stated, "We funeral directors should have never been able to take money for pre-need. It's just too tempting."

This is not to say that all funeral directors are shifty, but another scam that is often employed is a bait and switch tactic. A customer will pay for a specific casket, but when the time arrives, the director indicates it is not available, and suggest an inferior quality product. Also if consumers want to cancel their contracts, many states do not require that a full refund be made. And for those who move away from their original place of purchase, it is often difficult to transfer policies.

Blatant fraud also occurs. Even though most states require that 70-100 per cent of the customer's payments for pre-need be placed in a trust account, some morticians find it too inviting to use trust funds for something else. Often consumer's can't recover the money, because like the old saying goes, "you can't squeeze blood from a turnip."

The days of the family owned funeral home are quickly fading also, and many large corporations buy out mortuaries and cemeteries, yet keep the family name, so that consumers think they are dealing with the same funeral homes that their former relatives did. In fact, the prices are often doubled.

The biggest problem is the lack of federal oversight of the funeral and death industry. As explained earlier, the Federal Trade Commission is basically involved in requiring price lists to be given, but the fraudulent practices go much deeper than that. The funeral industry, however, is a lobbyist to be reckoned with, and also a large contributor to political campaigns, so its power is staggering.

It is important to be informed on the basic prices of funeral services, plots and caskets. Do not invest in a "sealed" casket, or spend a great deal of money under pressure. Bring someone with you who is not as emotional or distraught, who can help you make the wisest decisions. Remember there are online and wholesale options for caskets these days, with fast shipping, and in place of a vocalist, recorded music is used in many services. Because of an overabundance of funeral homes, the competition produces pressure to make a large profit on each funeral, so purchase your goods and services carefully. Many churches are also available for funerals, and you can save on the cost of the mortuary chapel, if money is a concern. Some people choose direct cremation, and have a memorial service later. Others choose a viewing, and service, with cremation following, instead of burial. Still others have a plot for burial of the ashes.

There are a variety of choices available for funeral or memorial services, and many families are choosing to take part in the ceremony. Whatever arrangements you choose, a little planning and knowledge can insure that you honor your loved one's wishes and desires, without giving into unnecessary pressure tactics from the funeral providers.

Sources: http://www.aarpmagazine.org/money/funeral_rip_off.html
http://www.abanet.org/genpractice/magazine/2007/sep/estate-scamming.html
http://www.funerals-ripoffs.org/index.htm#earlier-USNews
http://www.sojo.net/index.cfm?action=magazine.article&issue=soj0005&article=000512