FTC staff opinion: Funeral providers may discount basic services fee in cases of home funerals

According to the Funeral Rule of the Federal Trade Commission, a funeral provider may charge a "basic services fee" to recover overhead and staff service costs involved in "arranging any funeral." This fee typically covers such expenses as the arrangement conference, the securing of the death certificate and building expenditures. If the fee is non-declinable -- as is almost always the case -- the provider must disclose either that the fee will be added to the cost of funeral goods and services selected (most common practice) or that it is included in the price of the provider's caskets (rarely practiced).

Home funerals in which the family opts to use only a few specific services of a commercial provider typically break the norm, because in those cases, the family is serving in effect as the funeral director, handling most of the tasks normally bundled into the basic services fee. It seems reasonable, then, that funeral homes should be free to charge less than their customary basic services fee to such families, but the Federal Trade Commission never had addressed that particular issue. As a matter of fact, most funeral homes do already discount the basic services fee for four required basic services -- forwarding remains, receiving remains, direct cremation and immediate burial -- although past language from the Federal Trade Commission had not clearly indicated whether this is an acceptable practice.

Some months ago, I wrote Craig Tregillus, who oversees enforcement of the Funeral Rule for the Federal Trade Commission, to obtain a staff opinion on whether funeral providers may discount their basic services fee in the case of home funerals that make use of only a few commercial funeral goods or services. About the same time, Lisa Carlson of Funeral Ethics Organization wrote him, questioning whether the Rule allows a reduced fee in the case of forwarding remains, receiving remains, immediate burials and direct cremations. Also, Ohio attorney T. Scott Gilligan, representing the National Funeral Directors Association, wrote Tregillus arguing that the Rule has always permitted a reduced fee for certain services.

In a response dated November 24, 2009, Tregillus' staff concurs that a funeral provider may discount the basic services fee for receiving remains, forwarding remains, immediate burials and direct cremations. Similarly, the fee may also be reduced in the case of a home funeral that uses fewer services. The letter states:

The Rule does not address home funerals because they were not considered at the time of the initial rulemaking proceeding or the subsequent amendment proceeding. Home funerals are analogous to the four basic services, however, because they likewise involve reduced or minimal use of a funeral provider's facilities and staff. As a matter of enforcement policy, therefore, and consonant with the fundamental goals of the Rule, staff will not object to a reduction in the basic services fee if it is commensurate with the limited use of the provider's facilities and services.

Many funeral consumer advocates have questioned whether a basic services fee should be allowed at all, given that the spirit of the Rule is to allow consumers to pick and choose only those goods and services they desire and to provide transparency in the pricing of funeral goods and services. The basic services fee is the only item on the general price list that the funeral provider may make non-declinable. This fee has tended to increase at a faster rate than prices for other funeral goods and services, providing funeral providers with a mechanism to increase profit margins with limited transparency, since the values of the goods and services bundled into the fee are not itemized.

-- Holly Stevens