Yesterday, the Federal Trade Commission (FTC) announced that it is sending warning letters to 39 funeral homes across the country. It discovered several violations of the Funeral Rule as a result of the agency's first undercover phone sweep. Since COVID, the FTC has only announced one round of in-person secret shopper results.

In this new phone version of the secret shopper, reportedly conducted in 2023, investigators and other staff from the FTC's East Central Region, Northwest Region, Southeast Region, Southwest Region, Midwest Region, Western Region - Los Angeles, Western Region - San Francisco offices and the Bureau of Consumer Protection's Division of Marketing Practices placed undercover calls to more than 250 funeral homes from across the country to try to obtain price information.

From this investigation, FTC Staff determined that 39 of the more than 250 funeral homes violated the Funeral Rule on these calls. Part of the difficulty in assessing compliance is the subjectivity of the shopper. While the compliance rate certainly should be higher, the FTC reported a more than 85% compliance rate, which is consistent, if not higher than, the result of prior in-person secret shopper sweeps.

 As a result of this action, the FTC reported:

• On 38 calls, funeral homes either refused to answer questions about pricing at all or provided inconsistent pricing for identical services;
• On one call, a funeral home misrepresented that the local health code required remains to be embalmed if more than a certain number of people wanted to view the remains; and,
• On one call, a funeral home promise to send a General Price List, but instead provided a list of package prices that did not meet the Funeral Rule requirements for a General Price List.

The letters sent by the FTC reminds funeral providers that the Funeral Rule requires them to provide price information over the telephone, asks them to take prompt remedial action to prevent future violations, and reminds them that failure to comply with the rule result in penalties of up to $51,744 per violation. To see the FTC’s press release and a list of the locations to which the FTC sent letters, click here. 

As you know, the Funeral Rule requires that funeral providers tell persons who inquire by telephone accurate information about their offerings or prices from their price lists and any other readily available information that reasonably answers their questions. This includes when the caller is a price list consolidator, competitor, or anyone else whether they are a potential customer or not. Additionally, while funeral providers may ask callers to identify themselves, they cannot require callers to give their names, addresses, or phone numbers, and must provide them the required information, regardless.

The FTC also advises that funeral providers should not highlight only package prices and must include itemized and minimal services. When people call with pricing questions, you’re not required to provide them price lists electronically, but even if you do, you must still answer their questions over the phone. Sending them price information via other means doesn’t meet your obligation under the Funeral Rule.

However, funeral providers may:

• Use answering machines to record incoming calls or to advise callers to call a specified number during business hours to get price information;
• Decline to provide price information outside of regular business hours if that is the provider’s normal practice; and,
• Take a message if in the middle of an arrangements conference and call back to provide price information at a later time.

In each of these cases, the Rule requires that the funeral provider furnish price information promptly by returning the telephone call.

Further, it is a violation of the Rule to misrepresent state or local laws or make other deceptive statements, such as falsely claiming that the law requires embalming when that isn’t the case. The Funeral Rule prohibits misrepresentations about state or local laws or regulations at any time.

As you know, the FTC is currently considering revising the Funeral Rule. While we do not have a timetable for any changes yet, keep an eye out on updates from NFDA to keep you up to date on the latest developments.

For more of NFDA’s support and resources on Funeral Rule compliance, please visit www.nfda.org.