Breaking News: FTC Issues Report on Undercover Phone Pricing Sweeps

Today FTC Staff issued a report on the Commission’s undercover Funeral Rule phone sweep it conducted in 2023 (www.ftc.gov/system/files/ftc_gov/pdf/staff-report_-calling-for-funeral-services.pdf). The report presents the FTC’s findings on its ability to obtain price information from funeral providers by phone from the agency’s first-ever undercover Funeral Rule phone sweep.

About the Phone Sweep

As you are aware, the FTC placed calls to 278 funeral providers from February through December of 2023. For each of the randomly selected funeral providers, there were three attempts to reach the provider by phone during business hours (9 a.m.-5 p.m.), and up to three attempts outside of business hours. On the calls, FTC staff asked for pricing information, typically for direct cremation, cremation and a memorial service, and cremation with a viewing.

Key Findings of the Report

The FTC’s report asserts that they were “unable to obtain price information after business hours” from 26% of the funeral providers they called (73 providers), and that they were unable to obtain price information from 7% of the providers during business hours (21 providers).

The report also shows that in many instances, multiple calls were needed to obtain price information from a funeral provider. After business hours, staff either had to call more than once or wait for a return call from nearly 70% of the funeral providers called during the sweep. During business hours, staff had to call multiple times or wait for a return call for about 30% of the funeral providers called.

Finally, the report details that half of the funeral providers called answered at least some questions about pricing with estimates or ranges, rather than actual prices. The report also notes that at least 33% of the funeral homes provided package pricing for at least one service on a call (such as cremation with a viewing), without giving itemized price information for that service. In addition, staff found that at least 37 funeral providers quoted different prices for the same services on different calls.

While the FTC has previously reported on this phone sweep, this report is focused on how long it took to get the information and how many times they had to call. Remember, many of the findings listed above, in and of themselves, are not violations. It is generally acceptable to use an answering machine, have non-licensed personnel defer to licensed individuals to provide the information, and have a policy of only providing the required information during business hours (see more on the requirements below).

Indeed, this report appears to be intended to advance the position that requiring funeral providers to post their prices on line, where they would be available to consumers 24-7, is beneficial to consumers.

How to Protect Your Firm

NFDA published a Legal Alert on the FTC’s telephone sweep in February 2024 when the results were initially announced. We reminded our members that while nothing has changed with regard to the Funeral Rule or its enforcement, there were several elements to remember now that the FTC has appeared to shift its enforcement procedures from in person to via telephone:

• You must give accurate information from your General Price List, Casket Price List, and Outer Burial Container Price List to anyone who telephones and asks about your prices or offerings.
• You cannot require callers to give their names, addresses, or phone numbers before you give them the requested information. You can ask callers to identify themselves, but if they refuse to do so you still must answer their questions.
• You cannot require consumers to come to the funeral home in person to get price information.
• You can use an answering machine or answering service to record incoming calls. However, you must promptly respond to questions from callers on an individual basis.
  • As an example: Your answering machine can have a message telling consumers to call a specified number during business hours for information about prices and offerings. You need to provide the requested information when consumers call during those hours or you can have an answering machine or answering service take consumers’ names and phone numbers so that you can return the calls at your earliest convenience.
• You may have a (non-licensed) employee answering your phones respond to easier questions regarding your offerings and prices by referring to the printed price lists, but the employee must refer more difficult questions to a licensed employee. If a licensed employee is unavailable when the call comes in, the employee can take a message so a licensed employee can return the call later.
• You do not have to give price and other information after business hours if it is not your normal practice to do so. You can tell consumers who call during non-business hours that you will provide the information during regular business hours. However, if a consumer calls after hours to inquire about an at-need situation, and it is your practice to make funeral arrangements during non-business hours, you should provide price or other information the consumer requests.
• You must give certain information to people who telephone, but the Rule does not require you to send callers a General Price List. Similarly, you do not have to send a GPL in response to mail inquiries about funeral goods and services. Of course, you certainly are free to send a GPL to someone who calls or writes for information if you wish to do so. However, if a telephone or mail inquiry is followed up by a meeting at the funeral home or elsewhere, you must provide a GPL at that time.
• The FTC has also noted that they consider it a violation for a funeral home to promise to send a General Price List, but instead only provide a list of package prices that did not meet the requirements of a GPL. It is always important to remember, whether in person or on the phone, you must not misrepresent any law or requirement.

It is also important to note that some states require funeral providers to mail a price list upon request. You should check to see what the requirements are in your state.

Finally, we recommend asking at the end of the conversation with any caller asking about your prices or offerings, “do you have any additional questions” or “is there any other information I can provide you.” This catch-all will help to ensure you are in compliance and there was nothing left unanswered.

While the change in administration in the White House and recent Federal court rulings stemming from the US Supreme Court’s decision in Loper-Bright will certainly affect the FTC and its current review of the Rule, it is too early to determine exactly how. While this report seems to indicate the FTC is currently charging ahead on its current path, an anticipated new chair of the FTC will certainly result in some alteration.

Rest assured, NFDA has been – and will continue to be – your steadfast advocate in Washington, D.C., ensuring the voice of funeral service is heard. We are closely monitoring every development and engaging directly with the FTC to protect your interests and those of the families you serve. We’re watching this issue like a hawk and will keep you informed of all relevant updates as they happen. Your NFDA team is here for you every step of the way.

The business news last week was centered on the Producer’s Price Index (PPI) rising 0.6% in the month February, which equates to an annual 7.2% inflationary rate.  That reading, after being lower and even negative for a couple of months prior,  has caused many pundits to opine that getting rid of inflation in America may be a “stickier problem than once thought”.

Here’s a definition of the PPI and why it may have an effect on the products that funeral homes sell:

“(The PPI) is a collection of indexes economists use to measure the average change over time in domestic producers’ prices for their products or services. This information provides a picture of the marketplace from the perspective of sellers.

So, from my point of view, it indicates what the cost of producing goods will be from the suppliers who sell to funeral homes. . . such as casket companies, vault companies, urn companies, paper goods companies, chemical companies, and so on.  Again, from my point of view, the reason it is so important to funeral homes is that it indicates, with all other things being equal, that in time your costs for those wholesale products will be going up and unless you can mark the retail price of those products up to at least match the increase in the wholesale price rise, you risk going backwards on profitability.

And, in a world where the consumer is very conscious of “costs” for what they are purchasing, that increased mark-up gets harder and harder to accomplish.  Combine that with the Death Care consumer’s thought process of potentially reaching a limit on what they will pay for an earth burial service and you can see the consumer having a greater propensity to choose a lower cash-margin alternative such as cremation with services or Direct Cremation as a result of these price increases.

Tom Anderson
Funeral Director Daily

Funeral Director Daily take:  I’ve been involved in many businesses in my day, including owning and operating a funeral home for about 35 years.  In all of those businesses when you see input prices, such as products and labor, rising it makes for difficult decisions on how to move forward with your pricing.

There are options, especially if you are profitable at the time, to simply stand pat and absorb those costs without raising prices for the sake of retaining clientele. Or, you can raise prices to retain your margins. . .but you do that with the knowledge that the pricing may drive off some customers or,  in funeral service,  change them to a lesser cost and lower margin service.

That is the “between a rock and hard place”, as is the expression that many funeral homes find themselves in.  In today’s environment, holding on to customers and on to margins is especially critical if you are a business that has debt that has been in an adjustable rate loan environment.

Another factor that may weigh in an owner’s mind is “What is the consumer’s position”?  For instance, if they believe that their consumer is in a very good financial position — which many American retired people, who are a funeral home’s base customer have traditionally been in — the ability to raise prices is probably there.

However, the University of Michigan Consumer Confidence Survey also came out last week and that shows that consumers are slightly less confident about their situation than they were a month ago.  In contrast to a year ago, however, they are much more confident.

One thing I do know is that funeral director independent owners are very skillful and knowledgeable about their businesses.  They are on Main Street virtually everyday and, because of their interaction with local people, have a great feeling how their communities are doing.  When it comes to these types of decisions on pricing, I’m pretty certain that each funeral home owner has a great instinct on what to do.

I was like that.. . . .I took in all information, input, and data that I could, but then let my instincts take over.  And, I never did anything in a hasty manner. . . always making slow, thoughtful decisions.  That’s the best advice I can give to owner/operators on on these type of “between a rock and hard place” issues

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