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Undercover funeral home sting turns up 'significant violations'

By Todd Sperry, CNN
April 20, 2012 -- Updated 0121 GMT (0921 HKT)
Federal investigators uncovered illegal practices being carried out by numerous funeral homes across the country.
Federal investigators uncovered illegal practices being carried out by numerous funeral homes across the country.
STORY HIGHLIGHTS
  • 'Significant violations' found in 23 of 102 funeral homes investigated
  • Some forced customers into buying caskets as a condition of paying for a funeral
  • Richmond and Fredericksburg, Virginia, had the highest number of offenders
  • Five of 10 funeral homes in Columbia, South Carolina, had significant violations

Washington (CNN) -- An undercover investigation by the Federal Trade Commission found funeral homes nationwide deceived customers into making purchases they weren't required to make and failed to give up-front pricing to customers.

Undercover FTC agents posing as customers found "significant violations" in 23 of the 102 funeral homes investigated, according to the FTC.

Operators violated key provisions of the "Funeral Rule," a 1984 regulation the FTC put in place to prevent funeral home operators from forcing customers to buy caskets or any other item as a condition of paying for a funeral. Another provision of the rule requires funeral homes to provide an itemized price list during the first in-person funeral arrangement meeting.

Nationally, Richmond and Fredericksburg, Virginia had the highest number of funeral homes found with significant violations, according to the FTC's report. Eight of the 19 funeral homes investigated in the two cities committed significant violations. Columbia, South Carolina, was next with five significant violations out of 10 funeral homes inspected.

Thirty-three funeral homes had what the FTC called minor compliance issues. In those cases, the FTC contacted the funeral homes and required proof they were addressing violations.

The FTC gives funeral homes an opportunity to right their wrongs before they're hauled into court. A three-year program run by the National Funeral Directors Association gives participants extra training and additional compliance monitoring. Funeral homes that participate are allowed to make a payment to the U.S. Treasury in place of a civil penalty. Civil penalties can be up to $16,000 per violation, according to the FTC.

Jessica Koth of the National Funeral Directors Association says the "NFDA takes compliance with the Funeral Rule seriously." Koth says the organization encourages members to meet all obligations.

Since the annual undercover stings began in 1996, the FTC said investigators have found fewer than 400 funeral homes with significant violations. There are 19,680 funeral homes in the United States, according to the NFDA.

FTC inspections during 2011 encountered varying levels of compliance:

-- In northwestern Indiana, one of 12 funeral homes inspected had significant violations;

-- In Maui, Hawaii, none of the four funeral homes inspected had significant violations;

-- In the New York City area, as well as parts of Connecticut and New Jersey, one of 22 funeral homes inspected had significant violations;

-- In Cleveland, four of 16 funeral homes inspected had significant violations;

-- In Columbia, South Carolina, five significant violations were found in 10 funeral homes inspected;

-- In Austin, Texas, four of 19 funeral homes inspected had significant violations;

-- In Richmond and Fredericksburg, Virginia, eight of 19 funeral homes inspected had significant violations.

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