Friday, April 24, 2009
Within our daily reality of global and domestic economic meltdown, 8.5% US unemployment rate, TARP, the American Recovery and Reinvestment Act, auto bailouts, AIG, Madoff, toxic assets, mortgage scandals, swine flu outbreak, South Carolina burning, the Economic Stimulus Bill and tax day protests, Congress has chosen this prime opportunity to invest time and money into drafting and voting on legislation (House: S.Res.390; Senate: CR S14856) to, according to the bill "pay the Nation's collective debt of gratitude for all the hours and all the times they have put someone ahead of themselves by serving the living while caring for the dead". This would be National Funeral Director and Mortician Recognition Day. Am I missing something or does there seem to be a severe and distinct disconnect with what voters want and need their elected officials to be focusing on. Politics aside, if our congress wants to recognize a specific profession, there are certainly plenty of others that deserve a big thank you.
Sponsored by Senator Herbert Kohl (D-WI) and co-sponsored by Charles Schumer (D-NY), Mark L. Pryor (D-AR), Saxby Chambliss (R-GA), Sherrod Brown (D-OH) and Tim Johnson (D-SD). I'm sure that their constituents are so proud.
This piqued my curiosity on the funeral industry in each of their states, because it must be very different than what consumers in other states are experiencing...
Wisconsin: Sponsor Senator Herbert Kohl (D)
The WI funeral industry was rocked in mid-2008 by the fraud of Dickinson Family Funeral Home. Darrell Dickinson and Gary Sebranek, both funeral directors operating the funeral home, were convicted of 2 class I felonies for public assistance fraud for double-dipping into the WI Funeral and Cemetery Aids Program (WFCAP), which funds Medicaid and others who perish with no personal funds for funeral or cemetery expenses.
From 2003 to 2006, false claims were forged, submitted and paid from the WFCAP in the amount of $55,000 for 27 different funerals. The families and estates were also charged, so Dickinson and Sebranek were effectively paid twice. As if stealing from a state fund designed to help poor consumers pay for their loved ones funerals isn't appalling enough, Dickinson's punishment is purely outrageous. Found guilty on 2 felony counts of public assistance fraud, he was sentenced to 6 months incarceration, to serve the first 72 hours then be released on electric monitoring, pay restitution in the amount of $55,000 back to WFCAP, one-year of probation and must sell his share of Dickinson Family Funeral Home to his sons, who were employees at the time.
Doesn't seem to be much incentive to operate an honest funeral home in Wisconsin...but rest assured that as the state fund is fraudulently milked and consumers are stolen from, your Senator will propose a bill that "urges all Americans of all walks of life to embrace each of these special individuals"...yes, that is actual language from the bill. It's okay to laugh...
And by the way...the 4/17/09 seasonally adjusted unemployment rate for WI was 8.5%. (US Bureau of Labor Statistics)
New York: Co-Sponsor Senator Charles E. Schumer (D)
Where to even begin...how about with the 2008 widely publicized body harvesting scandal involving dozens of funeral homes under investigation and 3 different NY funeral homes, as well as 4 employees of the now defunct Biomedical Tissue Service being formally charged, for forging authorizations to allow tissue and body parts to be illegally harvested from 36 corpses for $1,000 a pop.
Or, in Nov 2005, Neil Foster Phillips, a Queens funeral director, and his wife Eloise Lyles-Phillips were charged with fraud involving over $20,000 in falsified and forged insurance claims paid for funeral related expenses.
Or maybe the 2008 FTC nationwide undercover investigation of funeral homes, inspecting 104 funeral homes in 7 states. Of the 18 funeral homes inspected in Nassau County, NY, 3 had minor violations and 2 had significant violations.
The Senator, who in February proudly proclaimed "To all of the chattering class that so much focuses on those little, tiny, yes porky amendments...The American people really don't care" clearly believes his rhetoric by taking the time to co-sponsor this bill.
As an aside...the 4/17/09 seasonally adjusted unemployment rate for NY was 7.8%, 8.1% for NYC. (US Bureau of Labor Statistics)
Georgia: Co-Sponsor Senator Saxby Chambliss (R)
GA, whose state motto is "Wisdom, Justice, and Moderation"...and the home of one of the most gruesome of all funeral related fraud.
In March 2004, a $40M settlement was reached in the case of 300+ rotting corpses found scattered in a forest. The settlement will be paid out by Tri-State Crematory and 58 funeral homes across GA, AL and TN. No further comment on GA....whose 4/17/09 seasonally adjusted unemployment rate was 9.2%. (US Bureau of Labor Statistics)
Ohio: Co-Sponsor Senator Sherrod Brown (D)
In early 2007, Brent Maders of the Mader-Peters Funeral Home was charged with stealing pre-paid funeral funds...you know the pre-need contracts that they sell "for your protection"...and falsifying death certificates to submit fraudulent insurance claims to the tune of over $700,000 over a 10 year period.
As a precursor to Maders, Mark Van Horn of Van Horn Funeral Homes was sentenced to 2 years in prison on 43 charges, and must pay restitution for stealing over $200,000 in pre-need funeral contracts. With instances dating back to 1990, but with most infractions occurring between 2000 - 2005, Van Horn simply did not forward the insurance premiums paid by 33 consumers to 2 different insurance companies, and instead just kept it for himself. In the infamous words of Steve Urkel..."did I do that?"...
Ohio was also 1 of the 7 states included in the 2008 FTC undercover investigation...Of the 15 Toledo-area funeral homes inspected, 1 had significant violations and 9 had minor violations.
Oh yeah...the 4/17/09 seasonally adjusted unemployment rate for OH was 9.7%. (US Bureau of Labor Statistics)
Arkansas: Co-Sponsor Mark L. Pryor (D)
Let's start with the AR ranking in the 2008 FTC undercover investigation...15 funeral homes in Southeastern AR were investigated resulting in 11 with significant violations and 4 with minor violations...which translates into a score of 100% failure...
Or, the 2001 conviction of Phillip Warren Stephens and his wife Linda Lou Stephens, of the Wilson-Stephens Funeral Home, the former of which was sentenced to 11 years in state prison for failing to invest more than $118,000 in pre-need funeral contract funds, who like all of the other funeral directors involved in pre-need funeral fraud, conveniently forgot that the money entrusted to his funeral home by everyday consumers was not his personal rainy day fund.
On the bright side, while 100% of the funeral homes investigated failed, at least the state's unemployment rate is only 6.5%.
South Dakota: Co-Sponsor Tim Johnson (D)
I am pleased to report that I could find no really glaring and/or horrific funeral fraud, body harvesting or otherwise distasteful stories readily available for South Dakota. Congratulations...
Other than the funeral home employee charged in August 2008 with 1 count of soliciting a minor and 1 count of attempted sexual contact with a minor for using computers at the Miller Funeral Home where he was employed...funeral homes in SD seem to be staying out of the news.
And, SD boasts the lowest seasonally adjusted unemployment rate of the states included here...only 4.9%. (US Bureau of Labor Statistics)
In summary...Whether the state you represent has glaring, embarrassing, and at times vomit-inducing disgusting incidents in the funeral industry is not the point. This is neither the time nor the place to spend resources and money to draft and vote on meaningless legislation, particularly when the line of work being praised and glorified is under a great deal of constant scrutiny from groups such as the Federal Trade Commission, Funeral Consumers Alliance and Funeral Planners Inc.
Be smart and do not rely on politicians to protect you when you can protect yourself. Please visit www.FuneralPlannersInc.com to learn how.
copyright Funeral Planners Inc. 2009
Tuesday, April 21, 2009
And, let's face facts...as invincible as we may at times feel, and in an economic and political environment that changes with the wind, it is the one honest-to-goodness truth we all can believe. That is why funeral homes, crematories and cemeteries...otherwise known as the "death industry", is booming when the global and domestic economy around them is crumbling. I recently read that by most accounts, the real estimated average cost of a traditional funeral is over $8,000. $8,000!!! In a financial climate of 46 states reporting over-the-month unemployment rate increases and the jobless rate in all 50 states and the District of Columbia posting increases! (March 09, U.S. Bureau of Labor Statistics) How can that be? How can consumers continue to lose their jobs and their security...and when the final event of devastation occurs...the loss of a loved one...the death industry ruffles its feathers and zeroes in like a vulture to pick the remains of the fresh corpse and their families. It's just not right...but unfortunately...it is one of the other truths that we are forced to live with.
According to senior industry analyst Toon van Beeck, of research firm IBIS World, the revenue of the U.S. funeral industry will grow by 1.2% this year to a $20.7 billion dollar industry, which, in all fairness, is down from a 2% revenue gain last year. My heart breaks for their loss.
The annual death rate of 2.5 million Americans a year is expected to increase by about 1% per year, and expected to spike by early 2020 as baby boomers reach their mid 70's. Rest assured...this is just the famine before the feast for the death industry, as their mouths water in anticipation of the aging baby boomers dying off...and perhaps the push to sell pre-need contracts. While they have to accept their measly 1.2% growth during a period of the U.S. experiencing a decrease in 2008 annual GDP of 6.3% (March 09, U.S. Bureau of Economical Analysis), they have derived clever new ways to push their growth numbers back up, particularly in light of the growing interest in "green" burials and cremation, which analysts expect to account for 38% of deaths this year. Let's see what they're up to...
The Video Tribute: This is the newest innovation from enterprising entrepreneurs and funeral homes. The services range from creating a video tribute to the departed using photographs and other memorials to live web-casting or recording the funeral as it takes place. Funeral homes offer this service to the families for hundreds of dollars. That big hearted gesture just brought tears to my eyes...until they turned to tears of anger as I realized that the necessary "capital expenditures" of the funeral home was a laptop and an internet connection. Virtually all laptops today are designed with web cam capabilities and you just need the knowledge of how to stream it (many free on-line tutorials, it really is not difficult). If the laptop does not have this feature, a web cam can be purchased, ranging from $10 to $50. Even newer Netbooks, the smaller, more compact versions of laptops, have web cam capabilities. Once again, thank you compassionate funeral homes, for taking the emotional and financial situations of the bereaved into consideration when designing your promotional offers.
Casket Rental: As the cremation percentage rises, funeral homes are feeling the pressure on the typically highest priced, and highest mark-up item...the casket. So, they are generously offering those who opt for cremation but would like a viewing to rent a casket. I recently saw one funeral home that offered a "discounted" rental fee of $1,000 for a "beautiful and ornate" casket rental. What they fail to mention is that they purchased that casket at wholesale, up to 800% below what they would sell it to you for, and after only a few, if that, rentals, the casket has paid for itself but they continue to rent it for years at the same rate. Does the phrase "cash cow" come to mind.
Others are offering grief counseling referrals, with a kickback from the referral source, and what is referred to as "thumbies"...14k gold earrings, rings, pendants or other jewelry that is made from the thumbprint of the deceased. To each his own, but you certainly do not need to pay a funeral director a fee above what the jewelry cost to be made...there are literally hundreds of vendors who provide this service without the "commission" being paid to the funeral home to Google a jewelry maker and give you a referral.
Another way that families are saving money and personalizing funerals is to have the viewing and funeral services take place in their homes or other places, sometimes with the aid of a funeral director and others that do not. That is a whole different subject and one I will cover in my next entry...wait and see!
In summary, the death industry is basically immune from the economy, or any other factor, because they have a very specific and select prospect list...everybody who is alive today! Beware of special promotional offers and be smart when selecting the types of funeral and burial goods and services. There are innumerable ways to save money through a comprehensive and documented pre-need funeral plan, you just have to take the first step.
Please learn more at www.FuneralPlannersInc.com. Everyday, we help consumers understand their rights and help them protect themselves and their families, while saving money in the process...Guaranteed. An informed consumer is a prepared consumer, an we can help.
Friday, April 17, 2009
Okay, one at a time...let's not get overwhelmed in the greed grab.
As has been well documented in the Chicago Tribune and other news sources, the IFDA has $59 million in pre-need contract funds, paid by consumers, that are unaccounted for. It apparently just "poof"...disappeared. That is outside of the fact that, per the Illinois Burial Funds Act, contract sellers may keep 5% of the principal paid for "administrative fees" and 25% of the profit on principal. So, they really don't need to steal the money...a chunk of it is just given to them. Not to mention that Randall Earl, Executive Secretary of the National Funeral Directors Association and 2001 President of the IFDA, when it had only a measly $10.6 million dollar deficit, neglected to disclose to consumers that the IFDA was investing the trust funds in risky insurance policies and that investment management fees and commissions resulted in millions worth of profits for the IFDA and member funeral homes.
Don't stop now...it goes deeper...According to the AP, U.S. Senator Roland Burris has been subpoenaed to turn over his records, license issuance due diligence, analysis on issuance of license revocation, and...gasp!...amount he was paid as a lobbyist for the IFDA. You see, when Burris was State Comptroller in 1980, he issued a license to the IFDA allowing them to manage the "trust funds" investments. Call me crazy, but since when is a funeral director suddenly an investment specialist. But interestingly, in 2007, after his role as Comptroller, Burris was hired as a lobbyist for the IFDA, specifically to lobby then State Comptroller Dan Hynes. And, shockingly, one Illinois funeral director claimed on a blog that "our pre-need trust sales are the biggest in 3 years"...time for a wake up call for Illinois consumers. Hmmmm, this one continues to play out and gets more interesting...and more disturbing...by the moment.
In an article posted on CNNMoney.com, according to Mike Nicodemus of Hollomen-Brown Funeral Home and Crematory, an average funeral at that particular funeral home costs $8,500...not chump change by any means. The VFDA promoted Shenandoah Life Insurance Company as it's funeral insurance provider of choice. Oh...did I mention that was before it was placed in receivership by the Circuit Court of Richmond, VA? It apparently does not have a balance sheet that adequately matches liabilities with assets. The FAQ document on the company's website states that policy holders should continue to pay renewal premiums to avoid disruption of claims, but does not guarantee actual payment of any claims, and at this time does not honor their "Required Minimum Distributions" on IRAs. What part of "required" am I missing? And the state of Virginia assures policy holders that interest will continue to accrue on annuities, but they cannot guarantee that this interest will actually be paid. And in more news...
Missouri is a mess. According to WLBT3 news, several pre-need funeral contract sellers are deficient in their accounts. Here's a quick sample...Green Acres (Vicksburg, MS) has $221 dollars in their trust fund to cover over $373,000 in contract liabilities. Other offenders include Prentiss Memorial Gardens (Baldwyn, MS), Sunset Gardens Memorial Park (Laurel, MS), Liberty Memorial Park (Booneville, MS), Pinecrest Memorial Park (Pittsboro, MS), which has at least 50% of the over $378,000 in pre-need contract funds unaccounted for, Southern Mortuary (Jackson, MS), missing over $38,000, George West Funeral Home (Natchez, MS), $95,000 deficient, and Jackson Mortuary (Aberdeen, MS), the runt of the group with only $10,000 unaccounted for.
But, the sad and frustrating fact is that the Missouri debacle was completely avoidable. For instance, according to the Natchez Democrat, in July 2006, a cease and desist order was issued to George F. West Funeral Home to stop selling pre-need contracts and they were ordered to pay a $5,000 fine. They ignored both the order and the fine and continued operations as usual. After they were recently...(that would be years later)...again ordered to cease and desist business operations, Mr. West hired attorney Earl Banks, a member of the MS legislature to represent him. Mr. Banks, as a member of the MS legislature, has the right to request a continuance if the case he is working on has potential to interfere with his legislature duties and obligations. Thus...this case will potentially be continued until the end of Mr. Banks' legislative term. Does anyone smell a whiff of conflict of interest...
And Green Acres Memorial Park, founded in 1955 (sold twice before 2001), faithfully neglected to file the necessary and state mandatory annual financial reports, which the "regulatory authority" was fully aware of. According to the Vicksburg Post, it filed an incomplete perpetual-care trust fund financial report in December 2003, which was rejected by the "regulatory" authority. In October 2005, Stephanie Graham, acting President, signed a consent agreement with the State of Mississippi to file reports in accordance with the Mississippi Pre-Need Act (enacted January 2002). In November 2005, the state issued a formal request for the report. In March 2006, the Mississippi Secretary of State indicated that the report had not yet been filed. In November 2006, Green Acres was issued a formal cease and desist order and their license is revoked. Fast forward to July 2008, where the Chancery court again requested the annual reports and in October 2008 the Secretary of State initiated a formal audit. As of January 2009, the Secretary of State estimated a $373,000 deficit and temporarily froze all accounts.
Oh, did I mention that Mississippi Secretary of State Delbert Hosemann is quoted in the Natchez Democrat acknowledging "at this time the state has no process for follow-up"? Well, thanks for the news flash Mr. Secretary, but that is pretty obvious
Adding insult to injury...Service Corp. International (SCI)...in case you are unaware, this is the national funeral corporation with over 1,500 funeral homes and over 400 cemeteries that showed the ultimate disrespect to our brave military vets who were in route to Arlington National Cemetery by piling their bodies up in hallways, unrefrigerated garages and other areas and, according to the AP, the defendant in over $60M in lawsuits, has applied for a bail out from the Troubled Asset Relief Program, or TARP. Really...go ahead a pinch yourself...unfortunately, this is all true and our reality.
You can protect yourself and your family from fraud and manipulation. Please visit www.FuneralPlannersInc.com today to learn how we can help.
Friday, April 10, 2009
The ponzi that should be in the spotlight involves a maze of intertwined companies under the umbrella of Missouri-based National Prearranged Services, including Lincoln Memorial Life Insurance Co. and Memorial Services Life Insurance Co., which was relatively quietly forced into liquidation in March 08. Unfamiliar...here's a thumbnail sketch...
NPS sold pre-need funeral contracts through funeral homes in 19 states, over 200,000 contracts nationwide. The pitch is to pre-pay funeral expenses at today's prices and avoid higher inflation adjusted prices later. What did my grandma always say...when it seems to good to be true, it probably is...then she would promptly box my ears for failing to see the obvious.
In a perfect world, NPS would take a percentage of the pre-paid funds and place them in a trust, which is used to buy a whole life insurance policy on the contract holder, which generates interest. When you die, NPS pays the funeral expenses within 24 hours and are reimbursed from cashing out the life insurance policy with interest. The insurance policies are, of course, purchased from their sister companies, Lincoln Memorial and Memorial Services. Keeping it all in the family...
In an imperfect world, a/k/a reality, NPS allows the insurance policies to lapse or cancels the whole life to buy a cheaper, non-interest bearing term-life policy. When you die, they "honor" the old contract with proceeds from new contracts sold. No harm, no foul. Except that you cannot sustain this model, it is illegal and is by any definition a classic ponzi! Aside from the fact that the percentage they are required to put into trust varies by state, with Missouri law allowing NPS to keep 20% of funds in commissions, and of course keep the interest. From the get go, a $10,000 contract is really worth $8,000, allowing consumers the privilege of paying $2,000 in inflation protection. I can feel my grandma's hands coming...
But, like Madoff, NPS operated with a relatively deaf ear from regulators. With it's various businesses...insurance, cemeteries, funeral homes...it fell into one of those gray, murky areas of oversight...insurance? funeral industry? contract law? Like a quick game of hot potato...don't be the last to hold it, or you are the state agency forced to do your job!
NPS was poison from inception. Founded in 1979 by James Douglas Cassity, a disbarred Springfield, MO attorney who served time in federal prison in the early 80's for an unrelated tax shelter fraud. His name rarely appears, instead placing the ownership interests of all of the kissing cousins in various Cassity family trusts and other family members.
FIRST FLASHING STROBE LIGHT
In 1992, the attorney general of MO began investigating NPS, resulting 8 years later in a 2000 court ruling which scolded NPS and told them to tighten up their financial records and make sure proper coverage is in place, with no further or ongoing regulatory monitoring guidelines.
SECOND FLASHING STROBE LIGHT
In 2005, under the cleverly named "Operation Grave Concern", the MO attorney general targeted funeral homes and pre-need contract sellers. A handful funeral directors and contract sellers were charged, and NPS, the godfather of pre-need contract fraud, was harshly scolded for failing to ensure proper coverage in relation to one charged funeral director, and paid an out of court settlement of $10,000 and once again agreed to tighten their financial records, with no further or ongoing regulatory monitoring guidelines.
MORE SPOTLIGHTSIt apparently was not important that according to the National Institute of Money & Politics, NPS ranked in the top 10 funeral industry lobbyists and political contributors, giving around $109,000, much to none other than MO attorney general Jay Nixon and MO governor Matt Blunt. It almost feels like I'm talking about Illinois! Where's Blago when you need him...
In March 08, Texas forced NPS into liquidation, as the two primary insurance companies were headquartered there, noting that the businesses were "inextricably intertwined". Not surprisingly, the Chap. 11 agreement personally exempts the Cassity's and about 50 other entities, including the Nantucket home that Doug Cassity sold last year for over $16M to Google CEO Eric E. Schmidt. In receivership, the unfortunate individual appointed to try to unravel this mess has stated that NPS will honor the existing contracts, but does not state at what value, and the payout will come no later than 60 days of filing the claim. 60 days! That's not much solace for the family who is forced to pony up thousands now for the at-need funeral they believed was paid for in advance, with the pat on the head that they will receive some to all of that money back within 60 days.
Several states, including Iowa, Texas, Missouri, Kentucky and Ohio are investigating, as is the FBI, who preliminarily have stated the loss at around $500,000,000. And various knee-jerk, sloppy and reactionary pieces of legislation have been proposed, with all of them failing to pass.
And the sordid story continues today...with no conclusion and little to no press coverage. At least they weren't deemed too big to fail.
Monday, April 6, 2009
The National Funeral Directors Association (NFDA) provides the 2006 average cost of a traditional funeral at $7,323, which most people who have arranged and paid for an at-need funeral know is much lower than they actually paid. Based on what I know and my background in finance, I simply do not believe that number. Skeptical curiosity got the best of me and I felt compelled to look into the statistical validity and integrity of that number, and...drum roll please...it is bogus. Oh, don't get me wrong, it's an average of something...but not what I believe is the average cost of a funeral. Funny how a single fact can ruin a good argument.
I will clearly demonstrate, using the NFDA's actual data, why that number is misleading at best, just plain wrong at worst.
Here are some facts (per the NFDA, but with no date reference):
- There are 20,080 funeral homes in the U.S.
- Over 10,200 funeral homes are members of the NFDA in the U.S. and internationally (they do not provide a breakdown of U.S. vs international membership)
- The NFDA provided 2006 average cost of a "regular adult funeral" is $7,323
- The average was calculated based upon member survey responses
- 3,000 member funeral homes, or 29% of it's membership, were invited to respond
- The response rate was 38%
Okay, now it gets interesting.
There is no explanation as to why only 3,000 members, or less than 1/3, were sent the survey or the diversification of the invitees, the notes do not specify whether the 3,000 invitees operated in the U.S. or if international funeral homes were also included, there is no indication of the selection process to identify those 3,000 invitees...were they "cherry-picked" or randomly selected? All of these, among others, very simple points can and will drastically determine the outcome.
Let me break it down...
- A 38% response rate equates 1,140 responses
- 1,140 represents about 11% of NFDA member funeral homes, and only about 5.4% of total U.S. funeral homes
- If survey invitees were not random, then inviting responses from targeted funeral homes in rural areas, financially depressed or disadvantaged areas, funeral homes whose business is influenced by providing goods and services to the homeless, mentally challenged or prisons, and family-owned vs corporately owned, basically allows the NFDA to handcraft a statistic to their advantage.
- The NFDA took a set number of goods and services and priced only these items from the submitted general price lists. This list is decidedly vague in what exactly was being included, providing the average cost of a "viewing or visitation", but did not specify the number of days, time of day, weekday vs weekend, etc...things that can change that number, thus the overall average, by HUNDREDS of dollars
- The average was NOT calculated from actual funeral receipts, but rather from only a pre-selected number of goods and services as determined by the NFDA.
Questions to the NFDA:
1) How would the average change if funeral home invitees were primarily located in the lowest median household income areas or rural areas? For instance, how would the prices differ from a funeral home operating in Liberty, MS (pop. 676) differ from one operating in Los Angeles, CA (pop 3.8M)?Or, funeral homes operating in Atherton, CA, with the highest median household income compared to those in Detroit, MI, with one of the lowest median household incomes?
2) Since when does information from 5.4% of total practitioners equate to "statistical integrity", as stated on the NFDA website? That's news to me...
3) What is the degree of influence from international funeral homes?
4) How were the 3,000 invitees determined?
5) Why did only 38% respond? A reasonable person might conclude that those funeral homes with higher prices operating in higher income, metropolitan areas may decline to respond knowing that they would influence the average up.
6) The funeral industry generates $11B annually...why weren't actual funeral receipts used as opposed to only the selected goods and services determined by the NFDA?
I could go on and on, but I believe my point is clear. When any type of analysis is prepared from unclear, misleading and manipulated data, the result is unclear, misleading and manipulated statistics. Only some of us can learn by other people's experiences...the rest of us have to be the other people.
Don't be the other people. Learn more about how to protect yourself and your loved ones by developing a thoughtful, comprehensive pre-need funeral plan at http://www.funeralplannersinc.com/.
Friday, April 3, 2009
With the average cost of a traditional funeral in excess of $6,500, it is every consumers right, and frankly duty, to question why funerals cost so much today... especially in light of the fact that a casket is typically the most expensive cost. The article indicates that Funeral Consumers Alliance initiated a class action antitrust lawsuit, stating that three national funeral homes engaged in price fixing with a casket manufacturer. According to the article, "as a result of the conspiracy, unsuspecting casket buyers are forced to pay perhaps twice as much as they would if there were true competition in the market."
Reality check...caskets sold by funeral homes are typically MORE THAN DOUBLE!
Just a quick check of my casket file gave me some facts that I would like to share. Here is a simple comparison of what a casket sells for if purchased from a funeral home and what it costs if purchased directly from the manufacturer, many times with free overnight shipping:
18G Steel Casket
Funeral Home Price: $2,895
Manufacturer Price: $ 995
Difference: $1,900, or 67% mark-up
Solid Oak Casket
Funeral Home Price: $4,495
Manufacturer Price: $1,485
Difference: $3,010, or 67% mark-up
Solid Mahogany Casket
Funeral Home Price: $5,695
Manufacturer Price: $1,795
Difference: $3,900, or 69% mark-up
Funeral Home Price: $5,595
Manufacturer Price: $2,195
Difference: $3,400, or 61% mark-up
These are not small, insignificant numbers. We are talking THOUSANDS of dollars of mark-ups that are being trust onto consumers, who have been led to believe that funeral homes are trustworthy and it would be distasteful to challenge their prices. In fact, the emotional state that most people are in when planning funeral arrangements is the perfect environment for manipulation to flourish. Particularly with encouraged sales techniques such as "this casket truly honors the memory of your husband"...what kind of cold-hearted wife would say no to that?
The fact is that the casket is going to be buried and nobody will ever see it again. It will eventually decompose, regardless of whatever kind of "gaskets" or liners that you are either required or manipulated to buy. Does it really honor the person who died to deplete their children's college fund to pay for their funeral? I think not.
But, the mocking tone and frivolous attitude of the author just goes to show the general pervasive attitude of the funeral and burial industry. The "people need us, so we can do what we want, when we want and to whom we want, because we have an unlimited number of potential clients because everybody dies" outlook. I disagree.
A pre-need funeral plan, developed with a thoughtful and clear mind, taking the quality and costs of various funeral related goods and services into consideration before making decisions is the only way to protect yourself and your loved ones. As I wrote yesterday, the FTC is responsible for regulatory oversight of funeral homes. During their 2008 undercover investigation of funeral homes nationwide, they managed to investigate 104. In 2006, the most recent year for "official" census studies, there were over 29,000 funeral homes in the US. Is 104 really a reasonable sample? I think not. And does it matter...of the 104, over 62% operated in violation of the Funeral Rule.
In short, there is really no disincentive for funeral homes to operate with the best interest of the consumer in mind. There is very little oversight, and if one dares to question their integrity and business principles (gasp), they must be some kind of cold, uncaring individual, subject to mock and ridicule.
That is wrong. Every consumer in this country deserves to be treated fairly. But, by about the time you are old enough to speak, you realize that is not always the case. You can and should protect yourself.
A pre-need funeral plan is a necessary and important step in financial and future planning. Please educate yourself, defend yourself from being victimized and learn how at www.FuneralPlannersInc.com. We help individuals and families everyday to make emotionally appropriate and financially responsible decisions about their funeral, burial, cremation and memorial options. Please learn more...it DOES make a difference and you DO have a voice and a choice.
Thursday, April 2, 2009
The FTC enforces what is called the Funeral Rule, which is basically a step-by-step guideline to protect consumers from being taken advantage of or misled by funeral homes, crematories and cemeteries. Within this enforcement, the FTC conducts an annual audit of funeral homes across the country. The 2008 results were recently released and, if anything, it makes me feel that consumers are more vulnerable to funeral home manipulation and thankful that I am informed and prepared.
The FTC investigated 104 funeral homes across seven states. Incredibly, almost 62% were cited for significant and/or minor violations!
Orange County, CA was one of the seven states included. In Orange County, incredibly 61% of the 18 funeral homes inspected were cited for significant and/or minor violations. That is likely not much comfort to the countless individuals and families who trusted these and other funeral homes during their time of emotional crisis and grief.
On the bright side, you can be thankful that you didn't have to arrange a funeral in Northeastern Arkansas. Of the 15 funeral homes inspected there, 11 were cited for significant violations and 4 for minor...or simply a 100% FAIL rate.
Of the seven states, only one (Nassau County, NY) ranked below 50% of the funeral homes operating without violations. Of the 18 funeral homes investigated, 2 were cited for significant violations and 3 for minor.
But here is the real interesting part...funeral homes with significant violations can avoid costly and public litigation by agreeing to participate in a 3-year Funeral Rule Offender Program (FROP), which teaches compliance, the Funeral Rule and other topics that reasonable minds would assume they already knew considering they operate as a funeral home and are likely a member of the National Funeral Directors Association (NFDA). Violating funeral homes also make a "voluntary" payment to the U.S. Treasury and pay annual administrative fees to the NFDA.
Let me clarify...violators learn how to operate a compliant funeral home, while continuing day-to-day operations as a funeral home, and pay annual fees to an association that they likely already belong to, ultimately paying themselves. This builds consumer confidence?
It's important for consumers to have some degree of confidence in the integrity of funeral homes considering that multiple reputable sources report that the average cost of a traditional funeral is now over $6,500. In these economic times, coming up with that kind of money to be spent on something like a funeral, which holds no lasting fiscal value, is quite a daunting thought.
But, the empowering and most important thing is YOU CAN PROTECT YOURSELF!
By working with an independent, unaffiliated pre-need funeral planner like Funeral Planners Inc., you can know your rights and options and prepare a comprehensive and documented pre-need funeral plan, where over 100 decisions, arrangements and negotiations are made with the benefit of time and knowledge, allowing for thoughtful and financially responsible decision making.
Learn more at www.FuneralPlannersInc.com or call today at 219. 728. 1290.