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 I N D E X

SESSION: PAGE:

Introduction and Overview 6

Session I -- Definition of the

 Term "Funeral Provider" 22

Session II -- Prohibition of

 Casket Handling Fees 79

Session III -- Pre-Need Issues 131

Session IV -- Price List 180

 Requirements

Session V -- Basic Services Fee 206

Session VI -- Public Participation 239

EXHIBITS REFERENCED DESCRIPTION

Exhibit A 220 Basic Staff Services/Overhead

 (Kansas City 1998)

Exhibit B 244 Gravesite Opening & Closing

 Fees graph, prepared by Dr.

 Frederick Crowley, Indiana

 University
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 FEDERAL TRADE COMMISSION

In the Matter of: )

Funeral Rule Review Workshop ) P984407

-----------------------------------)

 Thursday, November 18, 1999

 Federal Trade Commission

 6th & Pennsylvania Avenue, N.W.

 Washington, D.C. 20580

 The above-entitled matter came on for

rulemaking workshop, pursuant to notice, at 8:50 a.m.

before Chairperson Eileen Harrington.
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 PARTICIPANTS

NAME ORGANIZATION

Eileen Harrington Federal Trade Commission

Allen Hile Federal Trade Commission

Myra Howard Federal Trade Commission

G. V. Ayers Cemetery & Funeral Program of

 the California Department

 of Consumer Affairs (CFP

 of CA)

Mercedes Bern-Klug Funeral and Memorial Society of

 Greater Kansas City

Lisa Carlson Funeral and Memorial Societies

 of America (FAMSA)

John Carmon National Funeral Directors

 Association (NFDA)

Maynard Cheris National Casket Retailers

 Association, Inc.

Edith Churchman, Ph.D. National Funeral Directors &

 Morticians Association

 (NFDMA)

George W. Clarke National Selected Morticians

 (NSM)
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NAME ORGANIZATION

Randall L. Earl International Order of the

 Golden Rule (IOGR)

Paul M. Elvig International Cemetery and

 Funeral Association (ICFA)

T. Scott Gilligan NFDA

Pat Graham Graham Funeral Home (Graham)

Carolyn Jacobi Eternal Justice

Robert Karlin California Casket Retailers

 Association

Jeffrey A. Kramer American Association of Retired

 Persons (AARP)

Harvey Lapin Cremation Association of North

 America (CANA)

Glenn McMillen Service Corporation

 International (SCI)

Harry Neel Jefferson Memorial Cemetery and

 Funeral Home

Robert Ninker Funeral Ethics Association

 (FEA)

John M. Peterson Monument Builders of North

 America (MBNA)

James Pinkerton Orion C. Pinkerton Funeral

 Home, Inc.
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NAME ORGANIZATION

Jennifer Rawls National Association of

 Consumer Agency

 Administrators (NACAA)

Bill Seale Directors Investment Group,

 Inc. (DIG)

Jonathan Siedlecki FEA

David Swim Casket Gallery Showrooms

John S. Wallenstein New York State Monument

 Builders Association

 (NYSMB)

Billie Watson Hughes Independent Funeral Directors

 Association of the

 District of Columbia

 (IFDADC)
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 P R O C E E D I N G S

 - - - - -

 INTRODUCTIONS AND OVERVIEW

 MS. HARRINGTON: Good morning. Since you're all

here early, we'll start early. This is better than an

on-time group. My name is Eileen Harrington. I'm the

associate director for marketing practices at the FTC,

and my role today is to facilitate the discussion here

at the table and at the end of the day with any of you

who would like to make statements. There is a sign-up

sheet for people who are not participating here at the

table, and where is that?

 VONI: In the foyer right outside the door.

 MS. HARRINGTON: Did everyone hear that? If you

want to sign up to participate during the public

participation portion of today's workshop, there's a

sign-up sheet out in the foyer, and you may sign up

there, and you must sign up, because we won't call on

you if you haven't signed up.

 As I said, I'm Eileen Harrington. I have with

me today my colleagues from the division of marketing

practices, Myra Howard and Allen Hile, who may take

stints facilitating during the day.

 We have a very full agenda, and we will adhere

to it strictly. The time limits are important. We have
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a lot of ground to cover, and I will certainly exercise

my prerogative to hurry you up and move us along. We

want to hear what you have to say, but if you are

speaking and aren't making a new point or responding to

a question that's out or in other ways moving the

conversation forward, I will interrupt and move us

along.

 In a moment we're going to go around and have

introductions, but let me go over some ground rules

first, if I may. First of all, this is part of the

process of making a record for us to review in

connection with our review of the Federal Trade

Commission's trade regulation rule that governs the

marketing and sale of funeral goods and services.

 Because we are making a public record, we have a

court reporter with us, Susan, who's down here in the

burgundy jacket, and there are some things that we need

to do to make it possible for her to do her job. First

of all, she has a seating chart for those of us here at

the table. It's very important that we all stay in our

places today. That is, you can't move around or that

will really, you know, goof things up, and we'll have a

record that has, you know, Lisa Carlson representing the

NFDA or something like that, which we really -- I think

we would recognize the error in that record. So, please
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stay in your places where your placards are.

 Also, as we get started this morning, the first

couple of times that you speak, would you please

identify yourself to make it easier for Susan so she can

get into a groove here recognizing voices. For those of

you who are not participating at the table who

participate later in the day, you're going to have to

identify yourself so that Susan can get down in the

record who you are. So, that's the first important

rule. We have to help our reporter make a good record.

 The second rule that you need to know -- I

think, Jennifer, we have a place for you up here, don't

we?

 MR. HILE: Yes, we do.

 MS. HARRINGTON: Great.

 The second important rule is whenever you speak,

you need to speak into a microphone. We don't have

enough microphones at the table to have one per

participant, so you'll have to help one another out,

move them around, but speak into the microphone. We

have an overflow room downstairs, and it's being

video-transmitted, so that there are people downstairs

who want to hear and watch this proceeding, and if we

don't speak into the microphone, they will think that we

are lipsinking or something, and it won't come through.
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So, speak into the microphone.

 The third rule is that for those of you who are

participating here at the table, when you want me to

recognize you, I need you to put your name tent upright,

and I will be calling on people in whatever order I

decide I'm going to call on them. I'll be taking note

of who wants to be recognized, but the purpose of this

workshop is not for people to just restate the positions

that have already been laid out very well in the

comments. That is not why we are here. We are here to

talk to one another about those positions and about

issues that we've identified from our very careful read

of the comments that we would appreciate hearing more

discussion about here.

 You each have a perspective, an experience.

Sometimes as we read the comments, we see that folks

with one perspective say something that is diametrically

opposed to those who have a different perspective, and

we would like to hear you talk to each other. You

people may be able to really explore those differences

in a way that is more helpful to us than we can, and

that's why we're here.

 So, I hope that you find this to be a positive

experience. We have done a lot of this sort of work

very publicly in workshop format to help us in our other
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rulemaking activity, and I think that at the end of the

day, even though you may not find that the group has all

stood up to acclaim your position on any particular

issue, I hope you will feel that there's been a very

good discussion and an open discussion and a fair

discussion, and we want to tell you at the outset how

appreciative we are that all of you are here.

 So, the other -- I guess the other point is that

I think that the restrooms and other facilities in the

building are very well marked outside, and if there's

anything that any of us from the FTC can do to help you

make your day here a little bit more efficient or

pleasant for you, please don't hesitate to let us know.

 Last, we have a wonderful entrepreneur who runs

our food service on the seventh floor at the top of the

trade, Mr. Ming, and he would be very upset with me if I

didn't tell you that you can go right upstairs to the

seventh floor and grab a little something to eat during

our lunch break. There are also restaurants and other

food facilities around.

 Is today the day that we're having Thanksgiving

up in Mingdom?

 MR. HILE: Yes.

 MS. HARRINGTON: Today Mr. Ming is serving a

Thanksgiving dinner upstairs, turkey and the whole deal
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for not a whole lot of money.

 So, with that I think we'll begin by introducing

ourselves, and what I'd like each of the participants to

do is say who you are, who you represent and tell me

very concisely one thing that you are interested in

seeing happen today, okay? And I'm going to start --

oh, I'm going to start with Jeff.

 MR. KRAMER: I'm Jeff Kramer with AARP. I'm a

legislative representative in federal affairs, and I

guess what we would like to do is just to make certain

that people understand that the funeral rule is to help

consumers.

 MS. HARRINGTON: Thanks Jeff.

 Maynard?

 MR. CHERIS: Maynard Cheris, National Casket

Retailers Association. We would like to make the

Federal Trade Commission aware that the sham package

discount is anticompetitive and is a barrier to consumer

savings.

 MS. HARRINGTON: I want to give high marks to

our first two participants for following all

directions. You were listening attentively.

 I need to ask everybody to tip their name tags a

little bit so I can see who you are, because I don't

know all of you. So, the people who I do know are going
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to have the misfortune of getting called on first.

 Harvey?

 MR. LAPIN: I won't tell them how we know each

other.

 MS. HARRINGTON: Oh, my God.

 MR. LAPIN: Harvey Lapin, I'm general counsel

for the Information Association of North America, and

our primary purpose here is to bring to the attention of

the Commission and others that the warnings on the forms

and some of the disclosures should be adjusted so that

they are more beneficial to consumers.

 MS. HARRINGTON: Thank you.

 George? I don't know you, I don't think, but

let's hear what you have to say.

 MR. CLARKE: Good morning, my name is George

Clarke. I'm the executive director of the national

selected morticians. We are an association of

independently owned funeral homes, and some of our

members own cemeteries, as well. What we would like to

accomplish today is to meaningfully engage in the

dialogue to help each other understand the positions and

hopefully to help the FTC to understand some of the

different issues that have arisen as a result of the

changes in the industry over the last few years.

 MS. HARRINGTON: Thank you.
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 Billie?

 MS. WATSON-HUGHES: Good morning. I'm Billie

Watson-Hughes representing the Independent Funeral

Directors Association of the District of Columbia.

Today we would like to work with the FTC to urge the

strengthening of the funeral rules so that there is more

protection for the consumer.

 MS. HARRINGTON: Okay, thank you.

 Glenn?

 MR. MCMILLEN: My name is Glenn McMillen with

Service Corporation International, and I think if we

would look at one objective, we would hope that as we

consider the various suggestions to change to the

present rule, that we would look at it in a form that

would simplify the transaction for the consumer.

 MS. HARRINGTON: Thank you.

 Jennifer? You need a microphone.

 MS. RAWLS: Thank you. I'm Jennifer Rawls. I'm

here representing the national association of consumer

agency administrators, and we are interested both in

protecting the consumer but also in working with

agencies like the FTC in enforcing the rule where

appropriate.

 MS. HARRINGTON: Thank you.

 Rob?
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 MR. KARLIN: I'm Rob Karlin, representing the

California Casket Retailers Association, a group of

independent entrepreneurs not associated with funeral

homes or cemeteries, and our major goal here is to close

the loophole that we see where bundling is happening and

the funeral service costs more to those consumers who

elect to purchase a casket somewhere other than the

funeral home. Thank you.

 MS. HARRINGTON: Thank you.

 Paul?

 MR. ELVIG: My name is Paul Elvig. I am from

the International Cemetery and Funeral Association and

from Seattle. Our goal today is to participate in this

hearing to be certain that the voices of the cemeteries,

both large and small, are heard where issues affect us.

There's approximately 100,000 cemeteries in this

country, and we want to be certain that the FTC's

approach with cemeteries remains even-handed and fair.

 MS. HARRINGTON: Thank you.

 John?

 MR. PETERSON: My name is John Peterson. I'm

outside general counsel for Monument Builders of North

America. Our purpose today is to advance the interests

of consumers in the death care industry and to hope that

the Commission will listen to the voices of the
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consumers that have expressed a need for a broader

approach under the current rule.

 MS. HARRINGTON: Okay.

 Lisa?

 MS. CARLSON: Lisa Carlson, Funeral Consumers

Alliance and FAMSA. We are here today to try to

increase consumer choice. Many consumers can't choose

-- shop between funeral homes effectively or between

cemeteries, and so it's important for us to seek

additional opportunities of choice within any cemetery

or funeral home transaction.

 MS. HARRINGTON: Thank you.

 Mercedes?

 MS. BERN-KLUG: Mercedes Bern-Klug with the

Funeral Memorial Society of Greater Kansas City. We are

here to make sure that there is fruitful discussion on

the funeral rule regarding how the funeral rule can be

enhanced to ensure that the purchase decisions made by

families result from their informed preferences and not

those of the funeral provider.

 MS. HARRINGTON: Thank you.

 Edith?

 MS. CHURCHMAN: Good morning. I'm Edith church

man. I am here representing the National Funeral

Directors and Morticians Association. I'm also a fourth
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generation funeral director from New Jersey. I'm here

today to participate in an open dialogue that hopefully

ends in protection for the consumer, care for the

consumer, and high levels of enforcement of the FTC

rule.

 MS. HARRINGTON: Thank you very much.

 John?

 MR. WALLENSTEIN: Good morning, I'm John

Wallenstein, I'm general counsel to the New York State

Monument Builders Association. Our primary purpose here

is to ensure that if the rule is expanded to include

cemeteries and monument retailers, that it's done in a

fashion that would be appropriate to the industry as

well as to the consumer.

 MS. HARRINGTON: Thank you.

 Carolyn?

 MS. JACOBI: Yes, I'm Carolyn Jacobi, Eternal

Justice, self-proclaimed consumer advocate. It's an

honor to have this opportunity to speak at this table

today, and the intent that I have is to help to

stimulate a dialogue that will encourage the expansion

of the present rule so that it will become inclusive and

it will give the consumer much more protection, and with

that happening, that enforcement does take place.

 MS. HARRINGTON: Thank you.
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 Randall?

 MR. EARL: Good morning, I'm Randall L. Earl,

representing the International Order of the Golden

Rule. I'm a funeral director from Decatur, Illinois,

which has been in the news in the last several weeks

extensively.

 We at Golden Rule would like to see the rule

strengthened, because of the industry changes since 1984

and the inception of the FTC.

 MS. HARRINGTON: Thank you.

 Who do we have down here? Robert Ninker, and do

you go by Robert or --

 MR. NINKER: Whatever you feel comfortable

with.

 MS. HARRINGTON: Robert's fine, you know.

 MR. NINKER: My name is Robert Ninker --

 MS. HARRINGTON: You know, Harv and I know each

other differently, as he would say, but I don't know

what you're comfortable with.

 MR. NINKER: Make it Nink, then. My name is

Robert Ninker, represent the Funeral Ethics Association,

and what we'd like to see as an outcome today is that we

work together in the common field, taking as our lead

the fact that ethical practice is the key to us being

able to best serve consumers.
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 MS. HARRINGTON: Thank you.

 Pat?

 MR. GRAHAM: My name is Pat Graham. I'm a

funeral home owner from Junction, Texas and also a part

owner of a casket store, also in Texas. I'm interested

in seeing the industry move back towards the general

price list and less towards the bundling practices,

which have been occurring with packaged pricing.

 MS. HARRINGTON: Thank you.

 John?

 MR. CARMON: I'm John Carmon. I represent the

National Funeral Directors Association. I'm also a

small funeral director from Windsor, Connecticut. We

are here to hopefully see that the rule can be

strengthened to include all providers, but also to show

that certainly funeral service and the interests of the

consumer can be very much the same.

 MS. HARRINGTON: Okay, thank you.

 Harry?

 MR. NEEL: Good morning. I'm Harry Neel from

Jefferson Memorial Park a cemetery and funeral home in

Pittsburgh, Pennsylvania. I'm a third-generation

cemeterian. I've been listening to you and trying to

figure out what my thrust was. I think I possibly I may

be among a handful of us that are hands-on daily
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managers, and I hope that's a resource to you.

 MS. HARRINGTON: And it will be, thank you.

 Mr. Ayers, how do we address you, G.V. or --

 MR. AYERS: G. V.

 MS. HARRINGTON: Okay, G. V.

 MR. AYERS: I'm G.V. Ayers. I'm the chief of

the cemetery and funeral program for the California

Department of Consumer Affairs. I'm here, if I'm not

mistaken, as the only state regulator at this table, so

I may be a target somewhat. No, actually, I'm here to

help to participate in the conversation today, to seek

to find ways that we can better protect consumers on the

state and federal level as well.

 MS. HARRINGTON: Thank you.

 David?

 MR. SWIM: David Swim, president of Casket

Gallery Showrooms in San Diego, California, a California

state licensed cemetery broker. I'd like to see the

participants and the FTC today be encouraged to remove

the barriers that allow families and consumers to get

third-party merchandise, and then also to seek the FTC's

involvement in greater disclosure that the consumer has

the right to third-party products and services and

funeral cremation and cemetery products.

 MS. HARRINGTON: Thank you.
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 Bill?

 MR. SEALE: I'm Bill Seale from Abilene, Texas,

Directors Investment Group, which our subsidiary is

Funeral Directors Life Insurance Company. I've been a

funeral director for 50 years, and I don't look it, of

course, but we -- 18 years ago, a group of us funeral

directors in the western part of Texas organized an

insurance company, a legal reserve life insurance

company, for the purpose of doing pre-need funerals and

seeing that they're safely done and that the consumer is

fully informed as to their rights and what they have to

do.

 And we're very interested in helping the group

today in their discussions determine that the consumer

is foremost in everybody's mind and at the same time

that the -- we make it simple enough that the -- it's

easy to understand and easy for them to shop if they

want to and do whatever else they need to, but

particularly we're interested in the pre-need

arrangements and the pre-need insurance departments on

it. And we look forward to conversing with each of you

about our views and listening to yours.

 Thank you.

 MS. HARRINGTON: Thank you.

 Jim?
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 MR. PINKERTON: I'm Jim Pinkerton from the Orion

C. Pinkerton Funeral Home in Pittsburgh, a funeral home

that I own with my dad. I'm also a member of the State

Board of Funeral Directors in Pennsylvania. I guess my

primary purpose is if we provide the same goods or

services to the same people we ought to be covered by

the same rule.

 MS. HARRINGTON: Thank you, Jim.

 By my notes I've called on 23 of you and we are

supposed to have 24 participants, so have I missed

anyone here or did I just not do a good job of note

taking? I do a good job of note taking. We have gotten

everyone.

 All right, we're 30 seconds ahead of schedule.

You guys are very good. You're likely to get the full

benefit of the lunch break. Absolute we run a tight

ship here.
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 SESSION I

 DEFINITION OF THE TERM "FUNERAL RULE"

 MS. HARRINGTON: All right, the first item that

we're going to talk about may be among those of greatest

interest and one that may provide the greatest points

for -- points of contrast in our discussion, and that is

how it is that this rule defines "provider," because, of

course, it is providers that are subject to the

requirements of the rule.

 What we would really like to talk about here are

benefits, what benefits do you see consumers taking away

from this rule besides comparison shopping. I think

that shopping -- that an ability to compare price is an

obvious benefit. What we're interested in is more fully

developing the record on other benefits that may or may

not accrue. And then the other point that we really

would like your good thought on is if this definition

were to be expanded, who else ought to be included, and

should the requirements be the same if there were

additional entities included, or if additional entities

are included in the definition of "provider," would it

make sense to have different requirements? This is --

it's a tall order. We're going to talk about this now

from 9:15 until 10:30, and the floor is open for

participants. If you want to take a minute to think,
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we're very comfortable with silence here.

 MR. CARMON: Could you repeat the second half of

that question, ma'am?

 MS. HARRINGTON: Sure. The second half of the

question is, if the definition of provider is expanded,

who else should it include, and if other entities are

included, should the requirements differ among

entities? That is, are different entities that might be

included in the definition of provider sufficiently

different than providers presently covered, so that it

would make sense to have different requirements? And

for that matter, are the providers who are presently

covered sufficiently different that there ought to be

different requirements for them?

 So, we're really talking about three things,

what are the benefits, should the definition be

expanded, should the requirements be the same for all or

different.

 Now, I need that pitcher right there pushed in,

because I can't see Edith's name tag. Thank you.

Edith, we'll here from you first.

 MS. CHURCHMAN: Thank you. I think that one --

several of the benefits for the consumer beside

comparison, having the ability to comparison shop, is to

have an understanding of the funeral rule, a full
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understanding of the rule, and to lessen the pressure on

the consumer so the consumer can make informed choices.

 I think that whoever sells funeral goods and

services, funeral goods and merchandise, should be

included in the rule, and that the requirements should

be the same, because we want the consumer to be able to

focus on comparison again.

 Thank you.

 MS. HARRINGTON: Thank you.

 Pat?

 MR. GRAHAM: I feel like it's very important to

-- I mean, "level the playing field" is the catch

phrase everybody's using here, and I think it's vital

that if we're going to do that that we have to have a

standardized way of providing the consumer with

pricing. Like I said, I'm in the funeral business and

in a casket store business. A consumer's going to need

to be able to compare apples to apples. So, I think the

funeral rule should be expanded to cover -- to include

all third-party suppliers, cemeteries, monument sellers,

casket retailers, along with the funeral homes. And

that's -- you know, I think that's the only way you can

have the consumer make an informed choice.

 MS. HARRINGTON: Should the requirements

differ?
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 MR. GRAHAM: They should only in that a casket

retail center doesn't offer embalming, and they should

only have to provide disclosures on items or services

that they -- that they provide.

 MS. HARRINGTON: Okay, thank you.

 Jeff?

 MR. KRAMER: Jeff Kramer, AARP. I'll answer the

first part of the question first about whether consumers

are benefitting from the rule currently, and hopefully

as the discussion goes on we can talk more about

expansion, which we support, and talk about some of the

details of that. But as far as the benefits go, we

think consumers, again, benefit from the ability

certainly to shop, and we think we're finding that

consumers are starting to shop more than they have in

the past. But moreover, it's real important that

consumers feel comfortable about making choices, and I

think providing price disclosure and the rule as it

currently stands, at least with funeral directors, gives

consumers the ability to make informed choices, and

again, we feel that's the key, and that's why we really

feel strongly that the rule needs to be expanded to

include all funeral and burial service providers who

provide goods and/or services.

 MS. HARRINGTON: Thank you, Jeff.
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 Nink?

 MR. NINKER: I should take my card down, because

we agree with the gentleman who said that you don't need

to change the price list or have it identical to the

extent that it's not appropriate, and to the extent that

it is appropriate to add additional items, say for a

cemetery that offers different services and goods, then

that is appropriate.

 MS. HARRINGTON: Okay, Maynard?

 MR. CHERIS: Maynard Cheris. The --

 MS. HARRINGTON: Would you speak into the

microphone, please?

 MR. CHERIS: The casket retailers have never

really objected to being included as third-party

providers, and we feel that there are more vital issues

on the table than this.

 MS. HARRINGTON: Okay, let me check that, just

let me do a check around the table.

 Any of you who are here representing casket

retailers, does any -- do any of you object to the

proposition that Maynard just stated? Any objection?

 David, what's -- what's your objection?

 MR. SWIM: I have a partial objection, because

my concern is right now that some facets of the funeral

rule are not enforced, and some items tend to be broadly
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covered, and so by further expanding everything, even

though I do believe cemetery items need to be

particularly covered, but what would be of great concern

is all the definitions and the procedures that each

operation would be required to have and that there's

such a variety of services and different, broad range.

So, right now, the general price list and the funeral

provider, the rule itself is -- is not enforced.

 MS. HARRINGTON: What's your basis for saying

that?

 MR. SWIM: Well, the families that we speak to,

we can every week have a family that doesn't have a

price list in their possession.

 MS. HARRINGTON: Um-hum.

 MR. SWIM: We can ourselves go in, I've done

some shopping myself in Los Angeles, have been refused a

price list.

 MS. HARRINGTON: Um-hum.

 MR. SWIM: If you have a phone call that's made

and request certain things, you won't ever get it

through the mail. So, I mean, I think that there are a

large amount of things that could be strengthened just

with what we have. So, let's -- I just wish to mention

that.

 MS. HARRINGTON: I'm sorry, but -- it's Robert,
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okay, thank you.

 MR. KARLIN: Rob Karlin. We are not opposed to

being included under the funeral rule. We have

absolutely no problem with proper disclosures. We do

that now in terms of showing prices and product

descriptions and disclosures regarding the preservative

abilities of caskets. What we'd like to see -- and we

agree with the NFDA on this -- is the funeral rule to be

expanded regarding disclosures to the consumer where

they're told they have a right to purchase goods or

possibly services from other sources and that the

funeral rule be expanded and some guidelines be

instituted regarding the treatment of families when they

elect to do so and they aren't.

 Many families are very concerned about the

treatment that they might receive if they don't buy the

casket from the funeral home. They're concerned to the

extent of perhaps the funeral home might not do as good

a job at embalming or cosmetics or -- I mean, this is

how far it really goes with families. They have -- they

have -- they are intimidated by the process, and feel if

they elect this choice there's going to be some

repercussions, and if they're disclosed in writing on

the general price list or in some other way where they

have a right to select a good or service from another
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provider, without any penalty -- any penalty -- in

regards to how they're treated or in regards to the

economics of the transaction, that their funeral service

will cost the same regardless of where they purchase the

casket.

 So, we have no problem with complying with the

funeral rule. We think it's pro consumer, it's

beneficial, but I think there's a lot of uncertainty as

to how third-party caskets should be treated by funeral

homes. That was clear in the NFDA comments. Families

should not have to be present when we deliver the casket

unless they have to be present when they deliver their

casket.

 MS. HARRINGTON: Okay, Jim?

 MR. PINKERTON: As you talk about expanding the

rule and you talk about having various providers of

goods or services, I think it's important that when it's

all said and done the consumer is able to look to figure

out exactly what they pay for and what the total is,

especially since they may be purchased at different

times and certainly from the different providers. I

don't think that there should be so many escape routes

that people can provide the same goods or services and

not fall under the rule. And we educate many of the

families that come in at the arrangement conference
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about the rule, all of this within the professions in

the industry sort of know all about it, but many of the

consumers don't. Many of the consumers are still

pre-1984.

 So, we're educating them, and I agree, I mean,

if we're going to compete on a fair level, that's fine.

If he's going to provide a casket, the consumer should

know exactly what they paid for with that casket. As

we've experienced in Pittsburgh, not be under the

impression that somehow there is a relationship between

the funeral home and the casket provider that doesn't

exist. So, I think that those disclosures and

everything needs to be open and up front.

 MS. HARRINGTON: Okay. John Wallenstein?

 MR. WALLENSTEIN: I wanted to address the other

part of your question, and that is assuming -- I'm

getting a consensus from the table that everybody agrees

that the rule should be expanded, just about everybody

agrees that the rule should be expanded, and I assume

that that covers cemeteries, monument builders and

everyone who's involved in providing anything to do with

a funeral.

 The question then becomes -- and there's a

jurisdictional question here, too -- can you exercise

and should you exercise jurisdiction over religious and
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municipal cemeteries if they are covered by the rule?

And I don't know the answer to that, but I think that

everybody should be covered. And I think that that

should include those religious, municipal and nonprofits

that are, in fact, dealing with the consumer in terms of

selling monuments or selling monument services,

monument-related services.

 Our concern in New York, we've recently pushed

for and gotten legislation that requires a separate

contract for a monument, separate and apart from the

funeral contract. I think that is pro consumer. I

think that that is something that the Commission might

consider as part of an expansion of the funeral rule, to

require that type of a separate document which would

provide full disclosure to the consumer, what's the

monument going to cost you, what's it going to cost for

installation, what's it going to cost for lettering,

when can it be installed, what is it going to look like,

rather than simply having a consumer find out three

months after the funeral that they purchased the

footstone that they didn't even want or that wasn't even

permitted by the cemetery.

 Likewise, if the rule is going to be expanded to

cover cemeteries, consumers should be made aware up

front, perhaps at the time of the lot purchase, which I
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think would be appropriate, what the rules are with

respect to monuments. Some people don't care what the

memorial looks like. Others want an obelisk. Some will

settle for a footstone. Others want a headstone. And

obviously cemeteries have different requirements in

different sections of the same cemetery.

 The consumer needs to know when you're

purchasing a plot that, yes, I can put a headstone up

for my father, or, no, I can't, I can only put a

footstone here, or I can only put a bronze marker here.

The consumer needs to know that up front and needs to be

able to have some form of comparison, perhaps between

cemeteries and certainly between monument retailers

later on.

 And one other point on that, the consumer needs

to know that the cemetery can't require them to purchase

a monument from the cemetery or from someone connected

with the cemetery. In New York, we don't have that

problem, because nonprofits are not permitted by law to

sell monuments in New York. But that does not apply to

religious cemeteries, and I think that that ought to be

considered as part of any expansion of the rule, because

I think it is anti consumer if they are permitted to do

so.

 MS. HARRINGTON: Well, John, you very correctly
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note that there certainly is jurisdictional issue when

we get into that area.

 MR. WALLENSTEIN: Something we can't solve

today.

 MS. HARRINGTON: Right. But I think I would

just note for the record that there certainly is a

jurisdictional issue there, and that would be a matter

for Congress.

 MR. WALLENSTEIN: Well, I'm not sure that the

Commission can't do it. I don't know the answer. You

may have jurisdiction to do it if you -- if you take the

position that a cemetery which sells a monument is

engaging in a for-profit activity with respect to that

only, then I think that you do possibly have

jurisdiction, but I guess that depends where you are.

In the eighth circuit in may get away with it, in the

second you may not, so --

 MS. HARRINGTON: Right, right.

 MR. WALLENSTEIN: -- I think that's where the

problem is.

 MS. HARRINGTON: Well, that's right, and as a

national consumer protection agency, it's very difficult

to deal with the proposition that consumers in one

circuit have different rights than consumers in

another.
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 MR. WALLENSTEIN: Only one case to say you can

do it, everybody will fall in line, and if they don't,

there's some guys down the street who will tell you

about it.

 MS. HARRINGTON: Interesting discussion.

 John?

 MR. PETERSON: I think there is some language in

the California Dental Association Supreme Court opinion

in a footnote that provides some, shall we say, wiggle

room for the FTC with respect to its jurisdiction, and I

would encourage you and your staff to look at that area

as far as a grounds for expanding.

 Also, I think it's important that we not just

talk about leveling the playing field here. That

certainly, I think, is one basis, if other entities are

selling the same goods and services, but I think we also

need to look at the same types of abuses are occurring

that led to the funeral rule originally in the cemetery

industry.

 Monument dealers and retailers currently

practice under a code of good practice and a recommended

installation guideline, and they are fully capable of

performing under the restrictions of the funeral rule if

it should be expanded. We think that consumers will be

better served. They don't know the difference often
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times nowadays between a funeral director and someone

else selling the same goods at a cemetery. We think

that everybody should be under the same disclosure

requirements and the same prohibitions on

misrepresentation.

 MS. HARRINGTON: Thank you.

 Carolyn?

 MS. JACOBI: Yes, basically I feel there have

been many advantages as far as the consumer's concerned

with the present rule, even though there's a great need

for its expansion and revision. One of the things that

has not been mentioned is that the consumers that I've

had the opportunity to meet with have said that the rule

presently has educated them to the fact that there is

accessibility to information for them at the most

vulnerable time of their lives, and it gives them that

intercept period to be able to make sometimes a very

rational decision.

 The next issue I'd like to point out is that the

goal of the FTC is to represent and protect all

consumers. And I pray that John is correct that there

is a little wiggle room that we can pull in all aspects

of the industry, whether it be nonprofit, religious,

municipal or whatever, because the violations are

there.
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 I would like to see disclosure in a language

that is suitable for all consumers to understand, and

that's very important. I have seen in many instances

where the language within certain facilities was so

jargoned that even the Ph.D. would have to sit and read

it two or three times before they actually comprehended

it, because it became very ambiguous.

 I would also like to point out the strong fact

that, yes, all providers must be covered by the same

rule and regulation, but when you come to the different

categories and the different services that are offered,

you have to have different categories with subcategories

that would then include all individuals.

 MS. HARRINGTON: Thank you.

 Mercedes -- could you pronounce your first

name?

 MS. BERN-KLUG: Mercedes. You can call me

Merc.

 MS. HARRINGTON: Merc? Okay, thank you very

much.

 MS. BERN-KLUG: Kansas City. I just wanted to

encourage us to think about it a little bit differently,

and rather than thinking in terms of who should be

covered by the funeral rule in terms of the provider

status that we think about which items, which services
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and which merchandise ought be covered, and then anybody

who provides that, religious or not, would -- should be

compelled to follow the funeral rule.

 This would facilitate comparison shopping by the

families, and that's at the heart of what we want to

do. So, from a family's point of view, it really

doesn't matter who's providing it. It matters what's

being provided. And I would like us to take that to

heart.

 MS. HARRINGTON: Okay, thank you.

 Lisa?

 MS. CARLSON: Lisa Carlson, FAMSA. I can't

imagine that there's anyone in this room that doesn't

agree that the funeral industry has radically changed

since the original funeral rule. Given that, I really

appreciate the fact that we're looking at it again.

 If the four basic tenets of the rule are price

disclosure, rights disclosure, antitying, and honesty, I

cannot imagine anyone arguing with expanding the rule.

 MS. HARRINGTON: John?

 MR. CARMON: Yes, the National Funeral Directors

Association has simply thought that if the word and the

definition of provider, of providing goods and services,

was changed to "or," that that would certainly make an

expansion and to cover everyone where the consumer would
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go for goods or services.

 The other point that I would like to make is

that part of the rule and the importance of it is to

educate the consumer, and certainly wherever they can

get that education is very important, because I think

they perceive and see all these places the same.

 MS. HARRINGTON: George?

 MR. CLARKE: Thank you. George Clarke, National

Selected Morticians. Let's go back to the first part of

your question regarding the benefits that consumers have

realized from the rule beyond cost comparison. We think

it's important to remember that for many consumers, when

they approach the need to make funeral arrangements,

they often don't have any idea just exactly what it is

that they want or what they need and that there is no,

quote, "standard" type of funeral arrangement, be it

with a ceremony or not, that meets everyone's needs.

So, the funeral rule has helped consumers to educate

themselves about the various options that they have.

 After they identify their options and as the --

we've witnessed the changes over the last several years

in the industry, particularly with regard to the number

of providers that have entered the industry, the

consumers now are faced with identifying their options,

recognizing that there are different providers that can
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help them with those options, but yet there's

inconsistency in the follow-up information that allows

them to compare the services and products they may

receive from a funeral home versus a cemetery.

 To our way of thinking, if the cemetery is

providing the casket and providing an opportunity for a

graveside service or a chapel service, they're doing

nothing different than a funeral home, and as a result,

they should be bound by the same regulations that meet

what we perceive to be the primary objective of the

funeral rule, and that is to guarantee access uniformly

to consumers that need to make funeral arrangements.

 Within that context, I'm not sure that we could

say right now that there is one general price list that

will accommodate all segments of the industry, and we

would certainly be happy to continue discussions

designed at arriving at the most efficient way, the most

comprehensive way, for the consumers to obtain the

information that they need, regardless of their

choices.

 MS. HARRINGTON: Okay. Paul, what do you think

about that?

 MR. ELVIG: Paul Elvig, International Cemetery

and Funeral Association. My background is unique in

that I used to be the president of the National Cemetery
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Regulators Association, having been a regulator myself

in the State of Washington for 12 years and having

handled consumer complaints.

 Our review of FTC procedures and records has

gone as far as to ask under the disclosure, Freedom of

Information Act, for copies of any and all complaints

filed against cemeteries. We know the FTC gets

approximately 60,000 complaints a year, and we were told

in our request for this information that zero complaints

have been filed against cemeteries. I would emphasize

that, zero complaints.

 So, we're suggesting -- as a matter of fact, we

are advocating in a very aggressive way -- that if the

rule is to be expanded to cover cemeteries, that the FTC

follow its own procedures as it pursues an expansion of

the rule. And those procedures would be to determine

that, in fact, that there is a fact that the public is

being dealt with unfairly at the cemetery level.

 The information we're hearing around this table

are opinions, but we're not getting at surveys that are

detailed, that are accurate and that are qualified in

the area of survey. Let me say this, that when I was a

regulator in the State of Washington, the complaints I

received about cemeteries were issues concerning dissent

of title, misspelling on markers, the length the grass
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may have grown, all of these issues well outside of FTC

rule capacity.

 And so, to suggest to expand the rule to

cemeteries, that that is going to remedy a problem, that

problem has not been identified. The problem has not

been addressed, the problem has not been surveyed, and

the FTC itself can't produce a single complaint. It

would seem that with 5000 deaths a day in this country,

someplace, somebody would have a complaint if there is a

real problem.

 So, we're here to suggest that there's not a

problem in cemeteries with disclosure of prices, there's

not a problem in cemeteries with bundling, there's not a

problem in cemeteries with offering undeclinable fees,

there's not a problem in cemeteries with serving the

public. Quite the contrary.

 MS. HARRINGTON: Well, now things are reving

up.

 I would just note for the record that it may be

that -- and I don't have a basis for this other than my

experience working here for 15 years and dealing with

consumer complaints, but it may be that consumers don't

think to complain to the Federal Trade Commission about

cemeteries because the rule, as it's presently written,

pretty clearly -- or in many instances, not in all, but
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in many instances wouldn't apply on its face. And we

have had experience over the years with different

consumer issues, and I'm not saying that there is or

isn't a problem. I'm just observing that we've had a

lot of experience over the years with consumer

complaints coming to us. They tend to come to us about

matters that consumers would know are subject to the

FTC's general area of jurisdiction, and so sometimes

when we get new areas of problem, we don't hear about

them through complaints, and, of course, there are many

bases for establishing the existence of a problem.

 And I just offer that to correct any

misimpression, Paul, that your comment might create that

the only way that we ascertain the existence of a

problem is through consumer complaints.

 Okay, let's see, I had Paul next. Which one of

the Pauls?

 MR. ELVIG: I'm Paul.

 MS. HARRINGTON: Oh, you are Paul. I'm sorry,

Paul, duh.

 MR. ELVIG: Last time I looked I was.

 MS. HARRINGTON: Okay, yes. Harry?

 MR. NEEL: It would seem from some of the

comments here that there is not an honest business in

this country unless it has government regulation. I
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always object to the innuendos, Jim, escape routes. I

know of no escape routes on the contracts that I see

around cemeteries, that a consumer isn't -- can't tell

the difference between the salesperson who sells him a

casket and the funeral director he deals with. I've

never come in contact with anyone that can't tell the

difference or doesn't know.

 Remember the days -- and you still have them --

when people pre-arranged their funeral but did not fund

it. It was a wish list. That consumer certainly knew

their funeral wasn't paid for, but in their mind it was

completely arranged.

 The man that represents that we should have

separate contracts for items we sell so that the

consumer is more clearly informed does not seem to

understand the additional work and burden he places upon

all businesses. If we have one contract that covers

many items, it can be just as clear as individual

contracts for each item.

 To say that a family needs disclosure more about

the cemetery part, that when they drive into a cemetery

and they see upright tomb stones, obelisks and other

monuments, they can probably surmise that they could buy

a similar thing for their family. If they drive into a

cemetery that only allows markers, set even in a line,
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they could probably surmise that that's the type of

product they're allowed to place.

 As to the level playing field, the playing field

has been and is level. Cemeteries, which started

aggressive marketing in the early thirties and probably

more often than not started pre-need, had to disclose

prices to the consumer to sell their product. Price

disclosure has always been a bedrock of cemetery sales.

How can I sell someone something if I don't tell them

what it costs? I don't have to hand them a printed

price list to say, Madam, my graves go from $350 to

$1,100 each, my vaults go from this to this, my markers

from this to this. I don't need a printed price list to

have complete and full disclosure.

 To say that -- I believe someone down there gave

four points, and I sort of addressed in the beginning,

price disclosure, rights disclosure and honesty, and

there was a fourth one, I think that we do that well and

have done it well without government regulation. It's

not government's place, never has been, the Founding

Fathers didn't want it to be, to have government make

regulation simply to make regulation. They made

regulation to rectify a problem, left the rest of that

industry or other industries alone as long as they

weren't causing problems.
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 I think the cemetery industry has generally

well-regulated itself and has certainly given price

disclosure well over the years; therefore, there was no

need to expand the rule. I certainly object to your

point of view that everyone around the table is in

agreement with expanding the rule. I certainly am not.

 MR. WALLENSTEIN: I said general consensus.

 MR. NEEL: Well, take me out of the consensus.

Thank you.

 MS. HARRINGTON: Edith? Oh, you put your plaque

down.

 MS. CHURCHMAN: Well, since you called on me.

 MS. HARRINGTON: Okay.

 MS. CHURCHMAN: I would just like to address the

issue of cemetery complaints, and I think that as you

said, many consumers do not complain to the FTC about

the cemetery, but they certainly do complain to the

funeral home about the cemetery.

 MS. HARRINGTON: Well, I would also note that of

the complaints that we receive every year, an

infinitesimally small number and percentage concern any

of this. I would just note that, which, you know, you

can draw a million different inferences from that.

There is no problem, there is a problem that people

don't complain to us about, you know, it got lost in the
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mail, but this is not an area -- and there are a number

of areas that we work in in the consumer protection

field that are not necessarily reflected in our

complaints.

 Pat?

 MR. GRAHAM: I, too, wanted to address Paul on

what he said. Am I wrong -- correct me if I'm wrong,

but didn't the FTC initiate the funeral rule as much on

the premise of a potential for abuse as it did

documented cases of abuse? I believe that was the

NFDA's -- in their comment, as well.

 MS. HARRINGTON: No, there was a record

established in the rulemaking of actual abusive,

deceptive and unfair practices.

 MR. GRAHAM: Well, correct, there is

documentation, but however, wasn't also the rule enacted

under that premise, that there is a potential for much

abuse? I mean, that's what I've seen over and over

again through the FTC's records and also through some of

these comments.

 MS. HARRINGTON: No, it would have been that

there was an actual record of deceptive and unfair trade

practices and that the remedies imposed by the rule are

likely to correct those.

 MR. GRAHAM: Okay.
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 MS. HARRINGTON: George?

 MR. CLARKE: Thank you.

 I just wanted to point out with regard to

statements made about the absence of complaints in

cemeteries, in studies performed by both AARP and the

State of Virginia, the Commonwealth of Virginia, AARP

found in 1996 that there were almost -- nearly half of

the cemeteries failed to provide price information to

consumers, and in 1999, the study conducted by the

Commonwealth of Virginia found that 40 percent of the

cemeteries that responded to the survey admitted that

they did not provide price information to the

consumers.

 Just one other point. It's our understanding,

as well, that again, one of the primary objectives of

the funeral rule is to guarantee uniform access to

consumers regarding the services and products that they

need, regardless of the entity, and it doesn't

necessarily hinge upon significant abuses having been

identified but the potential for the consumer to obtain

the information that he or she needs.

 Thank you.

 MS. HARRINGTON: Thank you.

 Jennifer?

 MS. RAWLS: Thank you.
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 I would also point out that in the actions taken

by several states, there have also been violations found

of the funeral rule where funeral homes did not give

price lists or made comments beyond the price lists that

were unfair and deceptive. I know several states that

have taken action in conjunction with the FTC or on

their own regarding the price lists, and I just wanted

to follow up your comment with that.

 I also wanted to comment that with working with

consumers day-in and day-out, I can tell that this is,

as Eileen said, one of those areas that they are just

not going to complain about for a lot of reasons, and

one of them is they don't know that there's something

that can be done. The states probably don't get

complaints. I know my state doesn't.

 So, that doesn't surprise me, and I don't think

that it should be seen as a basis for saying that we

don't need regulation when clearly, based on the state

action and federal action, we do. There are abuses that

are taking place.

 Just a couple of other comments about the

benefits. Mr. Karlin made the comment that often

families are intimidated by the process, and I think

that's entirely true, and I think that the price lists

and the remedies of the funeral rule are really the
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basic stuff that folks ought to be given all the time

and really aren't, but I think that to look at that and

say it's the be-all and end-all is just wrong.

 I mean, this is just the basic things that

people need to get, because they are intimidated by the

rule -- I mean by the process. They're making a

decision many times for the first time and a decision

that they won't have to make again for a long time, and

things do change, and they are going to the folks that

they believe are the experts in the field, and they need

to be treated as such and in many cases are not.

 The only thing that I have to say about -- well,

at this point, the only thing I have to say about the

expansion of the rule is that it should be kept simple.

In order for consumers to really have the benefit of

having the price lists, they have got to understand

them. In order for the consumers to have the benefit of

disclosure, they have got to be able to read them and

know what they mean. And so when we're talking about

expanding it for coverage, which NACAA agrees with, I

would also encourage us to look at not how technical we

can make it but how simple we can make it.

 MS. HARRINGTON: Thank you.

 John, did you have something -- is your card --

 MR. WALLENSTEIN: No, it's back up.
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 MS. HARRINGTON: Okay.

 MR. WALLENSTEIN: I did have something.

 MS. HARRINGTON: Okay.

 MR. WALLENSTEIN: I wanted to address two

points. I originally wanted to address one, but now

Harry raised something that I feel I need to address, as

well.

 But as far as what Paul said, I think that the

problem with covering cemeteries with the rule goes back

to what Mercedes said before. It's not a question of

who is covered so much as what are they doing that is

required to be covered.

 If a cemetery is selling a monument and a

monument dealer is selling a monument and a funeral

director is selling a monument, if the funeral director

and the monument dealer are covered by the rule, then

the cemetery engaged in the same activity should be

covered by the rule at least for that activity, which

does affect the consumer.

 That's not necessarily the same as the cemetery

acting as a burial ground. When they are selling a

monument, they are acting as a retailer vis-a-vis the

consumer and should be required to be covered by any

rule that protects the consumer, particularly when other

persons engaged in that same activity or selling those
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same goods are covered by the rule.

 With respect to what Harry said, I think that --

I'm sure that if you sell a monument -- and I don't know

if you do -- but I'm sure that if you do and you sell it

in the same contract as your funeral arrangements that

you are personally disclosing to the consumer what it is

they're buying, what it's costing them and so forth.

 I would venture to say that everyone at this

table and those behind us here represent those people

who are active, interested and ethical. We're not the

ones that need to be covered. We're not the ones that

need to be told how to act vis-a-vis the consumer. And

I think we all know that there are those in every

industry, monument dealers, cemeterians, funeral

directors, who do need to be covered by the rule.

That's why the rule was enacted in the first place.

 The New York State Legislature determined that

there was a need for a separate contract because of

abuses, and we documented them, where funeral directors

in particular -- because cemeteries are not permitted to

sell in New York -- where funeral directors literally

buried -- no pun intended -- the monument in the funeral

contract. The consumer was totally unaware that they

purchased the monument, and they found out when they

went to the monument retailer, who asked for the permit
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from the cemetery and discovered that there was already

a stone on the grave.

 So, there are abuses that need to be addressed,

that the consumer needs to be protected from, and Harry,

you're not the guy they need to be protected from, but

those people need to be addressed.

 MS. HARRINGTON: Okay, Jeff?

 MR. KRAMER: Yeah, a few things to respond to

Paul.

 First of all, again, it's what they're selling

as much as who they are when they're selling it. One of

our -- one of the survey results we did, and we have

actually done surveys on this and studies, we submitted

those for the record, we found that 23 -- in a mystery

shop we did that 23 percent of cemeteries were selling

caskets. So, they are selling items that are part of

the GPL and therefore should be under the rule.

 We also found in another survey we did on

consumer behavior that less than 5 percent of all

consumers ever file a complaint with the Federal

Government about anything, not just funerals. So, the

fact that you haven't gotten anything on funerals or

burials is not surprising. They just don't normally

file with the Federal Government. They go to the Better

Business Bureau, they go to some state agencies,
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anything, but they rarely go to the Federal Government.

So, that's one thing.

 Also as part of our survey research we found

some other things that we found very interesting. We

found that the people who went to cemeteries, only 36

percent of people got written price lists from

cemeteries about their goods and services; only 22

percent were given a written price list afterwards on --

for the goods and services.

 And we also found that the protective feature,

that there was a lot of misleading information going on,

that 29 percent of cemeterians were providing misleading

information about vault liners and things like that.

So, the research is out there, and we found that there

are a lot of problems, and we really think that the

cemeteries need to be included under this rule.

 MS. HARRINGTON: Okay, thanks.

 Nink?

 MR. NINKER: Paul, you must be living in a

cave. The State of Illinois --

 MR. ELVIG: No, Seattle.

 MR. NINKER: -- there's a hotline to receive the

number of complaints against cemeteries. They have

revoked licenses. They have been found guilty of

stealing from trusts in huge amounts, exceeding the
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millions, and I believe that what we probably need for

your edification is a depository named by Madam Chairman

where all of these complaints can be clearly documented

and I'm not talking about strung out over 20 years.

There are a hundred of them in Illinois in the last six

weeks, and they aren't just having to do with tipped

markers or problems with maintenance. They have to do

with misrepresentation and actual theft. And if we can

decide where you would like to have that depository, I

think we could enrich it so that that not become a

problem in the future.

 MS. HARRINGTON: Harv?

 MR. LAPIN: Well, CANA, as you know, is neutral

on the question of extending the rule, but I do have

some points that I think should be considered in that

regard.

 First of all, if you are going to extend the

rule, you could only extend it to companies that

actually deal with the public. You can't have a broad

brush. There are a lot of crematories in this country

that do not deal with the public in any way, shape or

form, so requiring them to have disclosures which would

never be used would be ridiculous.

 I'm hearing a lot of talk about leveling the

playing field, and personally I think that's a misused
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term. The only way you can level the playing field in

this industry would be to require every consumer to meet

with every segment of the industry at the same time.

Unfortunately, that doesn't happen, because what happens

in practice is that the person either is approached by a

pre-need seller or, on that need, they are going to go

to the funeral director. So, leveling the playing

field? Extending it isn't going to do it. That's not

where it is.

 How to standardize a form in this area, I think

you're going to make it very good for the attorneys in

this country, because -- and I'm all in favor of that,

by the way -- because I think that standardizing a form

for a cemetery or some of these other suppliers and

crematories is very difficult, because they operate

differently. They offer things differently.

 And in that regard, I must say that, you know,

many cemeteries don't have anybody operating. They're

run by volunteers, and that's been my experience with

them.

 I feel -- and I think that CANA feels, too, at

this point -- that if you're going to have a proceeding

on these other segments, it probably should be

separated, because the funeral rule, the way it's

written right now, in my opinion doesn't even apply to
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the funeral directors. The language is too technical,

consumers don't understand it, lawyers don't understand

it.

 I've had extended discussions with lawyers about

how to do those forms and back and forth, and I've

submitted some of them to the Commission and had various

results from different parties at the Commission on some

items. So, it's not easy. It should be easy, but it

isn't easy.

 Another point, somebody brought up here about

state laws and monument builders in New York. Well, I

think you have to look at state laws for what they are.

State practices differ, and the monument builders in New

York are dealing with not-for-profit organizations.

 In Illinois, you can have a not-for-profit

cemetery, you can have a profit cemetery, a religious

cemetery, all different types, so that you have to look

at the marketplace to see how to separate contracts,

because it depends on the type of entity you're dealing

with.

 And finally, my good friend Nink, which I have

never heard that term used, I am from Illinois, and I

want to clarify the record. He made some misstatements

about what occurred.

 Our controller decided to have public hearings
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around the state to deal with problems in the cemetery

and funeral industry. As you all know and was stated

here, the funeral industry has its own source for

complaints, which apparently people don't do, so they

got a lot of cemetery complaints, but the two major

issues in these proceedings were, number one, the

problem with public access to family-owned cemeteries

that used to be on farms and now have been taken over by

big property owners, and the property owners will not

let the family go and maintain the spaces. And I kid

you not, that was a big issue at five of the six

hearings.

 The other big issue at this point was the

volunteers coming in and saying we're maintaining this

cemetery, and we're running out of people to maintain

it. There are no funds available to take care of

probably 70 percent of the cemeteries that were set up

in this country in the 1700s and 1800s, and it's

amazing, I think there are more revolutionary soldiers

buried in the State of Illinois that were involved in

the war, but there seems to be one everywhere.

 But in any event, of the complaints that the

controller's office has gotten, they have not been about

misrepresentations. There's been very few. We did ask

them with a Freedom of Information request, and they
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came back and said that there were not a lot of

complaints other than these two big areas.

 MS. HARRINGTON: Okay, we're going to hear from

Lisa and then from G. V.

 MS. CARLSON: I found it interesting that Mr.

Neel forgot the fourth item, which was anti-tying, being

forced to buy your vault or marker at the cemetery.

Paul, I wonder if you did your homework. We did

document a lot of abuse, AARP did, and I guess I'd like

to ask you why would you object to cemeteries being

under the rule if the requirements basically are

disclosure of prices and fair dealing?

 MS. HARRINGTON: Okay, we are going to have Paul

answer that question, and then we're going to go to

G. V.

 MR. ELVIG: Well, in answering that question, I

have to expand upon it. The reason we would object to

expanding the cemetery rule, aside from the fact that

expansion would violate the FTC's own procedures for

expanding rules or for covering the cemetery industry,

the reason we would object is there are a hundred

thousand cemeteries out there, such as referred to down

here, many of them volunteer.

 The liability to these cemeteries of potentially

being inspected, being hit with fines for not passing
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out a list of the price of graves in the cemetery or the

price of the liner or the price of the vaults in the

cemetery, that liability is not acceptable on the grand

scheme of things when you look at complaints.

 We have looked at the complaints that Lisa's

organization has supplied. We have looked at the

complaints that AARP has supplied. And in many, many

cases these are anecdotal type of complaints, these are

not specific. You take the survey that AARP conducted,

they say that 23 percent or 23 cemeteries were selling

caskets.

 Well, they went to 20 combination funeral

homes/cemeteries, which would explain to us right there

where the 23 were, with only 3 or 3 percent selling --

actually selling caskets according to their survey.

 The types of complaints we have seen about

cemeteries are not to do with disclosures, with prices.

When people went to these cemeteries, AARP's own work

that they submitted will show that they came back with

worksheets, much of it written in hand, some of it

typed, but in every case they received quotes on prices,

a variety of prices.

 The ability of AARP to collect information from

cemeteries demonstrates how available that information

really is in the area of having prices disclosed. So,
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we would submit that the survey work done by Lisa's

organization, by AARP, in both cases do not demonstrate

that the consumer's kept in the blind, that the consumer

does not have disclosure or that the consumer somehow is

forced to deal with a cemetery that they don't want to

deal with. And so we don't think the record is there.

 Now, I was a regulator, as I said, and I have

gotten complaints about cemeteries. I don't mean to

imply there were none. But those complaints were areas

that were outside of the cemetery rule. He mentioned a

imprisonment or, shall we say, felony charges for theft

of funds. I don't see where funeral rule would cover

that. I don't see where funeral rule would cover

double-selling of graves, criminally doing so.

 There are lots of statutes that empower the

states to bring criminal charges. I myself have put two

people in prison, but in both cases they were involving

embezzlement. Where does the rule take care of that?

 And so we don't think the evidence is there to

expand the rule, and if we are to look at expansion, we

are asking for a procedure that would allow for an

organized and orderly collection of information. And we

submit still that complaints covered by the funeral rule

are not on record with this Commission concerning

cemeteries.
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 Thank you.

 MS. HARRINGTON: G. V.?

 MR. AYERS: Yes.

 In the State of California, we do receive

complaints on cemeteries. In the last three and a half

years, we've received over 900 complaints. Most of

these do not deal with price disclosures, because that

is -- we would consider that nonjurisdictional, and our

complaint statistics would not refer to that

specifically. It would -- that would either be probably

mediated or closed as nonjurisdictional. Those do not

-- would not deal with that.

 Although what we have seen is we've seen since

the rule was first instituted, we've seen a change in

the way that funeral services -- well, actually funeral

goods primarily are provided to consumers, the selling

by cemeteries, some by crematories, by casket stores and

others, as well. And it seems reasonable to us that if

the way the goods are provided, if that changes, then

arguably the area of consumer protection should follow

the flow of goods, and there could be a good argument

made to where protections need to follow in that area,

as well.

 Also, we found in California that it's not

unusual for what seems to be a cemetery complaint to end
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up being a funeral home complaint, or sometimes what

seems to be a funeral home complaint ends up being a

cemetery complaint, and so we have -- we have a change

in industry, I believe, as well.

 MS. HARRINGTON: Thank you.

 I want to note a couple of things. One is that

I think Paul, actually, made the point that the FTC's

focus here is on presale disclosure. Our statute gives

us the authority to act to prohibit deceptive and unfair

trade practices, and the focus of the rule is to

prohibit the unfair practice of bundling and tying and

to prohibit the deceptive practices of failing to

disclose material information. And so you properly note

that there are many other things happening in relation

to these transactions that fall outside of the FTC's

statutory mandate, and I think we all agree on that.

 The other thing that I would note for your

consideration is that the rule presently clearly applies

to, depending on whose numbers you use, somewhere

between 18,000 and 22,000 providers, which is a very

large number of businesses. Many of them are now owned

by very large companies, but they operate in local

markets and operate sometimes, we have found,

independent of one another even if they're owned by the

same company. That is, a policy may be to require
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adherence and you find that providers owned by the same

company have different compliance practices.

 The FTC has fewer than a thousand employees.

So, the challenge already is that with fewer than a

thousand employees and 18,000 to 22,000 businesses

covered, should this rule be expanded to cover an

additional number of entities, whether they are

third-party casket sellers or monument sellers or

cemeteries.

 I'd be interested in comment during the

remainder of the time about whether the FTC is the right

entity to address problems with these kinds of

businesses or whether the states are in a position to

pick up more of the burden there, and I would look

particularly to Jennifer and G. V. and any others who

have a state perspective to help answer that question.

 But, you know, what we are hearing in the

discussion is this is a very -- there are a very large

number of players in this business, and there are

various perspectives concerning the existence of

problems with different types of players, and much of

this is happening at a local level in one-to-one

transactions, and I think a fair question from the

perspective of federalism and what that is about is

whether this is a federal issue in all instances.
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 So, Maynard, do you want to comment on that? Do

you have a microphone there?

 MR. CHERIS: Thank you.

 I came here knowing that the FTC is burdened

with enforcement in the funeral business, and I thought

about a way perhaps to assist the FTC in enforcement. I

think that the funeral director is a professional in a

position of trust. I think he holds himself out to be

in a trust relationship.

 Regulation is needed and perhaps could be

recommended by the FTC to impose a fiduciary duty on

funeral directors. Hold the funeral director to the

standards of fiduciary and create a minimum standard of

damages, such as in Truth in Lending, let's say three

times the funeral cost plus attorneys' fees. I think

that would ease the burden of enforcement. If the

funeral director had fiduciary standing, every consumer

would be a watchdog.

 MS. HARRINGTON: Okay.

 Jennifer, you don't have your tent up, but I'm

going to call on you anyway.

 MS. RAWLS: Should I --

 MS. HARRINGTON: You need a microphone, because

we all want to hear what you have to say about what more

the State of Tennessee could do here.
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 MS. RAWLS: Well, perhaps I should start out by

further introducing myself. I'm here today on behalf of

NACAA, but I'm also Assistant Attorney General for the

State of Tennessee, and I am charged with investigating

and prosecuting, where appropriate, under the FTC's

funeral rule and the Tennessee Consumer Protection Act,

although the comments I make today are not those of the

Attorney General or the State of Tennessee. I have to

get the disclaimer in.

 I think that the partnership that we have had

with the FTC has worked very well. Tennessee's Consumer

Protection Act specifically refers to interpretations

and decisions by the FTC, which gives Tennessee a leg up

in this area. Not all states do. All states have a

Consumer Protection Act which in some respect protects

consumers from unfair and/or deceptive trade practices.

 In the cases that we've had, the funeral rule --

the funeral homes that did not provide GPLs were also

those who made very, very hurtful comments to consumers

in other respects about what would be done with their

loved one's body, about where they would have to be

buried, about how important it was that they buy a

cemetery plot from their funeral home before we make

arrangements, the list goes on and on. And to tell you

that this rule is needed would be an understatement.
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 MS. HARRINGTON: What would we do if we had

another hundred thousand entities subject to this rule?

 MS. RAWLS: Part of the problem that we have

right now is finding the folks who are doing it wrong.

It's real hard for us in this industry to get people in

there to "test shop." It's a little hard to act like

you've got a dead body when there's not one coming. And

so the way that we do these investigations are very

difficult, and it's going to be hard to keep doing them

with expanding entities, but I think what we have to do

is build a relationship with the industry as a whole

where we know who we need to investigate.

 We have other investigative tools at our

disposal other than test shopping, but unless we know

who we need to be asking questions of, it's real hard to

use a subpoena, it's real hard to go in and ask

questions, it's real hard to know who to ask for a GPL

from. But I think that this kind of discussion is

exactly what we need to build that kind of

relationship.

 You know, we don't want to go after the people

that are doing it right. We don't have resources for

that. But if we can find a way to find the people who

are doing it wrong, we're happy to take care of those.

 MS. HARRINGTON: Well, this was not a planned
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colloquy, but I would note that the GAO just put out a

report that is critical of the FTC in a number of

respects, but one is for not having a precise measure of

compliance, and I think your point about the difficulty

of measuring -- we're not the Census Bureau, so we

can't, you know, law enforcement go door to door -- a

fair point.

 Paul?

 MR. ELVIG: You asked a question, and I think it

was a very good one, and that is where can these

organizations best be regulated. And of course, I would

beg to say the states, having been a regulator, I

believe the states are in the best position to regulate

cemeteries.

 The ICFA has provided for the various state

legislatures or attorneys general -- you're welcome to

have one -- 27 sets of guidelines on rules and

regulations that may be adopted to cover cemeteries, and

they cover a wide gamut of issues, the issues that we

really face as a regulator when we're dealing with

consumer complaints. And so we would invite you to look

at those. They're rather thick and detailed, and

they're good.

 I have it -- when I was president of the

National Cemetery Regulators Association, I collected
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all state laws governing cemeteries, and let me tell

you, that stack was more than a yard high. There's a

lot of regulation for cemeteries out there, and what's

unique about them is that when the states adopt

regulation or rule, they adopt it to what's unique about

the practices in the area.

 Example, Washington State has a 60 percent

cremation rate, but another state, such as Montana,

doesn't. A legislature is in great position to craft

legislation that will address the specific issues of the

consumer in that area. And so I would suggest the

National Regulators Association, which exists today,

should be checked about that. I would also suggest that

you will find model legislation and across the board

that regulations at the state level have addressed the

problems consumers have had with cemeteries, and again,

those problems have been outside of the scope of what

the funeral rule presently addresses.

 So, we think the answer is at the state level.

It's been demonstrated to work well there.

 MS. HARRINGTON: Okay.

 Billie?

 MS. WATSON-HUGHES: Thank you.

 I think the funeral directors in the Washington

metropolitan area would beg to differ with that. We
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would be inclined to say that FTC should be the

regulatory agency. As it stands now, we basically deal

with three different states who have three different

sets of regulations, and it's very difficult for the

funeral directors at this point to know, going from

jurisdiction to jurisdiction, what laws they're under.

So, the FTC would be the entity of choice for us.

 MS. HARRINGTON: Okay.

 Whoops, I was just going to call on you, John,

but do you want to defer?

 MR. CARMON: No, that's all right.

 I just wanted to reiterate simply for the record

that currently, the only place the consumer gets a

general price list, a merchandise price list, casket and

outer burial container, all of the disclosures and

everything that's necessary is from a funeral home.

That's the only place now where that happens. And in

the last 15 years, this marketplace has changed

dramatically. I mean, that's what's happening and

what's being said all around this table.

 MS. HARRINGTON: Okay.

 MR. CARMON: I just -- you know, clearly the --

 MS. HARRINGTON: Okay, those points well made.

 We have 12 minutes left, and so I'm looking for

original and different comments.
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 Lisa?

 MS. CARLSON: I think if you look at the change

from state to state in pre-need laws, that shows the

flaw of leaving it to the states only, that there are

some basic universal rights that should be protected by

the Federal Government, then let the states expand on

that.

 By having something that's established on a

federal level, you also provide a vehicle for consumer

education, and a lot of our volunteer groups can then go

out there. It's been our volunteer groups, because of

the FTC funeral rule, that we were able to do some of

the enforcement for you. And if we don't have that,

then we won't be able to continue on the cemetery

level. So, take advantage of the free labor that we're

going to offer you.

 MS. HARRINGTON: Thank you.

 G. V.?

 MR. AYERS: Quite frankly, the issue of whether

federal or state regulation is the best regarding the

subject of expansion that we've discussed here is

something that I'm not settled on. In California we're

not really settled whether it should be federal or

state. California tends to march to its own drummer

somewhat, and so I just say at that point it's still up
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in the air as far as we're concerned, but it does seem

in general to warrant some type of expansion of the

regulation.

 MS. HARRINGTON: Thank you.

 Glenn?

 MR. MCMILLEN: Thank you, Eileen.

 I guess I sit here in amazement a little bit as

I listen to the comments of the very uninformed

consumers that we have as a funeral, cemetery, crematory

customer. I don't know of any time in the history of

funeral service, the funeral service industry, and I

have been involved for over 40 years, where there is as

much information available to consumers that is

available today.

 That information is available through all of our

businesses, through the Federal Trade Commission,

through state consumer groups, regulatory agencies, as

well as the mass communicator today, we have the

internet, from as simple as the message boards on all of

the companies to just type in the subject of death,

dying and bereavement.

 So, I think there's a lot of information being

given to that consumer, and I think we tend to get

bogged down and mired in what we think that consumer

needs, and I wish that we had a little more empirical
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evidence to deal with what the true needs of the

consumer are so that it leads to disclosure.

 MS. HARRINGTON: Glenn, let me ask a question

about that. Since your company is so involved in the

market, I would think that you would do marketing

research that would reveal that information. Do you

have that kind of research?

 MR. MCMILLEN: We do not have specific marketing

research to that, but we have spent I'm told amounts of

monies in educating our employees to be able to

communicate to consumers, not only how to comply with

the funeral rule but to be able to give them all of

their -- all of the facts so that they can make choices

that are going to be best for them.

 MS. HARRINGTON: But you don't have customer

satisfaction research or marketing research or --

 MR. MCMILLEN: We have customer satisfaction

research based on every family that we have served.

 MS. HARRINGTON: But no focus groups or no --

 MR. MCMILLEN: But no -- we have not done any

individual focus groups.

 I'd like to move on to just a couple other

points. I think we need to put into perspective here

that there is absolutely no evidence of abuse by

cemeteries in areas that are covered by the existing
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rule, and that is the two areas of providing the casket

price list and an outer burial container price list as

it relates to the current rule. There's a lot of

anecdotal information, there is some less than

conclusive surveys that have been completed, but there

is no evidence that has been documented.

 But there is a tremendous amount of evidence

that we have submitted to the Federal Trade Commission

as it relates to the state regulatory statutes and

regulatory actions that have been taken since 1996 in

the 45 states that Service Corporation International

currently conducts business, and there have been over

800 statutes and regulatory actions as it relates to

cemeteries in those 45 states. And Eileen, I would

encourage the Commission to research in that particular

area.

 Not only do I feel we are in a business, a

profession that has a very high profile and there is a

tremendous amount of communication with the consumer, I

also believe that in the last four or five years, we've

probably become one of the most highly regulated

industries in America.

 I sincerely believe that most cemeteries have

price lists that deal with issues under the current

rule; that if there is a pattern of abuse and that
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pattern of abuse can be documented and there's a venue

to deal with the rulemaking procedure as it relates to

those abuses. The current rule in no way reflects a

cemetery. It really is geared to funeral homes as to

what the rule was designed to do.

 I've heard a lot here today about leveling the

playing field, and it was always kind of my

understanding growing up and becoming a business person

that there had to be rules for that playing field, and

those rules were generally determined by governmental

agencies, consumer protection groups who deal under

deceptive and unfair trade practices both on a federal

level and a state level, but I always was taught to

believe that the leveling of the playing field is to be

able to compete in the marketplace and that you will

rise or fall in that marketplace based upon, number one,

your pricing, your service and your ability to render

the experiences needed to meet the consumer's needs.

 I'd like to just close by saying that I've heard

a lot of things at this table today that says that we --

we're all honest, we're all ethical, and I would

certainly believe that of everyone at this table. I

think we have all different competitive interests. But

I think the current rule as it exists, with some minor

changes, not only adequately serves the consumer but has
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helped many consumers since its inception in 1984.

 MS. HARRINGTON: Okay, thank you.

 We have a number of people who have been

waiting. We have five minutes left. I'd like to get to

everyone, so please keep it as brief as you can.

 Bill?

 MR. SEALE: Thank you, Eileen.

 I look at the funeral profession as -- maybe a

little different than some of the people around the

table do. We look at ourselves more as caregivers than

we do as marketing people and merchandising people. The

funeral rule, as it stands, probably with some

finetuning and everything to cover some other areas

would be a great thing, but as it's said here, it's do

consumers benefit from the rule as it stands. I think

it should be do the consumers and the provider benefit

from this, and I think that we do.

 The funeral rule has forced us as funeral

directors -- and justly so and we appreciate it -- to

discuss finances with families. Back in the past years,

I was afraid to ask anybody to pay their bill, but now

we present them with a price list and they determine --

they say, When shall we pay, after they've selected the

things that they want. So, I think I sort of look at us

as caregivers first and merchandisers or sellers of
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merchandise as the second thing.

 The consumers use the information required by

the rule for shopping. They use it on an at-need basis,

and our experience has been that they don't use it very

much as an at-need, but we find that because we're in

the pre-need business, they use it greatly in the

pre-need area.

 Does the consumer have harm and

misrepresentations concerning the rule as it now

exists? Any harm that would come, I feel like, other

than in minor places, would be from the nonregulated

people, such as the -- such as the casket store. They

need to, you know, give a price list of all their

caskets that they have available, and the scope of the

thing, the rule, should be changed minutely to cover the

ones that are not now in it, but the rule itself we feel

strongly is doing a good job.

 MS. HARRINGTON: Okay, thank you.

 Is there anyone with a card up who hasn't spoken

during this session? With a card up?

 Okay, Randall.

 MR. EARL: Thank you very much.

 I sit here as a funeral director and am amazed

at some of the comments around the table. I deal with

families every day in my funeral home, and it's been
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said that the funeral director is the position in the

community that's very trustworthy, very upstanding, and

I think that the rule back in 1984 enhanced that

position of the funeral director. It gave them the

ability to show people exactly what the costs were and

the reasons why.

 We heard nothing from the funeral directors

around the table here this morning, and I find that very

interesting, that we've all sat here and listened to

everyone else in the industry, and the industry includes

all of us, and we have sat here because we're normally

the nice guys in the community.

 Now, I think that it needs to be noted that

yes, we are the ones that listen to the complaints

from everyone else. We hear the complaints day-in

and day-out. They're not going to the state

regulatories, they're not going to the Federal

Government. They come back to their home town funeral

director, and they explain to them what has or has not

transpired in their minds, whether it's right, wrong or

indifferent.

 We're the ones that sit there day-in and

day-out and try to decipher contractual agreements that

they've received from other entities, day-in and

day-out, and I would just suggest that we take a look at
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the industry as a whole and strengthen what we already

have.

 Thank you.

 MS. HARRINGTON: Well, thank you. We're out of

time. I know that there's much more that could be said,

but I remind everyone as we head into the break and the

next session, we have your comments. So, you don't need

to restate the points that you've made in your

comments. We are looking to move the record beyond the

comments in some areas, and I think that we had some

very useful and helpful discussion. I want to

compliment the participants for playing by the rules.

 It is now 10:30. We will resume promptly at

10:45, and if anyone is late, then they will be at a

disadvantage for being called on in the next session.

 Thank you very much.

 (A brief recess was taken.)
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 SESSION II

 PROHIBITION OF CASKET HANDLING FEES

 MS. HARRINGTON: There's been a question raised

at the table about whether the gentlemen can remove

their jackets, and absolutely.

 Also, I just went down to say hello down in the

overflow room, and it's a lot cooler down there and the

TV coverage is very good. There are some people who

would love to have seats up here, so -- yes, absolutely

you can take your -- uh-oh, Voni or someone, we need a

towel. We have got spilled water on the table. Thank

you. Quickly.

 Okay, we've got some -- the next issue on the

agenda is one that no one cares very much about, but we

thought we would just include it anyway. That's an

attempt at humor. We're going to be talking about

casket handling fees and the rules prohibition on

imposition of those.

 A couple of housekeeping notes. We have a

substitute in for Nink, Nink's not at the table anymore,

and would you introduce yourself for our reporter,

please, and for all the rest of us?

 MR. SIEDLECKI: Yes, ma'am, my name is Jonathan

Siedlecki. I am a fourth generation funeral director

from Illinois. I operate a funeral home in Illinois. I
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am also regional director for the Illinois Funeral

Directors Association and vice president of the Ethics

Association.

 MS. HARRINGTON: Thank you very much. That's

okay, you don't have to -- thank you, Rebecca.

 Are there any other substitutions? Scott?

 MR. GILLIGAN: Scott Gilligan, general counsel

for the National Funeral Directors Association, sitting

in for John Carmon.

 MS. HARRINGTON: Any others?

 Okay, we are going to continue to stay right on

schedule, which means this session will be ending at

noon, and we will break then until 1:15 for lunch, and I

would remind those of you who are not participants at

the table that if you wish to make comments today, there

is a session at the end of the day for public

participation, but in order to participate, you need to

sign up outside in the foyer, and if you're down in the

overflow room, you should come up and sign up. Right

outside of this room, there's a sign-up sheet for public

participation, and that will occur at 4:15 this

afternoon. And you should sign up before the end of

lunch, because I said so. So, it's not a part of the

rule, so I can say so. We don't have to have a basis.

 Okay, I wanted to note, and I'm delighted, that
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we've got some folks from some of the -- from the Hill

here. Why don't you just tell us who you're from,

because I think that people would be interested. Do you

mind? I'm sorry, I didn't give you any warning.

 MS. FULLER: Not at all. I'm Lauren Fuller.

I'm the chief investigative counsel for the Senate

Special Committee on Aging chaired by Senator Grassley

from Iowa, and with me is Cecil Swamidoss of our staff

and Kristy Tillman, who works with Senator Breaux, our

ranking member.

 MS. HARRINGTON: Great, we are really glad you

could be here. We know the Committee has a strong

interest in these issues.

 Anyone else here from the Hill? Thank you very

much for coming. We appreciate it.

 All right, let's move right on now to the issue

of casket handling fees, and right now, of course, as

you know, the rule prohibits imposition of them. Some

have suggested that that prohibition has created

unintended results that -- unintended, that is, from the

standpoint of the regulator.

 We'd like to focus here on a couple of basic

questions. A question that I have is why should a

provider charge a fee? You know, why is that

necessary? Are there costs? What is the basis, in
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fact, for the need to charge a fee, which, of course,

presently you cannot do?

 So, I think that that's a question primarily for

providers, but anyone, of course, is welcome to

comment.

 Maynard?

 MR. CHERIS: Thank you.

 I don't think a provider should charge a fee,

but I'd like to ask the question why does it cost more

to receive a casket from Batesville or Aurora than it

does to receive one from a third party?

 MS. HARRINGTON: Good question.

 Randall?

 MR. EARL: I would be happy to address that.

 In my pricing situation, I do include taking

care of the Batesville or Aurora or whoever's casket it

is as far as the handling fee. I would say that we're

probably one of the only industries required to receive

and handle a competitor's product for no charge, for no

fee.

 The first particular thing I would think of that

we have to do is to call the individual store or entity

that sold this product and find out what it is, because

the consumer doesn't know, and that takes some time to

do that. It also takes time to receive, prepare and do
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the things that we do as a funeral director to prepare

this product for presentation.

 As I said before, we're not going to put out a

product that is going to reflect on us as a funeral home

or whatever that looks inferior, and we're going to do

everything to make it look as good as we can, and it

takes time and effort to do that.

 We also think that by not allowing funeral homes

to offer a discount, there is also the probability of

the Federal Government regulating how we operate, and so

there's a couple issues that I think we need to

recognize and be cognizant of.

 MS. HARRINGTON: Okay, thank you.

 Randall and then Jonathan.

 Oh, I'm sorry, that was Randall. I'm really

sorry.

 Okay, Robert and then Lisa and then Jonathan.

 MR. KARLIN: Rob Karlin, California Casket

Retailers Association.

 We don't think the funeral service should cost

any different if the consumer purchases a casket

somewhere else. We have families that come in and

choose a casket from among 44 models we display --

 MS. HARRINGTON: Rob, I am going to stop you

right there. We know that that's what you think. We
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have a comment from you that says that that's what you

think. The question here is is there a basis for

charging a fee. Different question.

 MR. KARLIN: I'm sorry, I think that's probably

for the providers to answer.

 MS. HARRINGTON: Okay, thanks.

 Lisa?

 MS. CARLSON: I would point out that I don't

believe extra charges are levied for military or

shipment.

 MS. HARRINGTON: Jonathan?

 MR. SIEDLECKI: Yes, ma'am, I operate a funeral

home in Chicago on a day-to-day basis, and with the

advent of the rule and the evolution of the rule, we've

experienced an expansion in competition and different

places that we're getting caskets. Today it's possible

to order caskets on the internet. My own -- I'm a

veteran. My own beloved American Legion is selling

caskets in their magazine.

 Those caskets are shipped to us in containers,

sometimes in boxes, and we are then faced with the

problem of removing those and putting them into

selection rooms or putting them into viewing rooms, et

cetera, and guess who has to do that? The teamsters who

work for me.
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 And teamsters, if you're familiar with them,

have a very narrow job description. We also have -- no

offense, I love my beloved teamsters, but if you know

your teamsters, you have to keep that job description

pretty well defined, and you are responsible for their

health and welfare, which brings me to another point.

 If one of my beloved teamsters stubs his toe

while removing that casket, he has got a Workmen's Comp

claim against me. So, those costs that are ordinarily

not placed in the basic funeral services fee, because

they are not supposed to be there, they are supposed to

be on an individual basis, usually are recovered by me

from the sale of a casket.

 If I am not given the opportunity to sell that

casket and recover those fees, I feel entitled to charge

a handling fee for the individual caskets that are

delivered to my funeral home to help recover the

compensation that I need to keep my teamsters working.

 MS. HARRINGTON: So, what does it cost you? Can

you estimate that?

 MR. SIEDLECKI: I can do better than estimate,

Madam Chairman. One of our esteemed colleagues, David

Pearson (phonetic), who was president of the National

Funeral Directors Association most recently, he is also

a certified public accountant, came up with an
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accounting program that we would be happy to submit to

you at a later date --

 MS. HARRINGTON: Is that in your comment?

 MR. SIEDLECKI: Yes.

 MS. HARRINGTON: It's in the comment?

 MR. SIEDLECKI: Yes, ma'am, in the comment.

 MS. HARRINGTON: And what did he estimate that

it costs?

 MR. SIEDLECKI: His estimate was between $360

and $400 per case.

 MS. HARRINGTON: To unload and carry --

 MR. SIEDLECKI: No, ma'am, we are not just

unloading.

 MS. HARRINGTON: No, and cover the costs that --

 MR. SIEDLECKI: Cover the costs that are

involved in that, yes, ma'am.

 MS. HARRINGTON: I'm just trying to clarify.

 MR. SIEDLECKI: Yes, ma'am.

 MS. HARRINGTON: Okay, Pat?

 MR. GRAHAM: As you know, I have a funeral home

and an interest in a casket store. It's my experience

it takes two or three minutes to unload a casket,

whether it's from Batesville, Aurora or any other

provider. I tend to discount what I've heard here about

how this is an immense amount of work, an immense
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liability. It's not.

 There's a basic fee that funeral directors are

allowed to charge, it's nondeclinable, and in that fee

should be allowed for 24-hour availability of personnel

and regular business, which includes unloading

merchandise.

 In our particular store we own, we call the

funeral home and ask them when they would like us to

bring the casket to them, and we'll unload it for them.

I mean, that's not an issue I don't think.

 MS. HARRINGTON: Okay, Glenn?

 MR. MCMILLEN: We believe that the lack of

having a handling fee has benefitted the consumer, and

we would not support a handling fee. I think it's

evidenced by the fact that we have seated at this table

a whole new competitive market that did not exist in the

past in funeral service, that of the retail casket

store.

 MS. HARRINGTON: Okay, Glenn, I would like to

ask you this question: Do you see a difference between

a handling fee and a discount that applies to a package

that is offered only when the casket is part of the

package?

 MR. MCMILLEN: There's a distinct difference

between a handling fee and a package fee, and I would
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like to maybe cut right to the core of the issue that

seems to be the one that is most discussed in funeral

service, and that's how do you arrive at a package price

for the consumer, and the majority -- the highest

majority of funeral providers will take their current

price list, general price list, GPL, as prescribed by

the industry rule, and they will pick out a number of

items, and they will package a price based upon what the

retail listing is on that and then develop their

discount from that retail listing.

 There is no artificial increase of price to be

able to create a discount, and we are not supportive of

any type of process that would create an artificial

environment to discount. We believe the consumer can

best be served through packaging. It gives them another

choice. It gives them an opportunity to -- if they are

price-oriented to save money, and I can't believe that

anyone that is pro consumer wouldn't support a

legitimate package offering.

 MS. HARRINGTON: Okay, Rob, what do you have to

say about that?

 MR. KARLIN: Examples, specific examples of

families coming in and purchasing caskets at prices that

they can afford and then going to funeral homes or --

particularly one called Rose Hills, which is the largest
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cemetery combo owned by Loehn. They're offered a 30

percent discount on the service fees contingent upon

purchasing the casket. So, they literally crying, you

know, saying you can't buy the casket that the family

chose, because it's going to cost us a thousand dollars

here at Rose Hills if we do that. This is a loophole.

 I think the intent of the funeral rule to

unbundle in the beginning was to provide consumers

choice, and this is exactly opposite from what you said

in terms of providing choice. Casket retailers cannot

compete regarding service fees. The NFDA has commented

that they -- you know, they would be at a disadvantage

for a cemetery where there's a cemetery plot, and if the

cemetery were to say, Well, we'll give you a discount on

our cemetery plot only if you buy a monument from me or

you buy a vault from me, is another form of bundling and

packaging that's exactly correlative to this issue.

 Typically when families come in to us, in our

particular store, 90 percent of the time it's on an

at-need basis, not a pre-need basis. Their loved one is

already at the funeral home. I'd say 75 percent of the

time when they come in to us, the loved one has passed

away and is at the funeral home. They are not typically

of the mind to suggest to that funeral home that they

may take the loved one out of there to go to a
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competitor, because, you know, the level playing field

concept here is, Well, if they don't like it, they can

take it somewhere else.

 They're not going to do that. They're very

intimidated by the process. When a death has occurred,

the loved one is at the funeral home, it's not like

they're not going to have the service at that funeral

home. So, when the funeral home says your service fee

will be less contingent upon you buying this casket,

which costs much more at the funeral home, they're not

going to -- they're not going to fight that.

 And what we've done, actually, is said go ahead

and buy the least expensive casket that that funeral

home will offer, and we'll buy it from you at the same

price that you had to buy it from the funeral home and

then take advantage of that discount, and we've bought

$600 caskets that I wouldn't even show in my funeral

home -- in my casket store, because they're cardboard.

 MS. HARRINGTON: Okay, thanks.

 I want to remind everyone, if you have your tent

up, that means that you want to be called on, and I

think that -- I can't tell whether some of you who have

just spoken and whose tents are still up want to be

called on again.

 Maynard?
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 MR. CHERIS: Thank you.

 The difference between a casket handling fee and

the package discount is the inflation of the service

prices. We have supplied the Federal Trade Commission

with specific examples. We supplied the Senate

Committee on Aging of specific examples. We have got

dozens and dozens of them. It is the majority of

funeral homes in the Chicago area. The amounts vary.

They run as high as a $2,500 penalty discount.

 I think, referring to my earlier remark about

making the funeral director a fiduciary, you can't put

your interests ahead of the consumer's. It's a scam.

 By the way, I had one comment on an earlier

question, we moved to this, and I wanted to ask the

funeral director at the other end of the table, who's a

Chicago funeral home who incurs a $300 to $400 cost if

he and his accountant have hired an extra person at the

funeral home for the occasional third-party casket.

 MS. HARRINGTON: Jonathan, would you just answer

that question?

 MR. SIEDLECKI: No.

 MS. HARRINGTON: Thank you.

 George?

 MR. CLARKE: Thank you.

 First I wanted to point out that NSM, National
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Selected Morticians, is opposed to a casket handling

fee. The reason for that is that we see the casket

handling fee as, in effect, being a surcharge to

consumers that potentially costs them more money and

discourages comparison.

 MS. HARRINGTON: What about discounting?

 MR. CLARKE: On the other hand, we feel that

discounting the package pricing is pro consumer in that

it potentially saves the consumer money and does, in

fact, encourage comparison, encourage shopping.

 MS. HARRINGTON: Let me ask you a question. Has

discounting arisen because of increased competition? Is

that a business response by -- in your business?

 MR. CLARKE: I don't believe that that

generalization can be made, because certainly there are

funeral homes around the country and certainly our

members that offer packages not in direct response to

the emergence of any alternative providers in their

market. So, I don't think that generalization can be

made.

 MS. HARRINGTON: Did they offer packages

before?

 MR. CLARKE: Yes, ma'am.

 MS. HARRINGTON: Okay. Did they offer -- did

they -- well, did they offer packages that discounted
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the price?

 MR. CLARKE: Yes, I believe they --

 MS. HARRINGTON: That is, if you added up the

itemized prices and came to a sum, they previously were

also offering packages that if certain items were

purchased, the sum would be less?

 MR. CLARKE: The itemized cost would be greater

than that of the package, right. And if I may, I would

like to make just one more point.

 It's our view that the FTC, by virtue of the

funeral rule or perhaps other action that the FTC has

taken, does not seek to regulate price but rather to

ensure the access of information for consumers by which

they're free to make decisions, and we suggest that in

the -- if there are some prices that exist within the

realm of discount packages that are thought to be unduly

high, that the consumer is free to make choices.

 And we suggest that rather than the FTC

attempting to regulate price, that the marketplace ought

to be left to determine the viability of prices that

individual funeral homes may charge. The consumer is

free to bypass those funeral homes or other providers

that they feel are prohibitively expensive in favor of

other providers at which they can ostensibly save some

money.
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 Thank you.

 MS. HARRINGTON: Thank you.

 Lisa?

 MS. CARLSON: Having looked at thousands of

GPLs, I can say that there were some minimal package

offerings, but the degree of discount was very minimal.

It tended to amount to the guest book and the thank you

cards and so on. Since '94, the number of discounts has

radically increased. So, I would say yes, it's in

direct response to the third-party sellers.

 The other point I would make, that discounting

in a general marketplace is used to lure disposable

income. When you go to McDonald's and you buy a meal,

you get essentially your french fries for free. It's in

a very different situation that discounting in funeral

purchases is used, and it really is punitive to the

consumer. This is an effort to punish the consumer.

 MS. HARRINGTON: Scott?

 MR. GILLIGAN: I think I have got a couple of

points. First, going back to packages, packages have

been around since the funeral rule started. Discount

packages have been around. The Commission realized that

and recognized that consumers may realize a discount by

buying a package rather than buying itemized prices, and

that's their choice.
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 Now, when we talk about a loophole, this is not

a loophole. What the funeral home has, and in the past

recognized this fact back in the early nineties, is we

have a one-stop competitive advantage. Funeral homes

sell 13, 14, 15 items. Casket stores sell one. By

putting together a package and offering it at a

discount, we can offer that to consumers. They benefit;

the funeral home benefits because they're selling more

volume. It's a matter of choice.

 The courts realized that when it just went to

the Third Circuit. We had the same argument back in

1994. We told them that there is no difference between

a handling fee and a discount, because it both costs the

consumer money. He can either pay $300 in a handling

fee or he can pay $300 depending on if he doesn't get

the discount.

 The Court said no, you're wrong. The difference

is there's choice. In a handling fee, he's penalized,

it's a surcharge, as the courts recognized. With a

discount, it's his choice whether to take it, and if he

realizes a smaller savings because he went and bought

things off the itemized goods and services, that's the

consumer's choice and it's up to them. So, it's pro

competitive as recognized by the Third Circuit, it's

been recognized by the staff, been recognized in other
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rulemakings.

 With the eye ruling, the staff recognized the

same thing and said that if someone wants to put

together a discount that includes the eye examination

and the eyeglasses, that's fine. As long as you don't

compel the consumer to purchase both things, you can

give them an incentive to buy both, and that's a

legitimate discount.

 Now, going to the point where somebody's

charging $2,500, are they getting into an unreasonable

discount? That's going to have to be decided on a

case-by-case basis, but there are laws. There's the

Guide for Deceptive Practices that the FTC has, state

laws that would prevent those kind of unreasonable

discounts, sham discounts, that those kind of actions

could be brought either by the casket companies or by

the consumers under state law to enforce that.

 MS. HARRINGTON: This has been a great day,

because I heard a funeral director say that when the

funeral rule was promulgated, it elevated the status of

funeral directors, and now Scott is telling us that the

Third Circuit had it right.

 MR. GILLIGAN: Partly right.

 MR. MCMILLEN: I don't think Scott went that

far, ma'am.
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 MS. HARRINGTON: We can all come back tomorrow.

 All right, Jim?

 MR. PINKERTON: You asked if there was a

distinction, and I believe that there was one as Scott

and maybe some other people have said.

 There should not be something that is punitive

to the consumer. Traditionally both the sale of

merchandise and the charge for services have contributed

to us meeting the expenses necessary to provide the

funeral. If you look at what we provide, the

independent casket marketer essentially provides the

service of delivering the casket from the warehouse to

the funeral home on behalf of the family.

 We provide services to those families for days,

months, weeks and sometimes years. So, I don't think

there's anything wrong with us providing pricing that

encourages them to buy all the products from us and

continue to concentrate that cost and concentrate that

recovery. As long as it benefits the consumer, I think

it's acceptable.

 MS. HARRINGTON: Okay.

 Carolyn?

 MS. JACOBI: Yes, I'd like to veer away from the

technical aspect and the legalese for one second, and I

think one thing is being overlooked here. The young
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lady here to my left mentioned something about

simplicity earlier.

 When a consumer has a death, you're talking

about a right of choice and the ability or the lack of

the ability to make a wise decision. I mean, when you

get down to this discount package versus the handling

fee for a casket, how many consumers sitting there with

a loved one on a cold board are going to be able to

calculate right then and there?

 Whatever their decision is, you must keep it

simple. If you're here for the purpose of protecting

the consumer, let's not make things any more difficult

than they already appear to be, and let's keep it simple

for the sake of the consumer.

 Each of us sitting at this table are consumers.

Each of us sitting at this table are going to experience

a death. And I'm sure if you have this decision to make

that you would not have to want to go through all this

mental aspect. It's been proven psychologically that

once a death takes place, that your ability to be able

to make a wise, rational decision depletes itself. Ask

any therapist, ask any psychologist, go to any doctor,

and they will tell you. Please, keep it simple.

 MS. HARRINGTON: Jim, did you have a response

directly to that, because I saw your --
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 MR. PINKERTON: Yeah, I wanted to say one

thing.

 MS. HARRINGTON: Okay.

 MR. PINKERTON: -- in terms of as long as we are

competing appropriately, and I think this goes to the

disclosures and the inclusion in the rule, as long as

everybody understands what it is they're buying, and

especially in the pre-need arena, but having some

experience with third-party sales in Pittsburgh for many

years, when we have the consumer come in and be under

the misinterpretation or misimpression that somehow

there is a relationship between that sale of the casket

and the funeral -- in other words, they're back in the

pre-'84 mode, they think that buying the casket is

paying for the funeral, and they come in and they're

surprised to find out -- and we hear consistently the

comments that they were told that they weren't -- that

this is the largest expense and you've already taken

care of that.

 So, as long as we're competing honestly, I don't

think there's a problem, but whenever there is

misrepresentation, if the consumer believes that

purchasing that casket has paid for some part of the

funeral, then I think there is a problem.

 MS. HARRINGTON: Okay.
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 Jonathan?

 MR. SIEDLECKI: Yes, ma'am, I'd like to address

a couple points on this issue, two of which were brought

up by Maynard.

 One, I take great offense at the fact that he

suggests through innuendo that a majority of the funeral

directors in the Chicago metropolitan area are somehow

dishonest or devious. I would suggest to this group

quite openly that the FTC recently ran a sweep in the

Chicago metropolitan area, and I think the figures will

attest that the majority of the funeral directors in the

Chicago metropolitan area are, in fact, complying with

this rule.

 Next, he brings up another subject from a

previous topic regarding his idea of creating a consumer

police force to somehow ensure the implementation of

this rule, and if we were back in Chicago, I would

assume that his brother-in-law was a badge manufacturer

so he could sell 9 million badges to all the citizens in

the City of Chicago, but he's not.

 Right now, looking at the package dilemma that

we're faced with, I would tell you that packages are

established and evolving to give us as funeral directors

on a daily basis an opportunity to present an incentive

to consumers to use our products and services, nothing
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more than that. Funeral directors do not have to use a

package. They simply have the option of using that

package.

 You need to know that a handling fee, in my

particular situation at my funeral home, would be

utilized, once again, to recover the costs that are not

recoverable from the purchase of a casket from a

third-party provider.

 Now, if I don't have that basic cost in my basic

services fee, it is undue hardship on my operation of my

business to expect me to just handle it that way, that I

just eat that cost, or, as is suggested here at this

meeting, that we somehow put that cost into another fee

and thereby every consumer that comes into our funeral

home has to pay that fee. Thereby we're punishing all

consumers or giving them an undue burden of cost that

would not appear if we were allowed to establish a

handling fee that could be very realistically presented

on an individual basis to particular people who need to

be covered by that handling fee. And I think that

that's a point that needs to be made. If you do not

allow a handling fee, you are, in fact, saying that we

need to pass that cost on.

 Someone brought up and said, Well, Jonathan, did

you hire somebody else to do that? No, I didn't. No, I
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didn't. I'm absorbing that cost now, and the threat of

me raising my prices $362 to every consumer that comes

into my door is something that this rule was intended to

avoid. It was intended to minimize the cost and spread

evenly the cost and allow the individual consumer to

compete by judging costs from individual funeral homes.

 MS. HARRINGTON: Okay, thank you.

 Bill?

 MR. SEALE: Not only are we in the pre-need

insurance business, but we are partners in 57 funeral

homes and six cemeteries, and we have bundled our -- for

years, but it's not based on where you buy the casket.

And I would venture to say that 90 percent of the people

that trade with our funeral homes take the bundle,

because they get a lot more for their money in taking

the bundled package.

 But there is bundling and packaging in a

considerable number of businesses in the United States,

everything from restaurants to computer software to

automobiles. If packaging is not supported in the

funeral business, then other businesses must unpackage,

also.

 MS. HARRINGTON: Talk to Bill Gates. That's

just a -- that's just an FTC attempt at humor, and it

doesn't reflect anyone's predisposed thoughts about
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this. I just couldn't resist.

 MR. SEALE: We don't believe in handling fees at

all.

 MS. HARRINGTON: Okay, thank you. Thank you,

Bill.

 Glenn?

 MR. MCMILLEN: Thank you, just a couple

comments.

 First I want to say, Service Corporation

International has had some form of package pricing in

many of its locations for well over the past ten years.

Much of it has been what we would refer to as a package

to deal with lower-income families, but we've had many

packages that would fit into the middle economic ranges

that people would choose. They particularly enjoy the

simplicity of it. They enjoy the savings that they

receive.

 The second comment I would like to make is that

one of the representatives from the Casket Retailers

Association stated that they were placed in a position

of unfair competition, and I guess I would question, you

know, what's more important, unfair competition as it

relates to that group or a benefit to the consumer.

 And again, the marketplace is going to determine

what's fair competition and what isn't fair competition,
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and it's an issue that -- to regulate bundling or

package pricing would be doing a disservice to the

consumer.

 MS. HARRINGTON: Thank you.

 David?

 MR. SWIM: Does packaging encourage shopping or

give the family a choice? Absolutely not. Most of the

time when a package is offered, the body is already at

that mortuary. The family mentions in an arrangement

conference that they may consider something else,

because they're looking at prices that they just can't

believe, and they have somehow heard through a family

friend or through an advertisement that they have a

choice.

 They make that call, sometimes even from the

arrangement room and secretly, on a cell phone, outside

the mortuary. What are your prices? Where are you? I

can't hear you. You're on a cell phone. Well, we're

outside the mortuary. I'm in my car. I've got a bad

connection. What do you start at?

 We give them our prices. In the State of

California, we're fully required to distribute a price

list. On my internet site, since I've been in business

for the first two months, we've posted our prices. When

we first did that, they used that to somehow compete.
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 I'll take issue with Mr. McMillen that bundling

has been in regular practice. There is a free for all

out there of discriminatory pricing that exists in both

at-need and pre-need arrangements. The same family

cannot get that discounted package many times on a

pre-need arrangement but can get it on an at-need

arrangement.

 So, if they know that there's competition, it

will be offered at that moment, but to be able to lock

it in for mom ten years later is not the case.

 What is the real price? Many times during these

bundled programs the family has absolutely no concept as

to what the real price is other than they're just told

by the funeral home that they have now equaled the price

of the casket store. When the family brings the

contract back to us and we sit down with them and go

over it item by item, not only did they pay a thousand

dollars more for the casket, they ended up getting

services they didn't want, they have been added other

items, and they find out that they've been snookered and

taken advantage of.

 And so fees didn't work first for the industry,

and now discount packaging is the second choice based

upon a decision and promulgated largely by the NFDA out

of a distortion of what that decision was based on in
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1994, that there was no competition. Handling fees

virtually eliminated competition for ten years.

Packaging is going to essentially do the same thing.

 My question would be, has the FTC or any of the

funeral homes here got data to support in the states

like Oklahoma, Mississippi, Tennessee, where you have to

be a licensed funeral director, how much actual

packaging exists there? How much actual packaging

exists where there is no casket store or there's been no

competition?

 And yes, we do have documentation that the

prices have been raised exactly, within 10 percent, to

the amount of difference between a casket store's prices

and a funeral home's pricing on the packaging.

 MS. HARRINGTON: I have a question for the

casket sellers --

 MR. MCMILLEN: May I rebut, Madam Chairman?

 MS. HARRINGTON: Just a sec, I want to ask my

question.

 MR. MCMILLEN: Thank you.

 MS. HARRINGTON: Do you discount for purchases

of more than one casket or -- I would imagine that that

doesn't arise often, but I can imagine -- I mean, have

there been -- this is a yes or no question -- have there

been instances where people have come in to you and
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purchased more than one casket at a time?

 MR. SWIM: For pre-need or at-need?

 MS. HARRINGTON: Either.

 MR. SWIM: Well, yes.

 MS. HARRINGTON: Well, it could be at-need if

there were multiple deaths.

 MR. SWIM: Yes, we have definitely helped a

family where they had a tragedy and both were killed in

a car accident.

 MS. HARRINGTON: Do you -- in that situation, do

you charge the same price for each casket that you would

charge if it was a single transaction?

 MR. SWIM: No, retailers are definitely, Eileen,

involved in variable pricing, but not to the extent of

50 percent. You can go into these --

 MS. HARRINGTON: I just want yes or no.

 MR. SWIM: No.

 MS. HARRINGTON: Okay, thanks.

 Glenn, you have to rebut in 30 seconds.

 MR. MCMILLEN: I can do it in 30 seconds.

 Two issues that -- an implication, we have

published pre-need price lists, published at-need price

lists, which can be provided to dispute the comments

that were made. And the second issue I'll cut out in

the benefit of the 30 seconds.
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 MS. HARRINGTON: Thank you.

 Randall? I'm sorry, your tag is down.

 I want to hear from Rob, and we'll get back to

you, Maynard, but I want to get to some of the people

who haven't been called on quite as often, and then

we'll hear from Pat.

 Rob?

 MR. KARLIN: We've asked the Department of

Consumer Affairs in California to review this issue.

We've asked the LA District Attorney to review this

issue.

 From the point of the original intent of the

funeral rule, and if I can just read really briefly,

when you talked about casket handling fees being

prohibited, it says in this -- your book, and I show

this to every customer, "This is simply a hidden penalty

for those consumers who have exercised the right to

purchase a casket from another seller."

 We have no problem with packaging, offer

packaging all day long, it's an appropriate marketing

tool, but don't tie it to the purchase of the casket.

 MS. HARRINGTON: Okay.

 Pat and then G. V.?

 MR. GRAHAM: I tend to agree with what he just

said, allow competition head to head, apples to apples,
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casket to casket. A casket retailer cannot compete with

a funeral home when that funeral home ties not the

casket to the services but ties the services to the sale

of the casket is what it amounts to.

 Discounting in my experience and in our last

year and a half of operation of our casket store has

increased a hundred fold in the city we operate in. It

was not done hardly any beforehand, and now it's

prevalent. What it amounts to is bundling is back.

They've rebundled it back into the packages. And again,

they have the advantage of being able to offer that

service tied to the casket sale, not the casket sale

tied to the service.

 The package price list in funeral homes we

visited has become the de facto price list. That's what

they're offered, not the general price list, in many

funeral homes that we've sent a spy into, if you want to

call it that. That's a fact. They're handed a package

price list.

 Mr. McMillen, I've seen copies of the Dignity

Plans that you all are using now, and they're very

confusing. There's six or eight different plans with

all different price ranges.

 MR. MCMILLEN: They're also in compliance with

the industry rules.
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 MR. GRAHAM: I understand that, but we're

getting back to what Ms. Jacobi talked about as far as

simplicity.

 MR. MCMILLEN: We find them very simple.

 MR. GRAHAM: When you have six or eight

different package price lists, you have a general price

list, how can a consumer make an informed decision when

there is not something to go by in that respect?

 I think on my comments I had suggested that

maybe the Commission look at limiting the package price

list to a percentage, but I mean, God, that's going to

be even more confusing. I think it's either up or down,

allow it or disallow it in connection with the casket

pricing.

 MS. HARRINGTON: Okay.

 I'm going to call on G. V. and Scott and Maynard

and Edith, and then I have a question, and any of you

who I just mentioned are free to answer it, but I want

everyone who knows anything about this to answer it, and

that is this:

 Do funeral providers offer packages with

discounts where the package does not include the

casket? That's -- I want yes or no on that.

 Okay, G. V.?

 MR. AYERS: I don't know on that -- on your yes
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or no.

 In '84, the FTC found that competitive offerings

to shift overhead costs of the market in casket mark-up

to professional service fees resulted in casket handling

fees. Being not on the casket store side or on the

funeral director side, I would raise the what if? What

if there were no bundling provision tied to the -- tied

to selling the casket? What if that were -- what if

that were prohibited?

 Would we see a result, then, of more out and out

price competition on pricing caskets? Especially, I

think that in many cases the funeral director might be

at an advantage on that, because number one, they can

offer services, and number two, often times they get

volume discounts for the caskets themselves.

 MS. HARRINGTON: All right, let me observe that

the Federal Trade Commission Act prohibits deceptive and

unfair trade practices, and a finding of deception or

unfairness in a particular practice that is prohibited

is necessary. So, we're not the, you know, "make a more

perfect world" regulatory agency. We have a very

specific statutory mandate and legal requirements that

must be met in order to issue a trade regulation rule or

provision. That's an editorial from the Chair.

 Okay, Maynard? I'm sorry, then we will get to
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you, Scott.

 MR. CHERIS: Thank you.

 I've read the Third Circuit decision. I don't

see anything in there about inflating service prices

before the discount. I've got in the NFDA guidelines on

page 6 a section on unreasonable discounts, what the

NFDA thinks they may inflate and how much would be

unreasonable.

 It's the inflation that is the problem to the

consumer. The eye glass people, I don't know if they

inflated the cost of glasses and then discounted it, but

I know that that's common now in the funeral industry,

and that's why we call it a sham.

 MS. HARRINGTON: Scott? You probably wrote

those guidelines, didn't you?

 MR. GILLIGAN: Maynard, the response to it is if

it's a sham discount, it's illegal, and there are laws

on the books not only from the FTC but also from the

state.

 MR. CHERIS: How much is the sham?

 MR. GILLIGAN: That's for the court to decide or

the FTC to decide, that's why we have guidelines on

deceptive practices.

 Just to get to your question, Eileen, prior to

the handling fee ban being put into place, 25 percent of
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our members offered packages at a discount. So, this is

-- package discounts were well before the ban on casket

handling fees.

 And the other thing I want to point out is --

 MS. HARRINGTON: Are these packages -- do you

know whether there are packages that don't include

caskets?

 MR. GILLIGAN: Yes, there are now.

 MS. HARRINGTON: There were?

 MR. GILLIGAN: There were before the rule and

there are now. Right now, 14 percent of our members

offer a discount tied to the sale of a casket, 25

percent of them offer discount packages. So, obviously

there's ones out there that offer beyond the tying it to

a casket.

 The other thing I want to point out is we're

talking about caskets right now, and they want to

discount -- or outlaw any discount type of casket.

Well, we sell a lot of other things. So, next time, are

we going to have the vault people in here or the

cremation people in here or people that sell funeral

services, complaining that we can't put those in

packages and offer them at discount?

 You know, that's what we have to realize. Once

you -- if you knock out caskets, then the vault people
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would be in here or the people that offer just cremation

would be complaining that funeral homes are putting

together in their direct cremation packages discounts

and that unfairly penalizes them. So, you can't just

stop this at a casket. A casket is just one component

of what a funeral service is, but you have to go beyond

that, and that's going to be really problematic.

 MS. HARRINGTON: Lisa?

 MS. CARLSON: I saw almost no mention of caskets

prior to '94 in packages conditional.

 MS. HARRINGTON: Edith?

 MS. CHURCHMAN: Yes, I think that I would like

to focus this part of the discussion on strengthening

the rule, again, for the benefit of the consumer, and if

discounts are used as a lure, what about the casket

store practices in my area of giving away things to the

family, such as prayer cards, register books, a donation

to the church for purchase of a casket? I think that

that's a lure, also.

 So, what is the real price of the casket? What

-- you know, what is the issue of incentives here? How

is a consumer to make an informed choice on whether a

casket is more expensive at a funeral home or whether

it's less expensive at a casket store if all they see is

an ad saying, Yes -- at the casket store -- our prices
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are 50 percent lower or 100 percent lower?

 There's no, you know, there's no mechanism in

place there for the consumer to be able to compare.

 MS. HARRINGTON: Thank you.

 Jim?

 MR. PINKERTON: One of the things that I wanted

to point out, and as we talked, and G. V., I think you

brought up the point, that the shift of profit or cost

from the casket sale to the handling charges, if we

really wanted to put you guys out of business, what we

would do is charge the casket at wholesale and elevate

the service charge and recover appropriately. I mean,

we know -- well, just think about this, though.

 We know that there's going to be a certain

amount of cost for our funeral home. The current method

of pricing, which does have a throw-back to previous

days, has a balance between the sale of the merchandise

and the charge for the services, understanding that

there are people who can't afford the same things all

the time, that there is a balance.

 By selling a range of merchandise that has the

option or the necessity for people to buy up or down and

having the service charge somewhere moderately, you have

that sliding scale. If you charge everybody the same

price for the services, you increase that baseline, and
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I think you penalize people least able to pay for it.

So, the current method has the sliding scale on the

merchandise and a lower baseline on the service charge,

and I think it is a fairer way to do it.

 So, offering that -- again, the package for the

conglomerate of services encourages the people to buy

just from the funeral -- I mean, there's a basic premise

here that more people's salaries you're paying, the

higher the cost of the funeral is probably going to be.

One of our efforts is to try to minimize the number of

providers that are involved in any funeral transaction.

 MS. HARRINGTON: Okay.

 Pat?

 MR. GRAHAM: Okay, number one, I have never seen

a package price list or a package deal that I've ever

heard of that did not include the casket. I don't know

where the NFDA member there got that information --

 MS. HARRINGTON: Hold on.

 Scott, what's your basis for saying that?

 MR. GILLIGAN: It's a membership survey that we

have been doing, and we'll be happy to supply it to

you.

 MS. HARRINGTON: Is it in the record?

 MR. GILLIGAN: We recited it to the record, but

we didn't enclose the survey, but we have a -- in our
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comments, we reference it, but we will be happy to give

you. It's surveys that we make available to anybody who

calls up and asks for them.

 MR. GRAHAM: I would rather see that evidence

come from an uninterested source.

 MR. GILLIGAN: It's historical evidence.

 MR. GRAHAM: Rather than a biased source, if you

want to put it that way. You know what I mean.

 Secondly, Mr. Pinkerton mentioned that service

charges, if they wanted to run casket retailers out of

business, they would merely raise their service charges

and lower casket prices to a wholesale level. That's

not going to happen, they haven't done that, and the

only reason is the service charge is already so high,

the public is not going to swallow it. And where they

have gone up already, discount funeral homes are opening

up and have taken a good percentage of that business

away.

 MS. HARRINGTON: Okay.

 All right, Jonathan -- we are starting to run

down on time, so we need to keep these comments now

short.

 Jonathan?

 MR. SIEDLECKI: Yes, ma'am.

 First of all, I'd like to inform the people at
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this table who think that things don't change,

prohibition was repealed. Everything changes. We are

in a situation here where since 1994, I keep hearing it,

we reviewed the casket handling fee, we looked at those

things, yes, we did, and since that time, the rule has

fostered competition and sources of caskets that were

never before available on a level they were never before

available to. So that the industry, the profession, is

reacting to that.

 You need to know that funeral homes offer a

complete range of services, that was stated before.

That's a very important fact, because when a family

comes to the funeral home that I operate, they deal with

me or one of my funeral directors. That funeral

director guides them through a planning process which

eventually evolves to the selection of a casket along

with other products.

 That funeral director costs me a lot of money to

have him in that building. He has education, he has

licensing requirements, he has continuing education, he

has a whole series of things that give him

accountability and credibility with that family.

 If I were to open up a casket store, without

offending anyone at this table, I could select anyone in

this room and put them in that store and say, When
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someone walks through that door, you tell them this

casket is $272. But I cannot, ladies and gentlemen, do

that at my funeral home.

 When people come in to my funeral home, they

expect to be guided through a funeral service. They

expect to be given competent and honest advice. And I

provide that to them at a high cost, because

incidentally, in the City of Chicago, all my funeral

directors are -- guess what? Teamsters.

 Thank you very much.

 MS. HARRINGTON: I'm really sorry we don't have

anyone here from the teamsters to rebut. Jimmy Hoffa's

buried in the FTC garage.

 Okay, Bill?

 SPEAKER: They didn't comply with the rule when

they buried him, either.

 MS. HARRINGTON: It was prerule.

 MR. SEALE: I know in our situation, the funeral

homes that we are involved with, our service charge

absolutely covers the basic charges. There's not a

dollar's worth of profit put into our service charge.

 As a for-instance, in one of our places, the

taxes and insurance that we provide is $400 worth of

overhead cost that we're putting in there, but at most

funeral homes -- and I'd like to ask the other funeral
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directors here -- most funeral homes have always just

shown the actual costs as their service charge, and I

think that's the case, and so they are due to put in --

maybe put a profit over on their service charge. We

probably should have done it years ago.

 MS. HARRINGTON: Okay, let's ask one.

 Randall?

 MR. EARL: Thank you, I was about to jump up and

down down here.

 MS. HARRINGTON: We can't have that.

 MR. EARL: Just a couple of points, please.

 The consumer that we're dealing with today is an

educated consumer, and if you don't think so, when they

come into our office with 42 pages off the internet, I'm

telling you, they're very educated today. So, I don't

really buy some of the comments that, you know, we're

doing this or we're doing that for someone that doesn't

know. That's not the case today. That's definitely not

the case.

 To answer the question, have we transferred

profit into the service fees, most definitely. We have

learned how to compete with the casket stores.

Absolutely. It's fair competition, and that's the way

that we have done it as an industry.

 To answer your question, Madam Chairman, are
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there discounts for packages without caskets, yes, there

definitely are. We discount services every day for

infant services, indigent services, police and firemen

and charity, every day of our lives. Any funeral

director sitting around the table will tell you that.

We do that every day.

 Thank you.

 MS. HARRINGTON: Okay, let's hear from Rob.

 MR. KARLIN: So do casket retailers.

 I think it's clear here from your comments and

the gentleman down there that you have significant

overhead. Customers come in to me and ask me, Why can

you offer a casket for so much less than the funeral

homes? And my answer is, I don't have the same

overhead. That's -- that's absolutely true.

 And to put things in absolute numbers, in

general, casket retailers double their price. If you

buy a casket for $500 -- and by the way, we can't buy it

as cheap as funeral homes can, particularly SCI, we'll

sell it for a thousand, and as business people, we

operate businesses and we can survive doing that and

provide a service to the customer.

 That same casket is marked up much more than

that at almost every funeral home in my market. I am

significantly lower on casket prices. So, what's
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happening is, like you say and you say, the cost of your

operation has been supported by the merchandise as well

as your service fee, and what you need to do is transfer

it to your service fee and compete head to head against

each other for services, because with the internet, with

casket retailers, the consumer is educated. They won't

pay $2,000 for the casket that they can buy from me for

$1,000.

 MS. HARRINGTON: Okay --

 MR. SIEDLECKI: Madam Chairman, can I have

rebuttal just quickly?

 MS. HARRINGTON: No.

 What I'm going to ask is whether anyone at the

table has anything new to say. New, I'm looking for

new.

 Just a minute, I'm studying to see who has new,

and if you don't, I'm going to stop you.

 Harvey?

 MR. LAPIN: It seems to me that the big problem

that we're talking about here from what I can see, and

I'm sort of a neutral party here, because CANA doesn't

really care about the casket handling fee, but the

problem seems to be when they condition the purchase of

the casket on the discount, when they're tied together.

 Now, the rule seems to cover that in a general
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way under 453.4 as it being an unfair and deceptive

practice, but the rule also specifically mentions under

453.4 situations which are set aside, casket for

cremation provisions and the other required purchase.

So, why not amend the rule specifically to say that if

you condition the taking a discount on purchasing the

casket, that it will be a violation of the rule?

 MS. HARRINGTON: David?

 MR. SWIM: In San Diego County and most of

California where we have documented price lists, Eileen,

I just wanted to clarify, the only packages we've seen

without a casket are direct cremation, ship in, ship

out, and so as these comments are being made as to yes,

we offer packages, it's very important to identify what

specifically is that package.

 MS. HARRINGTON: Thank you.

 Harry?

 MR. NEEL: The view taken here is one funeral,

one profit, one recovery. I have seen few businesses

that operate on such a small scale, regardless of

whether you're 50 funerals a year or 300. I look at a

year. I'm not going to look at one case. So, these

recoveries of costs and expense are not on a one-family

basis; they're over the business year.

 I mean, I don't know -- no one's talked about
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actual numbers. For the first three quarters of this

year, I've accepted seven caskets from outside sources,

about ten last year and eight the year before. Now,

that's not a significant impact, but again, I don't look

at the individual family for profitability. I look for

a 12-month span, and I'm surprised that everybody's

micro-managing to such a one-case/one-family basis.

 It would just be interesting -- California may

have a much different, as usual, impact, but Jim, how

many do you receive a year?

 MR. PINKERTON: We receive about two, so it's

not a major issue.

 MR. NEEL: And you, sir?

 MR. SIEDLECKI: Me?

 MR. NEEL: Yes.

 MR. SIEDLECKI: Five years ago, I didn't get

any.

 MR. NEEL: How about this year?

 MR. SIEDLECKI: Last year I got three, and next

year I may get ten. That's the issue here.

 MS. HARRINGTON: Okay, okay, Maynard has a

question.

 MR. CHERIS: Thank you.

 Here's a question to think about, we don't have

time to have answer. Does the consumer benefit if
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funeral directors, funeral homes, funeral trade

associations get rid of casket stores? Think about

that.

 MS. HARRINGTON: I would say a rhetorical

question.

 Merc and then Scott.

 MS. BERN-KLUG: I have a different question,

inspired in part from my neighbor's question.

 This discussion, in part, kind of the underlying

theme is are funeral providers going to be able to

recover some of the costs, should it be through the sale

of the casket, should it be through the basic services.

My question is very different.

 Can a family decide how much money they want to

spend and then go and buy a funeral that matches that?

And are we putting in disincentives to allow a family to

decide, I want to spend $2,700, and I want to use this

funeral home, and if I can't buy a casket there for this

amount, I'm going to buy it from a casket store.

 I mean, this discussion hasn't really focused on

from the family's point of view, can they buy what they

want to buy and nothing else?

 MS. HARRINGTON: Scott?

 MR. GILLIGAN: I just want to clarify, Harvey,

it's not a condition of tying a discount to a purchase
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of an item. What the rule prohibits is you conditioning

the purchase of anything on a GPL with a purchase of

something else on a GPL. A discount is totally

different.

 And just a comment to Robert, he properly

pointed out that they do -- his casket store has a big

advantage over funeral homes, you have lower overhead.

Funeral homes have an advantage that you don't have in

that we offer a group of goods and services, and we can

offer them at a discount package. So, let's compete.

 MS. HARRINGTON: I'm still looking for new. We

are not going to -- I am going to cut off speeches and

rhetorical questions and stuff, because that doesn't

help our record. I'm serious about that.

 David?

 MR. SWIM: I think Mercedes' point is the whole

key. We've found that shopping doesn't exist until one

of two things, that they've run out of money, because

they go in to shop when they're at the funeral home, and

they do start coming to us, and we had a family that

wanted to buy a bronze casket. We didn't carry it.

They came over, looked, they had been quoted no package

price.

 We mentioned to him that probably he could get a

package price. We asked him extensively, looked at his
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price list, hadn't been offered a package price, this

was right in San Diego, and sent him back and said, Why

don't you ask for the package price? You have got a

certain casket you want. All of a sudden, that became

an appearance there. And yet by the time he ended up

there, he didn't know about how much he spent.

 And families going on, they're so confused as to

actually what are they going to get. If we had general

price lists that stated here's the funeral service fee

and here's what it's going to be no matter what else you

buy -- they're doing this currently, Eileen, on general

price lists with church and chapel ceremonies. You'll

find that the exact same fee is charged to go to a local

church as it is to use the funeral home chapel.

 And is the cost the same? Most of the time

not. It's all bundled in there, and they tie all these

things in. So, the same thing with the family. They go

in, and they're bundled with a potpourri of services,

and then mention that, Boy, if you get the casket, it

can save you a lot of money. And we get cancellations

as casket retailers.

 The competition, no problem. Bring the casket

down to my price, no problem. But to hold the family

hostage at that point, when mom is in that funeral home,

is where most of the time we see the feedback coming.
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 MS. HARRINGTON: Bill?

 MR. SEALE: I would like to answer Mercedes.

Being a funeral director and owning funeral homes, one

of the nicest things that happens is a family comes in

and says we have got X number of dollars to spend, and I

don't know any funeral director that has ever refused to

take that amount of money and give that person a decent

Christian burial.

 MS. HARRINGTON: Okay, I have two more comments,

and I would like them as close to 30 seconds as

possible. We will have Jonathan and Glenn.

 MR. SIEDLECKI: Just very quickly, I have heard

a lot of talk here today about the expensive caskets at

funeral homes. I would throw out here on the table

today, that my price list for caskets, I have a casket

suitable for viewing at $258. I have a minimum metal

casket suitable for viewing at $554. I would ask Mr.

Maynard and the other gentlemen to comment on that,

please. Where are your base prices?

 MS. HARRINGTON: Glenn?

 MR. MCMILLEN: I'll withdraw, the point was

made.

 MS. HARRINGTON: I think we had some consensus

earlier that third-party casket sellers -- I think we

heard this -- would not disagree if they were required
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to provide price lists.

 MR. SWIM: Absolutely, full agreement.

 MS. HARRINGTON: Under the rule, okay.

 Okay, I don't think that we're going to have

that discussion, because I don't think it gets us

anything in terms of what we're looking for in our

record, and I haven't -- unless somebody has something

new to say, we will adjourn for lunch early. So, at the

risk of knowing that you're standing between the meeting

and lunch, would anyone like to say anything new?

 Hold on, hold on, Mercedes?

 MS. BERN-KLUG: Could we add the extra ten

minutes into the discussion of the basic services fee?

That's the shortest amount of time.

 MS. HARRINGTON: Hold on, yes. Here's what we

will -- well, we will come back at -- and resume

promptly at 1:05, and so we will be able to move up the

afternoon, and if we stay on track, we can have

additional time.

 Jim, question?

 MR. PINKERTON: Can we also revisit the issue of

jurisdiction?

 MS. HARRINGTON: I don't think that we can

revisit the issue of jurisdiction, because it's a legal

question, and there isn't really anything, I don't
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think, that anyone could say into the record that would

help the record on a legal issue.

 MR. PINKERTON: Okay.

 MS. HARRINGTON: Thank you very much, 1:05.

 (Whereupon, at 11:50 a.m., a lunch recess was

taken.)
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 AFTERNOON SESSION

 (1:05 p.m.)

 SESSION III

 PRE-NEED ISSUES

 MS. HARRINGTON: Thank you all for being back

right on time. If everyone could please take a seat and

end your conversations, that would be helpful.

 Now, let's just take a look around. Susanne,

are you good to go down there?

 THE REPORTER: I believe so.

 MS. HARRINGTON: All right, I believe we have

some substitutions this afternoon, so let's get those on

the record before we start.

 Joe, could you introduce yourself?

 MR. HAYES: Yes, I'm Joe Hayes with Service

Corporation International, and I'm substituting for

Glenn McMillen.

 MS. HARRINGTON: Are there any other

substitutions? I don't see any. Okay, very good.

 Okay, how many of you had lunch with Mr. Ming

today?

 (Show of hands.) 

 MS. HARRINGTON: Yeah? He'll be so happy.

That's right, it's a package deal.

 All right, for the next hour we are going to
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talk about pre-need issues. What we're going to do is

do pre-need from 1:05 to 2:05. We will take our break

from 2:05 until whatever time I say we're going to end

it at, we'll see how it's going there and what it looks

like we need in terms of either fresh air or movement.

 Then we will do price list requirements, and

we'll see how that goes. We may shorten that up,

depending on what the conversation is like, so that we

can make sure that we have a good and robust discussion

on the basic services fee issue, which was requested

earlier. So, I'm going to kind of play that by ear.

 If I hear that we're going over the same ground

here and that we aren't having new and enlightened

discussion, I know that we all have views and we want

them on the record and we want to make sure that

everyone knows what they are and understands them, and

we would all love for everyone to agree with our

positions, but this really isn't the opportunity to

restate the positions that are staked out in the

comments.

 It's an opportunity to help us narrow the issues

or better understand the issues really by talking to one

another and building on the discussion that we have at

the table. And I know it's really hard, because you're

all here as advocates, as well.
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 And I want to say that I thought that all of the

participants really helped us a lot this morning, so I'm

not restating the rules by way of criticism at all but

only to say good work, keep it up, and let's go at it

now on the pre-need issues.

 I guess that the first basic question is how

prevalent is pre-need purchasing, and if someone has

some information on prevalence that they could just

briefly summarize just to get the conversation started

this afternoon. What I really would like to do, though,

is to focus our conversation on the distinction between

pre-arrangement and prepayment and focus on

pre-arrangement here, the payment issues.

 That is, what happens when people pay their

money and what happens to that money are issues that are

beyond the FTC's rule and really beyond our reach and

ken. There are state laws about trusting, there's

common law about trusting, that sort of thing, and I

know that those are extremely important issues.

 Now, if someone wants to disagree with me that

it's beyond the FTC's ken, you're certainly welcome to,

but we're interested in focusing on pre-arrangement,

what happens when consumers want to pre-arrange, what is

the information that they're getting, what is the

consistency or lack thereof between the information they
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receive when they pre-arrange and their experience when

it comes time for fulfillment of a pre-arranged package

or service.

 But first let's talk a little bit about the

prevalence of pre-need arranging or purchasing. Does

anyone have anything on that? What is the prevalence?

 Pat?

 MR. GRAHAM: I don't have a lot to say about it

other than it is prevalent. There's a lot of pre-need

activity going on in both the funeral industry,

traditional funeral industry and also in the emergence

of the third-party suppliers.

 MS. HARRINGTON: In your business, would you

venture an estimate of pre-arrangement versus --

 MR. GRAHAM: A percentage of business you mean?

 MS. HARRINGTON: Yes, of pre-arrangement versus

at-need?

 MR. GRAHAM: Probably 30 to 40 percent.

 MS. HARRINGTON: Pre-arrangement?

 MR. GRAHAM: Pre-arrangement.

 MS. HARRINGTON: Okay.

 Anybody have a different view or any data?

 Jeff?

 MR. KRAMER: Our -- excuse me.

 Well, I don't know if it's any different. We're
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finding that -- and again, a lot of our data deals with

prepayment, which is one of our big concerns, is that

people who are being asked to prepay or who are

prepaying in advance, but we're finding that 32 percent

of people aged 50 and older have prepaid for funeral

services and 25 percent 50 and over have prepaid for

plots.

 And on the burial side we are even more

concerned, because nearly 60 percent pay the full amount

in advance for their burial services.

 MS. HARRINGTON: Now, prepayment suggests

pre-arrangement, so do you have any data on the

information that people are receiving when they make the

arrangement that leads them to prepay?

 MR. KRAMER: Well, I think we mentioned some of

that before. We're finding that when people are going

in to ask for information, we're finding on the cemetery

side they're getting -- a third of the time they're

actually getting a price list, a written price list, and

when you get down to products and services, we're

finding -- it skews about the same way. We're finding

between 25 to 42 percent, I think, we're finding that

people are getting the information up front when they go

in to ask for information.

 MS. HARRINGTON: With cemeteries only or with
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providers, as well?

 MR. KRAMER: With cemeteries. No, with funeral

directors we're finding, as well, that it's a little bit

higher percentage, but the compliance is not nearly the

90 percent that I think that the FTC found that it is,

and we're finding it's about 67 to 75 percent

compliance.

 MS. HARRINGTON: Okay.

 Billie?

 MS. WATSON-HUGHES: What was just stated is a

perfect example of why we need to strengthen the funeral

rule, because there is a wide inconsistency in

information that is given out on pre-need, for

pre-arrangements and also for prefunding, and the

consumer does not benefit from this discrepancy, and if

the rule is strengthened, the consumer would.

 But the pre-need area is so vast and the states

have done a job already working on rules and

regulations, maybe it would behoove FTC to work with

those states first --

 MS. HARRINGTON: Well, let's --

 MS. WATSON-HUGHES: -- 49 states at this point.

 MS. HARRINGTON: -- let's hear from a state

who's not here speaking on behalf of her state.

 Jennifer?
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 MS. RAWLS: Yes?

 MS. HARRINGTON: Are your state regulations on

pre-arrangement and pre-need sufficient from your

standpoint?

 MS. RAWLS: To my knowledge, other than the

trust issues that you had talked about before, our state

laws, other than the Consumer Protection Act, don't

really address the concern that I have and the concern

that I think some other state regulators share that I've

spoken with, and that is the difference of what people

pay initially, what they're asked to pay in addition to

that when they actually get the service, and what

disclosures are made in that process.

 And what we are hearing -- and interestingly

enough, although I don't have any kind of overwhelming

numbers on this, the complaints that I do see that come

through the state agencies on the funeral industry by

and large are on this very issue, and that is somebody's

paid, you know, whatever on the front end, they go to

have the service, and they're told that they need to pay

additional $1,500, $2,000. They don't know why, and

they didn't know that there was a chance that that was

going to happen.

 The Consumer Protection Act, I think, can

address that and would, but I don't know, you know, how
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the industry is dealing with that issue.

 MS. HARRINGTON: Okay.

 Let's hear from Jim and -- Jim.

 MR. PINKERTON: Well, as a state board member in

Pennsylvania, I can tell that our regulations covering

pre-need, it covers about 200 words, which we think it

needs to be strengthened a lot. I think what would go a

long way is the encompassing of the Federal Trade

Commission rule on funeral service to incorporate the

other entities and to cover both pre-need and at-need.

 And I was interested by Jennifer's comments and

I would like to expand on that discussion a little bit

where you mentioned the sort of partnership that you

have with the FTC, and I guess states can be empowered

to enforce federal rules through the Attorney General's

Office, and I think that perhaps your issue of the

number of entities that you would be overseeing, if you

could develop sort of a guideline and a clearinghouse,

if you will, that you could help us in the state levels

to enforce those laws, to create sort of a standard by

which those laws could be enforced and working in

cooperation with the states, I think that we could

perhaps achieve the enforcement that's necessary. But I

think that it would fall to you, your agency, to sort of

oversee and spearhead that.
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 MS. HARRINGTON: I would note that, as Jennifer

observed earlier, under some state statutory schemes,

the states' unfair, deceptive acts and practices laws

encompass Federal Trade Commission trade regulation

rules, and in other states that is not the case. There

is a very lively legal and policy debate about the

Federal -- the appropriateness and constitutionality of

the Federal Government imposing enforcement requirements

on states, and so that there's some tension in this area

about the Federal Government's ability to unilaterally

require that states enforce federal laws. When the

states opt to incorporate those federal laws into their

statutes and then enforce them, that is not an issue.

 MR. PINKERTON: Well, but I think if you offered

and you were invited in, and I think that perhaps the

offer hasn't been as clearly expressed as possible, that

if the state regulatory entities knew that that was

available and that there was a format to do that, that

it would be perhaps much better received.

 MS. HARRINGTON: Thank you, Jim.

 Edith?

 MS. CHURCHMAN: Yes, thank you.

 Couple reasons, three reasons that I can think

of right off the top of my head that people preplan

funerals and perhaps prepay them. First of all, lack of
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survivors, lack of family survivors. Second of all,

people are in a Medicaid spend-down mode, so that they

need to get rid of some of their assets in order to

qualify for Medicaid. And the third thing that I'm

finding right now, a lot of people prepay because of

scare tactics that are perpetrated upon them.

 And I would just like to give you one example of

something that happened recently where a family that I

was in touch with prepaid a cremation, and they were

told by the cemetery, which interesting enough did not

have a crematory, that cremation prices were escalating

and that they needed to do this, they needed to take

control of this right now, and the family was charged

$550 for cremation that's $150 in New Jersey, and they

were also charged a finance charge.

 Also, I'd like to say that New Jersey has a

great pre-need law for funeral directors, you should

check it out.

 MS. HARRINGTON: For funeral directors?

 MS. CHURCHMAN: Yes.

 MS. HARRINGTON: It doesn't extend to other

entities?

 MS. CHURCHMAN: No, it does not.

 MS. HARRINGTON: Let me ask you, Edith, one of

the questions on the agenda for this segment asks
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whether the requirements for pre-need disclosure should

vary from the requirements for at-need disclosure. Does

New Jersey treat those differently?

 MS. CHURCHMAN: No, our pre-need funeral is

treated exactly the same as an at-need funeral in that

we must, you know, present our price lists, and we do

have 100 percent trust and 100 percent refundability.

 MS. HARRINGTON: And Bill observes Texas, also.

 Okay, Lisa and then Scott.

 MS. CARLSON: As in our commentary, we think

it's extremely important that the disclosure of penalty

for changing your mind on a prefunded account be

disclosed, and not just in -- not just as 10 percent.

It should be $546 will not be refunded if you transfer

this account.

 MS. HARRINGTON: Okay.

 Scott and then Jonathan.

 MR. GILLIGAN: The NFDA certainly supports full

disclosure, and I believe if you look at some of the

states' laws, and there are some excellent state

pre-need laws that cover just funeral directors, a lot

of them detail just what Lisa is looking for, consumer

disclosures that have to be made in the pre-need

contract itself.

 Now, when we talk about price disclosures, yes,
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the funeral rule really covers price disclosure, but

once you get on into portability issues, refundability

issues, cancellation issues, there's a number of states,

and we just did an analysis of all 49 states that have

laws, some of them are very detailed, and your pre-need

contract must include the following disclosures, one,

two, three, four, and lays it out very clearly for the

consumer.

 MS. HARRINGTON: Would NFDA support an amendment

of the rule to require those additional contractual

disclosures?

 MR. GILLIGAN: I think what we would prefer to

see is for the FTC, if they deem it appropriate, to

bring in other state regulators and go to the states,

because they have been regulating this for 20 years, see

what works and what doesn't work. Get their

viewpoints. Talk to the insurance companies, because

half of this is funded by insurance.

 We're going to -- you're going to deal with

issues of cancellability of insurance contracts. You

have to get their viewpoints, too. So, bring in all

these people, get their feedback, and then you could

either -- either through guidelines to the states or

amendment to the funeral law or funeral rule or some

other appropriate device spell out what disclosures you
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believe should be in there.

 MS. HARRINGTON: Where there are state laws that

require the disclosure in plain and simple terms in the

contract of these additional terms and conditions, does

NFDA agree that those are useful regulations?

 MR. GILLIGAN: Absolutely. We have our own --

we came out with our Pre-need Bill of Rights two years

out from our policy board, and it goes right on down the

full rights, disclosure, portability, refundability and

all of those, so it pretty much mirrors off of what a

lot of states are requiring.

 MS. HARRINGTON: So, if we were to select from,

you know, the best of states' requirements, you guys

wouldn't have a problem with that?

 MR. GILLIGAN: No.

 MS. HARRINGTON: In general terms.

 MR. KRAMER: As far as consumer disclosure --

 MS. HARRINGTON: Not waiving your rights to sue

us again.

 MR. GILLIGAN: And again. But no, we would have

no problem sharing that with you.

 MS. HARRINGTON: Okay, thank you.

 Paul? I'm sorry, Jonathan, I said I was going

to call on you next.

 MR. SIEDLECKI: Thank you, Madam Chairman.
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 I don't know how many people at this table

actually do pre-arrangements. I do on a regular basis.

I sit down with families and discuss what their plans

are, ask them what their outcome is -- what the probable

outcome they want to happen, and I want to let you know

that the same elements that go into an at-need

arrangement go into a pre-need arrangement.

 Do not fool yourself, ladies and gentlemen. We

need to discuss strengthening of this rule to bring in

people who are not included at this point, and I think

that will eliminate a lot of the problems that we see

pre-need and at-need. The strengthening of the rule

will bring under the umbrella some of the problems that

we are looking at.

 MS. HARRINGTON: What are you talking about?

Are you talking about --

 MR. SIEDLECKI: I'm talking about people who are

not included under the rule at this time.

 MS. HARRINGTON: So, you are talking about

extending coverage of the rule?

 MR. SIEDLECKI: Yes, I am.

 MS. HARRINGTON: Are you recommending that

additional items or material terms and conditions be

required to be disclosed under the rule?

 MR. SIEDLECKI: Not at this time, but I would
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say, Madam --

 MS. HARRINGTON: So, your point goes really back

to coverage, which was the first issue that we raised

this morning.

 MR. SIEDLECKI: No, it doesn't. No, it

doesn't. We're talking about pre-arrangement issue

here, and the pre-arrangement -- strengthening the rule

will -- will cause a -- will eliminate many of the

problems that we're facing with pre-arrangement. I --

let me just make a couple points.

 When we do this pre-arrangement in the state of

Illinois, for example, there are actually three ways in

which you can do this. You can take a family and talk

to them and develop a funeral plan, and that plan does

not have to be funded. That plan can just be put in a

drawer and put aside as a roadmap for future use.

 They can designate an insurance beneficiary or a

-- through a will or a trust, someone that will -- an

executrix, et cetera, that may pay for this funeral at a

later date.

 We also are involved with a trust program. We

also have many, many insurance programs that are funding

pre-arrangement programs. I have to let you know that

if the FTC were to go and get involved in that at this

point, it would be a monumental task to sort through the
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complexities of that issue. Each state, there are

different rules in each state.

 So, I think the simplest thing for the FTC to do

is to strengthen the rule, and, if necessary, look at

the complexities at a separate time. I don't think that

we can properly deal with that issue at this point in

this meeting at this time. I think it deserves and

warrants a particular -- its own private attention,

Madam Chairman.

 MS. HARRINGTON: Okay, thank you.

 Paul?

 MR. ELVIG: Well, I would just like to set the

record straight, this is Paul Elvig again with the

ICFA.

 We heard from AARP about their sample survey,

their telephone survey and other surveys, and the

figure's been used twice now by the representative that

36 percent of the people were -- who checked the

cemeteries were given prices. Their own records

indicate, in fact, it was 70 -- in fact, it was 64

percent received it. They're saying that the

thirty-some did not receive it. So, that information is

being incorrectly put into the record. The record they

have submitted in writing will show the percentages are

just the opposite as being reported here.
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 And while I have the microphone, allow me to say

that the suggestion is already made that the funeral

rule be expanded to cover cemeteries that have

pre-arrangements. Again, we also believe that would

require an entire different process for the FTC.

There's all types of new information out there to be

gleaned. I think the mere fact that somebody has made a

pre-arrangement -- funeral or cemetery -- indicates

they've seen prices, indicates that things have been

disclosed to them, cancellation periods allow for people

to have a rethink on issues.

 The dynamics of pre-need are awesome and

considerably beyond what we have seen with the funeral

rule. I have personally audited over 180

pre-arrangement trust funds in my lifetime as a

regulator, and let me tell you that the issues of

disclosure are not the problems that states face. The

issues states face are the finance of it, the funding of

it, the integrity of those funds, but not the integrity

of the contracts.

 MS. HARRINGTON: Thank you.

 John?

 MR. WALLENSTEIN: I wanted to make two points.

At present, obviously, monument dealers are not covered

by the rule, although certainly in New York State and
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other states that have pre-need trusting arrangements,

we are covered by the requirement to trust those funds

if we take a pre-need order.

 And the way around that in the monument industry

is easy. You make the stone and say it's yours, I'll

keep it here until you need it, and then you don't have

to trust -- place the funds in trust at that point,

because you've passed title to the stone.

 But I think that part of the problem is that

when a consumer goes to a monument retailer pre-need and

orders a monument, they get full disclosure, they get a

full design, they get a full -- a full package of this

is what your stone will look like, either I'll make it

now or I'll make it when you call me and tell me it's

needed.

 What we've found is that the abuses occur -- and

I hate to pick on funeral directors, Scott, but --

 MR. GILLIGAN: Then don't.

 MR. WALLENSTEIN: I have to pick on somebody.

 The abuses we've found is that where a funeral

director will make a pre-need pre-arrangement, as you've

called it, where they'll say we'll take care of

everything, don't worry about it. Monument, no problem,

we'll take care of that, that will be $1,500, and that's

all they get, that's all they know.
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 And when the need arises, they suddenly realize

they bought a stone 15 years ago that they really didn't

want, they really didn't know what they were getting

into, and there's really no disclosure to the consumer

from that standpoint as to what it is they're getting.

I think that may be a coverage issue, as well, but I

think it's something that does need to be addressed.

 I would also like to make one point with respect

to what Jim said, the states really can't enforce the

FTC reg unless it's adopted by the state legislature as

a part of their enforcement scheme, and I think it's

unfair to ask the states to do that, particularly in New

York, the Division of Cemeteries -- and I know the

director is here, and I'm not saying this just to butter

him up -- the director of the Division of Cemeteries in

New York has three investigators, three and a half

investigators, and two accountants and himself and a

secretary for 1700 cemeteries, God knows how many

monument dealers and funeral directors in the state of

New York.

 He can't possibly enforce the funeral rule as

well as New York State rules and regulations, and most

of what he's got to do has to do with watching the

numbers and not the monuments in and out of the

cemeteries.
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 MS. HARRINGTON: Okay, there was something that

you said that Randall wanted to respond to very

briefly.

 MR. EARL: Thank you, Ms. Chairman.

 To address your comment in reference to the

funeral director, I take great offense to that. We are

the only group around this table that are covered by the

rule today, right now, and we're the only ones that have

abided by the rule today, and yet we're talking about

contracts from all these other entities and what they do

or what they don't do, and it all comes back to the rule

and the funeral director.

 We are abiding by the rule. It's been proven by

the FTC, AARP in their surveys that they have done, we

are abiding by the rule, whether it be pre-need, at-need

or anything else. All we're saying is let's make sure

that the guidelines are out there for everyone that

comes under the rule.

 MS. HARRINGTON: Okay, Jim?

 MR. PINKERTON: I wanted to touch on something

and Scott touched on it.

 In terms of the insurance sales that -- and I

understand that there is a barrier between insurance and

the FTC, but in many cases insurance is used to fund

pre-need, and I think there needs to be a distinction
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that the arrangements part of it could still fall under

the purview of the FTC in providing the information, and

the funding is secondary and separate to that.

 That brings up another question, and that is in

terms of who is already under the rule, and I believe it

probably is somewhat repetitive of my comments, but

there is that issue of common interest and control,

where we have entities -- and we have these in western

Pennsylvania -- who it's the same ownership of different

corporations providing funeral goods and services. We

haven't even changed the word yet.

 And yet they claim to fall outside of the scope

of the law, because they are only providing one portion

of it, and yet whether it's in pension law or whether

it's in environmental law or whether it's in wage and

hour, the issue of common interest and control -- they

are all three companies, but collectively they fall

under the thresholds, and they're covered, and I just

wondered how that's applied in the Federal Trade

Commission rule.

 MS. HARRINGTON: Okay, Edith?

 MS. CHURCHMAN: Yes, Madam Chairperson, I would

like entered into the record --

 MS. HARRINGTON: You can call me Eileen. The

Chairman of the Federal Trade Commission is in the next
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room here, and he would be the Chairman here.

 MS. CHURCHMAN: I wouldn't want to make him mad,

but I want to give you respect, too.

 I would like entered into the record that the

National Funeral Directors and Morticians Association

certainly would like to come to the table with you to

look at states whose pre-need laws are working, along

with the National Funeral Directors Association.

 Again, let's strengthen the rule. I'm seeing a

lot of families that come to me -- I'm here representing

an organization that represents African-American funeral

service consumers in the United States. I'm seeing a

lot of consumers who are coming to me who are not

explained about cancellation fees, don't have any idea

about what happens if they die before their contracts

are fulfilled -- talking about cemeteries now --

consumers that are not given fair pricing information,

that never even see a mausoleum space until the day of

the funeral, that may purchase a preconstruction space,

that are sold overpriced goods, that may, indeed,

purchase a mausoleum space for $5,000 when they could

buy one for $2,000 that is closer to where they live and

that's already constructed. And so, again, let's

strengthen the rule to benefit consumers.

 MS. HARRINGTON: Thank you.
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 Carolyn?

 MS. JACOBI: Yes, this category is a true

indicator as to why I highly recommend revision and

expansion of the present rule so it becomes inclusive.

Not only are we concerned about disclosure as far as the

aggressive trend of pre-need, but more importantly, I am

very concerned about the trusting factor.

 In the state of -- your great State of Illinois,

I became a nonresident to campaign for the present state

comptroller, because the one promise he made and is

fulfilling, that he would make sure that the cemeteries

would comply with the rule of trusting. This came about

because of me being there activating for over a year,

and there were two owners who had absconded with the

consumers' monies that had been paid in on pre-need

items. Not only these two owners, but many others who

have run rampant through that one particular state.

 So, the state comptroller realized outside

disclosure, outside of the language, more importantly,

they had to enforce trusting and make sure that there

was an auditing process.

 MS. HARRINGTON: And Karlin, were those mostly

insurance products that were used --

 MS. JACOBI: Yes.

 MS. HARRINGTON: -- to collect prepayment?
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 MS. JACOBI: That's correct.

 MS. HARRINGTON: Yeah. I would just note that

there was a remark made about separation between the FTC

and insurance, and that's the Karen Ferguson Act,

prohibition on the FTC being involved in the business of

insurance, which is the law.

 MS. JACOBI: Well, getting outside of the

insurance factor, which is law, you have got John Q

Consumer's hard-earned dollar in many instances that are

paying for these items. Enforcement through revision,

through expansion, through inclusion would give that

consumer more protection, and that we definitely need.

 MS. HARRINGTON: Okay.

 Joe?

 MR. HAYES: Thank you, Eileen.

 I think all of us at this table support the

concept of full disclosure in the context of pre-need.

When there are allegations of unscrupulous or deceptive

selling practices, it harms the entire industry, and

many states have recognized that, and there are a lot of

states out there that have enacted very detailed

statutory schemes on both the funeral side and the

cemetery side to address the pre-need situation.

 And some of these statutory -- most of these

statutory schemes deal with trusting issues, they have
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detailed reporting requirements, and there are audits

that go on, and there are disclosure requirements. And

if the FTC is getting into this area or considering

getting into this area, I think it needs to work very

closely with the states that already have these

statutory schemes in place, because I think we would

also all agree that it's very important to keep the

transactions simple for the consumer.

 If you overlay the existing state laws with a

new system of federal laws, we may have inconsistent

disclosure requirements, which will confuse the

transaction. So, I think it's important that the FTC

confer very closely with those states that have already

addressed this issue before deciding how to proceed.

 MS. HARRINGTON: Okay, thank you.

 Pat?

 MR. GRAHAM: In Texas, and I think Bill can

verify this, we have a very strong pre-need law, which

is enforced mainly by the Texas Banking Department but

also through cooperation with the Funeral Service

Commission, and I think from the FTC's point of view,

you should separate pre-arrangements from prepayment,

because prepayment will be more in the banking field

than the FTC purview would be. That's it.

 MS. HARRINGTON: Jeff?
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 MR. KRAMER: Thank you, Eileen.

 Yeah, we feel very strongly that the rule needs

to be expanded to include pre-need, that there needs to

be minimum contractual disclosures regarding

cancellation, portability, all of those issues, because

I think, again, what we're trying to get at with this

rule is to benefit consumers, and whatever steps we can

take to make that more functional so that consumers will

benefit is to be helped.

 One of the things I want to point out is, and I

know a lot of -- most of the providers at the table will

agree with this, beyond being a business decision, for

-- certainly for the consumer, it's an emotional, it's

a spiritual experience, they're trying to get through

it, and whatever we can do to standardize this, to make

it easier for consumers, would be helpful.

 We're finding now that 40 percent of people over

the age of 50 are being solicited for pre-need either in

the burial or the funeral industry, and we just think

it's real important that as these numbers continue to

increase and as it becomes a bigger sector of the

funeral and burial industry, that there needs to be some

kind of just general -- some kind of standardized

contractual language, because I know Texas may have a

great one and some states have really good pre-need
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legislation and regulation, but some -- it's a

mishmash. Some is really good in funeral, some really

good in burial, and the two don't necessarily co-exist

together.

 So, we think whatever we can do to get that, so

if we can get together, perhaps with industry, and talk

about what states are working and what kind of language

can be adopted at the federal level, we would really

appreciate that.

 MS. HARRINGTON: Let me just clarify that, of

course, the FTC's rule presently applies to pre-need and

requires the same sorts of disclosures that are required

at need. So, I think that the real distinctions here

are, number one, should there be an expansion of the

term "provider," which is what we talked about first

thing, and I think that's what many of you mean when you

say strengthen the rule.

 And then secondly, the question that's on the

table for this session is are there additional or

different disclosure requirements that should apply

pre-need. And what I hear you saying and some of the

others, Jeff, is that you think that there are some

additional terms that should be disclosed and that

perhaps the requirement for disclosure should be on the

contract and not in a separate document. I don't mean
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to put words into your mouth, but --

 MR. KRAMER: No, that's right.

 MS. HARRINGTON: For those of you downstairs and

here, I just want to be perfectly clear that the rule

does apply presently to pre-need.

 Scott and then Harv.

 MR. GILLIGAN: Thank you.

 One thing I would urge the FTC, if they are

going to get into this area, is do it with a little

flexibility, look at maybe guidelines or a different

regulation or especially exemptions for states that

already have a system in place. There's ten states that

require a funeral director to submit his pre-need

contract for pre-approval before he can even use it.

That's very detailed. They go down there and look and

make sure you have all the disclosures.

 I don't think it would be wise for the FTC to

adopt either a dual standard or something that preempts

that. So, I would urge you to look at exemption this

time for states that already have this situation well in

hand.

 MS. HARRINGTON: Okay, we are going to have

Harv, Lisa and then G. V., or we will have Lisa before

Harv, if you want.

 MR. LAPIN: I don't care, go ahead Lisa.
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 MS. CARLSON: I was just going to quickly say

that the November issue of the AARP Bulletin went out

with an article to, what, 2 million members, and our

phone -- pre-need was one of the topics, and I would

verify, given the hundreds of calls and the 4000 web

hits last week, the issue, as Jennifer pointed out, of

being required to pay more or being penalized are -- is

a common complaint. So, there is a problem.

 MS. HARRINGTON: Where -- Jennifer, where do

people go -- I mean, if you had actually dealt with

consumers who believed that when they pre-arranged and

paid, that they had covered all their bases, and then

find at the time of fulfillment that they're asked to

pay more, have you looked at their paperwork? This is

going to be anecdotal, but have you taken a look at the

papers to see whether that's accurate, and if so, where

do they go? What do they do?

 MS. RAWLS: Well, what we usually get from

consumers is the price sheet that they signed up for to

begin with that says $7,500 and then the price sheet

that has a few items marked up when they go for need

that will say, you know, $8,500. Those are the two

things we get. What we don't get are the contracts they

saw beforehand, if there were any. We don't get any

kind of disclosure documents from the home.
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 So, in those instances, you know, what we're

faced to do is have them go back to the home first and

say, you know, I think there's a discrepancy here, can

you explain it? After that, we try to go through our

funeral board and refer some complaints there. We

have --

 MS. HARRINGTON: Do these folks file -- ever,

ever file suit in small claims court?

 MS. RAWLS: Can they or do they?

 MS. HARRINGTON: Both.

 MS. RAWLS: Yes, they can, and I don't know

whether they do. They don't make it a habit of telling

us, unfortunately.

 MS. HARRINGTON: Right.

 MS. RAWLS: We have seen more complaints filed

with our Division of Consumer Affairs, which is what,

you know, lights up our board. In Tennessee, the way

that our consumer division works, and I guess what I --

I had my card up, I don't want to jump anybody here --

 MS. HARRINGTON: Sure.

 MS. RAWLS: -- but I think I agree with what

John said about some states have very strong contracts

on some of the issues, like transferral or cancellation

or that kind of thing, but what we're looking at is

really a different issue, and that is the issue of the
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increased costs, which I'm not sure that these contracts

deal with uniformly. Maybe they do, you're certainly in

a better position to know that than I am.

 MR. GILLIGAN: May I respond?

 MS. HARRINGTON: Quickly, Scott, then we will go

to her.

 MS. RAWLS: One more thing?

 MS. HARRINGTON: Sure -- actually, I will come

back to you, but let's have Scott just answer that

question quickly, then we will come back to you and

Harvey.

 MR. GILLIGAN: Contracts definitely spell out

whether it's nonguarantee or guarantee, that's the issue

we're looking at here, and the issue is mother has died,

the children don't know where the contract is, and

mother says I've taken care of everything, but she

signed a nonguarantee contract that says we are going to

put this money aside and then we will use it toward

nonguaranteed prices when you die.

 She may not have communicated that to her

children or may not have understood it that well, but

it's all in the contract. They all spell out whether

they're guarantee or nonguarantee. In the guarantee

situation, what she has paid, the funeral director

guarantees this will cover when you die and you're not
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due anymore.

 So, it's probably a situation where they've lost

the contract or they don't have a benefit of the

contract to be cleared up with the funeral home.

 MS. HARRINGTON: Jennifer, back to you?

 MR. SIEDLECKI: Madam Chairman, could I ask for

a clarification, please?

 MS. HARRINGTON: No.

 Jennifer?

 MS. RAWLS: I guess my response to that would be

-- and is this is apparently one of those situations

where there is a lot of consumer confusion, and I think

including it in the rule would only help.

 I would also like to clarify -- and this is only

for mine and Eileen's benefit, when I talked about a

partnership between Tennessee and the FTC, it truly is a

partnership. The FTC does not require the State of

Tennessee or any other state that I know of to enforce

the rule. So, if there has been any miscommunication

about that on my part, I apologize.

 MS. HARRINGTON: Harv?

 MR. LAPIN: I think I still remember what I was

going to do.

 I have a couple points, and strange as it may

seem to everybody, Scott and I agree on this particular
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issue. The FTC -- in fact, we've been requesting the

FTC since 1984 to put out guidelines in the

pre-need/pre-arrangement area, and one of my former

associations I represented. The reason is it's a timing

problem, and a lot of it depends on the way the

contracts are, but right now, if you have a pre-need

purchaser, the rule requires you to give them a general

price list at the time the transaction is entered into.

If it's a guaranteed contract, that general price list

will be, in fact, what that customer is going to pay.

They will never pay any more.

 Now, in the meantime, their money has been put

into a trust fund. Hopefully, if there's been proper

investment of it, there will be more money there, but

when a seller guarantees a contract, they get the

benefit of the investment of the funds. So, the rule

says you give them a general price list then. It also

says if you change the arrangements at the time of

death, that you have to give them an up-to-date general

price list.

 Now, let's take the situation where it's not

guaranteed. At that stage -- and this is what

everybody's having a problem with -- you give them a

general price list when you enter into the agreement.

Now you have to give them a general price list again at
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the time of death, because the money that's coming out

of that fund is just money. It's just like they set up

an insurance policy that paid at the time of death.

 And I don't think it's clear for the industry as

to what the requirements are and what disclosures should

be, and I think it could be done by guidelines. The

rule is already complicated, and making it more

complicated is not going to help the industry at this

point. Guidelines, we could work with and adjust a lot

easier than we can amending a rule.

 And finally, I guess I'm the defender of

Illinois, which is my home state, and my neighbor here,

who I've been pouring water for all day, made some

misstatements. The --

 SPEAKER: Look out, she is going to pour it on

you.

 MR. LAPIN: No, I don't mean to challenge her.

The situations that she was referring to -- first of

all, let me tell you, Illinois is not running rampant

with people that are misrepresenting and stealing funds

and doing all these things. The two instances she's

referring to were not developed by the present

controller, who's been in office for nine months, but

actually were before he ever came into term.

 In fact, one of the situations has been going on
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for eight years, and the present controller started

enforcing our laws more stringently against these two

people that we're talking about.

 MS. CARLSON: But it is rampant if it's been

going on for eight years.

 MR. LAPIN: No, because we're talking about --

you know, you have got to understand, two sellers out of

all the sellers in the State of Illinois is really not

that significant, plus the fact that we have a

protection -- consumers' protection fund in both cases

which covered the consumers for items that they had

purchased and weren't delivered. So, it's not exactly

like there's running around.

 Now, unfortunately the bad apples make laws more

stringent, and we're not happy about bad apples, but

it's not -- I just don't want you to understand that if

you land at O'Hare you are going to be getting pre-need

information of an abusive nature, because it's not going

to happen.

 MS. HARRINGTON: Well, I hear that we have very

different takes on what's going on in Illinois, and as

much as we're all desperate to know more about the

Illinois situation, I'm going to go to G. V., and if we

have time at the end of this session, we can hear from

all of our Illinois people.
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 MR. AYERS: It's interesting to hear about

somebody else's issues.

 MS. HARRINGTON: But in California, you march to

a different beat.

 MR. AYERS: No, California we view, as far as

disclosures, pre-need and at-need in the same -- in the

same manner, much like the FTC does, as well. One

anecdotal type of thing that we find from time to time

are those who have pre-need contracts that are not

guaranteed, they come to time of need, and then they

have to pay more, and that's very difficult for

consumers.

 One thing we do with our consumer guide that all

general establishments and cemeteries are required to

make available to consumers is we try to spell out in

there that that may be a possibility and that they might

want to look when they're trying to do pre-need to

obtaining a guaranteed contract.

 The largest issue, though, is the trust issue,

and that's really beyond the scope of what we're talking

about here, but that's the -- that's kind of the iceberg

that's below the surface there.

 MS. HARRINGTON: Right.

 Okay, Paul.

 MR. ELVIG: Allow me to just further continue
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with this discussion about the suggestion that the rule

will be expanded to cover cemeteries in the area of

pre-need. Again, we would point out that you would need

to have a complete review of the whole process before

you travel down that road, and I'm going to give you one

example.

 The purchasing of a grave, which in the State of

Washington is generally done on pre-need basis 22.2

years before its use, 22.2 years before its use, are

done by different -- pardon me, are sales made by

different cemeteries and they sell a different type of

grave. Some, they have actually sold the real estate;

some, they sell burial rights; some, they sell access;

some, they quitclaim rights --

 MS. HARRINGTON: And is all -- for my

information, this isn't rhetorical, is all of that

disclosed in the terms and --

 MR. ELVIG: That's all disclosed in the type of

deed and contract used and --

 MS. HARRINGTON: Are there any state disclosure

-- separate disclosure requirements --

 MR. ELVIG: No.

 MS. HARRINGTON: -- on those? So, it's in the

deed or contract?

 MR. ELVIG: The State of Washington simply says
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there will be a conveyance used, and so you have all

these types of conveyances, and what you have just in

the area of cemetery graves, grave sites, you have a

variety of approaches in a single state to how the

conveyance occurs, which says a lot about how the

disclosures will be made. So, when you say cover the

cemetery industry with the FTC rule, we're talking about

a Pandora's box of definitions.

 Example: If you bought a grave in the State of

Delaware or the State of Texas or the State of Montana

and you bought with it a second right of interment, can

you use it for double death or are there additional

fees? And that's why there are state regulations, state

after state, 49 of them, of the 50, covering cemeteries

that deal with what it is you're actually purchasing.

 And so when we talk about expanding the rule,

we're talking about moving into an area that is vast,

cumbersome and would need in-depth investigation by the

FTC prior to even adopting. And I would remind our --

for the record, the ICFA has prepared model legislation

to deal with pre-arrangement contracts and the

disclosures that would be appropriate, and we urge

everyone to ask for it, look for it and to see if they

cannot get incorporated with their own state law.

 MS. HARRINGTON: Am I correct in assuming that
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Jonathan and Carolyn would like to say more about

Illinois?

 MS. JACOBI: I would love to.

 MS. HARRINGTON: Okay, I'm just checking. This

is not about Illinois?

 MR. SIEDLECKI: I'll be happy to talk about

Illinois if you like.

 MS. HARRINGTON: We will save that for the end.

We will have Jonathan and then Lisa and then we will get

to you, Carolyn, and then we'll be done.

 MR. SIEDLECKI: I have just one brief comment on

what this gentleman just said. It's been my experience

as a funeral director, when I sit in my office and

families come in to do a pre-arrangement or especially

an at-need arrangement at this point, let me say that

it's predicated on a pre-arranged program that

cemeterians seem to think everyone understands.

 I would bet that most people in this room don't

understand that when you buy a grave, you're not buying

everything that you need to buy at the cemetery. When

you buy a grave, many of my families come in and say,

Well, this is taken care of at the cemetery, we don't

have to worry about any of those costs, because mom has

her grave.

 Well, mom doesn't have her interment fee. Mom
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doesn't have her outer container. Mom doesn't have her

headstone. And why doesn't mom? Because she thought

all she had to do was buy a grave. There was nothing

else that she needed to buy.

 So, once again, Madam Chairman -- Eileen, excuse

me --

 MS. HARRINGTON: That's okay.

 MR. SIEDLECKI: -- as I open Pandora's box on

this issue, I want you all to realize that we need to

strengthen this rule, period.

 MS. HARRINGTON: Thank you.

 Lisa?

 MS. CARLSON: I agree with Jonathan in that if

cemeteries were required to give out a price list, a GPL

price list, it would have interment rights, opening and

closing, it would have the range of costs so that it

wouldn't be a surprise, and indeed, it is often a

surprise that things aren't all taken care of.

 Paul mentioned that there is a difference

between owning a deed, a piece of land, versus interment

rights. Most consumers do not understand that

difference. They think they own the real estate. And

as Merc said, let's look at what the consumer is

buying. They are looking for a place to put a body, and

that should be disclosed in terms of what rights they
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are buying. We are asking for full disclosure of

consumer rights and prices.

 MS. HARRINGTON: Okay, Harry?

 MR. NEEL: Pennsylvania must be the garden spot

of the world. Of all the consumers --

 MS. HARRINGTON: We often say that here.

 MR. NEEL: I know.

 You make it sound so terrible. 92 to 95 percent

of our burials on an annualized basis, and Jefferson

does about 1600 interments a year, 92 to 95 percent of

those consumers that are buried have owned their graves

for 20 or more years. My computer matches yours. That

is a very high percentage.

 Of all of the consumers we serve, those people I

know in the funeral and the cemetery industry, these

problems are so rare. People pay for something, they

get what they pay for, they're very pleased that they

did it, they saved their family an awful lot of

headaches and money, and I just don't see these rampant

problems that you bring to the table.

 Certainly there are some, but they're the

exception, not the rule to my experience. Funeral

directors and cemeterians alike try very hard to explain

to their families to do things correctly. Pre-need by

its very nature is full of disclosure. I can't sit at
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your table or you at mine and sell you anything if I

don't tell you all about it and disclose all about it.

 You probably don't really care if you're buying

a burial right or a piece of grass. You do care about

the interment and that the site will be properly

maintained. I'm just disappointed that we can't see the

good that we're doing and all we can bring to this table

is the bad that occurs.

 MS. HARRINGTON: John?

 MR. WALLENSTEIN: I think that just to address

what Harry just said, the rule originally arose because

there were problems. The rule is under consideration

for change because there are other problems. When

everything works right, you don't fix it, as you point

out, but obviously everything's not working right or

there wouldn't -- we all wouldn't be sitting in this

room discussing how to fix it.

 I think that this issue comes back to what we

discussed this morning. Whether it's pre-need or

at-need and whether it's a headstone or a funeral or a

grave, the issue is what is being sold to the consumer

and what does the consumer know about it at that point

in time. It -- I don't think it makes a difference

whether -- whether you're buying pre-need or whether

you're buying at-need if you know what you're buying and
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you understand what you're buying and you understand

what the consequences will be down the road, whether it

be tomorrow or 20 years from tomorrow.

 So, I think that this comes back to who's

covered by the rule, what's covered by the rule and

shouldn't it be what you're buying that's covered by the

rule rather than who's selling it to you.

 MS. HARRINGTON: The FTC has a program of

regular review of all of its trade regulation rules, and

we are here because we're reviewing this rule. That's

part of our ordinary course of business. And the fact

of a rule review doesn't mean that we've concluded that

something's broken and needs to be fixed or that there

need to be changes, but rather, that we are asking those

questions. Does this rule work? Does it still serve a

need? Do we need to re-evaluate any portion?

 So, I just want to clarify that one particular

point, which is that the staff of the Federal Trade

Commission has reached no conclusion as to whether or

not there are changes that need to be made based on the

record. It's a point for the record, and I appreciate

that your perception is things are broken and they do

need to be fixed.

 We're going to hear from George, Merc and then

from the real garden spot of the United States, the
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Illinois contingent.

 MR. CLARKE: Thank you.

 I think it's important to note -- my perception

of the some of the conversations that have taken place

is that the assumption there is pre-need arrangements

are always made far in advance of the actual at-need

event, and that's not always the case. And I may be

stating the obvious, but I think it's important to

remember that in many, many instances, the actual act of

making pre-arrangements may occur only hours or perhaps

days before the death occurs.

 And I think it's important to keep that in

perspective for this reason: The FTC, when they

originally promulgated the rule, determined that the

consumer was vulnerable at the time that he or she made

funeral arrangements. It would stand to reason, then,

that if the funeral home -- if the consumer, excuse me,

is vulnerable during the time that he or she makes

arrangements for a particular service or product with a

funeral home, that consumer is equally vulnerable,

regardless of who that provider is.

 And to take it a step further, if that

vulnerability exists in an at-need situation, there is

no reason to think that it doesn't exist in a pre-need

situation, and the two often times may not be easily
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discernible for the reasons of timing that I mentioned.

 So, I just submit that it's important to keep it

in perspective, that we not automatically assume that

people have the luxury, if you will, of making

pre-arrangements at a time when there is no time press,

that they are not dealing with raw emotions that are

brought to the surface as the result of a death and that

they have time to understand all of the things -- all of

the components that make up that pre-arrangement.

 And I just think that points further to the fact

that all of the things that we're talking about with

regard to reviewing -- the Commission reviewing the

state regulations in the hopes of determining and

gleaning the best of the best and developing them into a

regulation that will, perhaps, address some of the

underlying issues, as well, but it seems like a good and

prudent first step would be to say let's take care of

what we can today based on the products and services

that the providers are selling, and let's ensure that

the consumers have access to the information that they

need regardless of the source.

 Thank you.

 MS. HARRINGTON: Merc, Carolyn, and then I'll

give you instructions about the break.

 MS. BERN-KLUG: In Kansas City, we collect
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general prices every other year. One year we decided to

try to do it for cemeteries. It took us six months. I

think cemeterians are doing a very good job describing

what they offer right there for that family at that

cemetery, but in order to try to collect information

ahead of time from cemeteries, there's no standard way

to do that. There's no way to collect it.

 Like I said, it took us six months to try to

figure out -- to try to compare prices. So, for

pre-need --

 MS. HARRINGTON: And Merc, how does that compare

with -- do you also collect price lists for pre-need

purchase from providers?

 MS. BERN-KLUG: We can collect the general price

lists from -- assuming pre-need for --

 MS. HARRINGTON: And you do that every other

year?

 MS. BERN-KLUG: And we do that for funeral

homes.

 MS. HARRINGTON: And could you talk about the

comparison between --

 MS. BERN-KLUG: There is no comparison, because

there is no easy way to compare prices and options

across cemeteries currently. We have 44 cemeteries in

the Kansas City area, and when we went around and asked
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people for information in writing, first of all, it was

required to go there and sit around for about an hour,

and still, when our committee got back together again to

try to decide, well, what did you learn, there were no

standard definitions, there were no standard ways that

things were sold, people didn't know whether or not to

ask about cremated remains being allowed on plots.

 I mean, there's so -- what you're talking about

here, the complexity to try to regulate this is

underscored doubly for consumers. So, precisely because

it is so complex, we need to try to standardize it in

such a way that if people want to take initiative and

try to get this information pre-need from the cemetery,

also, that it's going to be available, because right now

it's almost impossible to compare options and prices

across cemeteries because there's no standardization.

 Let me mention one other thing. I was absent at

a couple of committee members -- committee meetings when

we were talking about trying to collect this

information. It never occurred to the committee that

they could buy monuments elsewhere from the cemetery.

So that everybody at that committee -- and these are

people who are activists -- with final arrangements

didn't know that you could buy monuments someplace other

than at a cemetery. They also didn't know that
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cemeteries sold caskets.

 So, we need some basic disclosures for

cemeteries, as we also do for the funeral homes, and we

need to get this information in a standard format to

families have the option of buying from whom they want

because they can make sense of the information. The way

it is now, you cannot make sense of the information

across cemeteries, and you couldn't do it across funeral

homes before the GPL.

 MS. HARRINGTON: Okay, Carolyn.

 MS. JACOBI: Yes, I would just like to state in

response to my good friend Harvey, who has been pouring

me water all day, that I did not make a misstatement of

fact. I was there with Lolita Dierdrickson (phonetic),

and there were rules on the books that were not being

enforced, and through that when we got the new -- or

when you got the new, because I don't live in Illinois,

the new state controller, he made the commitment to

enforce the rules.

 There weren't just two sellers. I could name

six. It's just that I was only involved with two of

them, and that's all I have to say.

 MS. HARRINGTON: That's all, thank you.

 All right, we are at break time. We are going

to take a 15-minute break. We will resume at 2:20
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promptly, and we need an announcement. Hold on, I have

an announcement.

 The transcript of this proceeding will be ready

in ten days. Well, what does this mean? Do they have

to pay for it? Or we're putting it on the website?

Fine, okay. I'm just -- somebody just handed me this

note and told me to read it, and I'm trying to figure

out what it means. It will be on our website shortly

thereafter, so you can get the transcript then.

 (A brief recess was taken.)
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 SESSION IV

 PRICE LIST REQUIREMENTS

 MS. HARRINGTON: Okay, let's go, price list

requirements. Some suggest that the price list

requirements are just fine as they are and others

suggest that there are some additional items that ought

to be included in the required disclosures. Others also

suggest that there might be some substantive disclosures

or warnings, not itemized -- not items, but some

additional information.

 And finally, we're interested in exploring the

notion that some have suggested that a standardized GPL

format would make it easier for consumers. That doesn't

necessarily mean that it's easier for I suppose

providers.

 One thing that I'm particularly interested in is

whether there are items that can be deleted, whether

this can be streamlined. We have heard from some that

it's very important to keep this simple for all. So, I

would also ask people to comment on items presently

required for disclosure in the rule that might be

eliminated, and if you think that there are some, I

guess the question is for those who might disagree, can

you tell us what the consumer harm would be -- what the

harm to the consumer would be in the absence of that
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particular information.

 So, we're interested in talking about

streamlining, we're interested in talking about

expanding, we're interested in talking about

standardizing. Those are very different concepts, but

they're all included by various of the commenters.

 Harvey, we are going to start with you.

 MR. LAPIN: Yeah, I just want to clarify. You

indicated when we first started this morning that if we

had already covered something in our comment, you didn't

want to hear anything about that at this point.

 MS. HARRINGTON: We don't want a rehash of

comments, but if you can, you know, make a point to --

especially to begin our conversation that's in your

comment, that's okay, but we -- the purpose here isn't

to bring everybody together so that they can restate

what they've already stated but really to listen to each

other talk and move the dialogue forward.

 Is there something you wanted to say?

 MR. LAPIN: Well, no, I just wanted to indicate

that that was one of the big issues that we covered in

the CANA comment and that I'm not going to repeat it.

It's available to anybody, but it is a major issue as

far as our members are concerned.

 MS. HARRINGTON: Thank you.
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 Pat?

 MR. GRAHAM: I particularly wanted to address

the standardization format. I think it's a great idea,

and as far as the consumer goes, if you can look at two

price lists from two funeral homes or two providers, if

the rule is extended, then you have a way to actually

compare on a level field. I mean, look, there's a

Welch's Juice bottle right there, the disclosures on it

about what's in that bottle. I can pick up a bottle of

juice made by another company and tell exactly about the

nutritional value. And I think it would follow if you

had a standardized format of general price lists, and

that would work well for the consumer, too.

 MS. HARRINGTON: Okay, thank you.

 Merc?

 MS. BERN-KLUG: Oh, I'm not up.

 MS. HARRINGTON: Scott?

 MR. GILLIGAN: Just to respond to Pat there, one

of the things we're seeing in the industry and the

profession is innovation, a lot of funeral services, a

lot of funeral homes tailoring their services to a

particular interest. For example, we had just a client

of ours in Cincinnati just build a beautiful funeral

home that's designed primarily cremation.

 He's going to want on his price list to
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highlight all the cremation options. Someone doing a

traditional type of practice in Cincinnati is not going

to be interested in highlighting that. So, that kind of

standardization like that squelches innovation and

really limits the consumer's choice by going to a

uniform format.

 MS. HARRINGTON: Well, does it squelch

innovation or does it squelch the use of the price list

as a marketing tool, which is not necessarily a bad

thing, I'm not suggesting that, but I'm not sure that a

standard price list would discourage someone from

building a home that would --

 MR. GILLIGAN: No, but it is going to make it

more difficult for that practitioner to market his

services, therefore giving him less incentive to go out,

start thinking outside the box and offering different

things that consumers may want.

 MR. GRAHAM: May I respond to that?

 MS. HARRINGTON: Yes.

 MR. GRAHAM: When I said a standardized format,

I don't necessarily mean a standardized list of the

exact same items offered but a standardized format in

the way it's presented.

 MS. HARRINGTON: So, for example, what you're

talking about is a tabular format that would -- that
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would be standardized in terms of content and order?

 MR. GRAHAM: Right, as far as understanding by

the consumer, this is what we offer, these services,

this merchandise, in that type of a format that's

readily distinguishable, where I've seen -- I've got

price lists, book of them that thick from different

funeral homes, and some of them are pretty hard decipher

and they're very hard to compare one price from one

establishment to another.

 MS. HARRINGTON: Lisa?

 MS. CARLSON: I don't see that having a

standardized format for the basic ingredients that are

required to be on a GPL would stifle creativity at all.

You can append as many pages as you want. We've got

GPLs that are 13 pages long, some of which are really

quite creative, but I think it is important to be able

to compare apples to apples for the basic services that

consumers need to shop for.

 Lastly, I think maybe it ought to be renamed the

general services list, that if people -- if the industry

and the public really understood that this was a menu,

they would look at it differently. Funeral directors

wouldn't have to worry that they're shoving prices under

the nose of the consumer too early if they're saying

these are the services we offer. The fact that prices
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are included is appropriate.

 MS. HARRINGTON: Scott?

 MR. GILLIGAN: Two points, Lisa: First, our

office reviews 500 to 700 funeral or general price lists

a year, and for the most part they are very

standardized, because you have the same 16 goods and

services on every one of them.

 Now, going back to the innovation part, it will

squelch innovation. For example, if the format lays out

that you have to have your basic service fee first,

embalming, visitation, et cetera, if I want to emphasize

cremation, I'm going to have to put that toward the

bottom of my list.

 Why, if I'm in the business of primarily selling

cremation services to the consumer, is it at the bottom

of the list? I'm going to want it at the top of the

list. So, you'll never get an agreement that it helps

everybody present the information to the consumer, I

mean, no way.

 MS. CARLSON: I see it going onto a second page,

Scott, or a third page, and you can give -- as long as

you can give the consumer the GPL in that packet, the

FTC hasn't told you which one has to be on top.

 MR. GILLIGAN: Okay, Lisa, who is going to make

that decision that we are going to promote this and
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allow this to be on the front page and we're going to

tell cremation you have to be on the second page?

 MS. CARLSON: The FTC hasn't told you yet which

page you have to --

 MR. GILLIGAN: Right, they have allowed funeral

directors to market to their consumers by having that

innovation and allow them to do that.

 MS. CARLSON: Fine, but we need to -- we need --

I think we've all agreed that there are certain basic

ingredients, and one of the problems is that those

aren't even standardized now.

 MR. GILLIGAN: They are standardized. There's

16 goods and services that must go on your --

 MS. CARLSON: But it is not clear. What is

included with an immediate burial from one funeral home

to the next is not clear. What is meant by a direct

cremation from one funeral home to the next is not

clear.

 MS. HARRINGTON: And Lisa, if that is not clear,

do you have a proposal for making that clear vis-a-vis

the price list, or is there -- how might that -- if it

is not clear, just for -- and that may be something that

you dispute, so we'll note that Scott disputes that

proposition, but let's just say it's not clear. How

could it be or should it be fixed?
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 MS. CARLSON: I'm willing to -- I think a lot of

us representing consumers don't really care what is

included if it is clear that it's included across the

board under everyone's definition. In other words, I'm

flexible about what could be included.

 MS. HARRINGTON: So, what you're suggesting is

that there ought to be a common -- commonly applied

definition for immediate burial, immediate cremation,

direct cremation.

 MS. CARLSON: Exactly.

 MS. HARRINGTON: Okay. And do you have a view

on that?

 MR. GILLIGAN: Direct cremation is standard

across the board. Now, you will, because of certain

state laws, maybe come into -- maybe somebody's going to

be required to have an identification of that body prior

to cremation because of state law. That might be added

in somebody's direct cremation package that's not in

somebody else's.

 If you want to standardize them and require that

across the board, you can, but for the most part, direct

cremation is extremely standardized, and like I said, we

see hundreds of price lists, and it's the exact same

thing. Transportation to the crematory, handling the

body and getting into -- and cremation, and it's
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covered.

 MS. HARRINGTON: Robert, you're back at the

table.

 MR. NINKER: Thank you.

 Cooking cutting has already taken place with the

16 items. We don't need to test the cookie anymore.

What we need to do is be sure that other people who are

providing similar goods and services use the same

general format.

 MS. HARRINGTON: All right, Joe and then

George.

 MR. HAYES: One of the things that we're

noticing as a company is that we are serving an

increasingly diverse clientele, and we're dealing with

people that have very different religious beliefs and

cultural customs relating to funerals and burials, and I

agree with Scott, I think there's sufficient

standardization already with regard to what's currently

required on the price list, but if there is to be any

consideration of further standardizing it, I think we

need to maintain sufficient flexibility to take into

account these various traditions and religions and

preferences that we are going to see more and more of as

you are culture gets more diverse.

 MS. HARRINGTON: George?
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 MR. CLARKE: Thank you.

 I guess I have more questions than they are

statements or opinions. The first is, I'm still a

little bit vague on what the notion of standardization

means, whether it's format, layout, the order in which

the various items appear, so I'm trying to weigh that

and maybe make a decision in somewhat of a vacuum.

 The other question that I'm interested in

knowing the answer to is what is the genesis of this

point? Do we have evidence that consumers are put at a

disadvantage by the current lack of what some may deem

as standardization?

 MS. HARRINGTON: I can answer that. The genesis

of this point of discussion is from comments that

suggest that, that -- and that there would be consumer

benefit, which is the real acid test for us, from

standardizing the general price list. It's not clear to

us what standardization means, however, within the

framework of those comments.

 And so I think that you correctly observed that

some are discussing standardized definitions; others are

discussing a standard format; and I think someone else

may have suggested a standard format and order of

content, which I suppose would be the most restrictive

standardized approach. So, I think that there is a
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range of suggestions on the table.

 I want to ask a different question -- and I

would like to ask a different question. Are there items

that are presently included in the rule for disclosure

that could be eliminated without causing consumer harm?

 MS. CARLSON: Not counting the nondeclinable

fee?

 MS. HARRINGTON: Oh, we'll talk about the

nondeclinable fee later.

 MS. KARLSON: I just wanted to clarify your

point.

 MS. HARRINGTON: No, but are there any items

that could be deleted without causing consumer harm?

 MR. GRAHAM: I think any item if it's not

offered by that establishment.

 MS. HARRINGTON: But as a matter of rule, that

is, so that if it is offered, it should be disclosed.

Is there anything that could be deleted? Maybe not.

Just checking.

 All right, John, you wanted to say something?

 MR. WALLENSTEIN: I think that in the context of

our discussion this morning, if we're talking about

expanding the coverage of the rule, then we're going to

get into a discussion of expanding the GPL requirements

to the point where I think you're going to wind up with
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essentially three different types of GPLs.

 Monument retailers don't offer any of the goods

or services that are on the present GPL. Funeral

directors who sell monuments are not required to

disclose anything more, I think, on the GPL than

monument, $500, or whatever it may be, whereas we in New

York specifically, with our separate contract, have a

very specific requirement to disclose the cost of the

stone, the cost of the inscription, the per-letter cost,

all of the things that are associated with it.

 If cemeteries are covered by the rule, you get

into a whole host of other things, including what is the

foundation charge, is there a monument handling fee,

which would be akin to a casket handling fee. All of

those things need to be disclosed, because the consumer

has a right to know and a need to know all of those

things, but what may happen is that you are going to

wind up with essentially three, I think, separate GPLs.

I don't know how you deal with that other than to

promulgate three separate GPLs.

 MS. HARRINGTON: Well, the current rule has a

GPL requirement, a casket price list requirement, and we

do have different price list requirements in the rule.

 MR. WALLENSTEIN: Right, I understand that.

 MS. HARRINGTON: So that it would be certainly
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consistent to add, were this to occur --

 MR. WALLENSTEIN: Two or three or four more.

 MS. HARRINGTON: Uh-huh.

 David?

 MR. SWIM: The families that we serve as

retailers confirm some of the feedback voiced by AARP,

Lisa, Merc, in that when they come in, they're not so

concerned about what all this standard format is, but

they're wondering if I take the nondeclinable, do I have

that in addition to everything else? The disclosure

language tied into that as far as understanding in just

plain English is are all these 16 items tied in to what,

because of those 16 items, you may have different

services for different items, and the family saying am I

going to be still charged for those items if I'm going

to have my funeral there?

 So, again, I see expanded disclosure more the

item rather than this standardization. There needs to

be an understanding that families always need help on

understanding that. And in the State of California, I

must say that we've experienced extreme opposition to

disclosure in these areas. In a bill we tried to

introduce, AB-828 in the California State Legislature

that was vehemently opposed in committee by the SCI

Funeral Services in California, Mortuary Alliance and
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the Interment Association. So, disclosure I see as

still the issue where families are concerned.

 MS. HARRINGTON: Randall?

 MR. EARL: Eileen, at my particular funeral

home, we do not have confusion concerning the 16 items

on our price list, and I am not sure where everyone's

coming from when they say that there's this confusion

and everything about going through the GPL. I do not

have that at my funeral home.

 Thank you.

 MS. HARRINGTON: Edith?

 MS. CHURCHMAN: I would like to echo his

remarks. There is no confusion at Churchman Funeral

Home, and the last thing I want is for a consumer to

walk away from my funeral home not understanding what it

is that they have purchased. People come to Edith

Churchman and to other funeral directors in the National

Funeral Directors and Morticians Association because

they trust us. The last thing we want is someone who's

confused.

 MS. HARRINGTON: Lisa?

 MS. CARLSON: One of the easiest ones to explain

is is the cremation fee included in a direct cremation

or not? Is a graveside service or a committal service

and is there a difference between a graveside service
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and a committal service? This is not consistent across

the nation.

 MS. HARRINGTON: So, what you're saying is that

it may be the case that at Randall and Edith's homes,

this is all well understood, but this is not consistent,

and you're calling for definitions?

 MS. CARLSON: Yes, but --

 MS. HARRINGTON: Or something like that.

 MS. CARLSON: -- what consumer would think to

ask if the crematory were extra? In other words, the --

New York State is unusual in that their GPLs say, "This

does not include the crematory fee," but that is

unusual. In other states, when we do a price survey, we

can't -- we look through, and we see transportation to

the crematory, paperwork, whatever, and they say nothing

about the crematory fee. So, we assume that it does not

include the crematory fee. We're right part of the time

and wrong part of the time.

 MS. HARRINGTON: Okay, I think we have some

response on that from Randall, from Edith and from

Scott.

 MR. EARL: I still come back to the fact that if

a family is asking us for a particular service, when we

hand them the general price list, we would not only give

that to them, but we would explain to them what is or is
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not included. It would do me no good -- I've been in

business for over a hundred years. It would not do me

any good to try to fool people into thinking that

they're going to get something that they're not. I

just --

 MS. HARRINGTON: We want to know what you have

for breakfast.

 MS. CARLSON: Those who are deaf depended on --

depend on the written word, and there are a lot of

elderly who do not hear what you are telling them, and

they depend on what they can read. They also, talking

about standardization, need to be able to read it, and

half -- I mean, I have got GPLs that look like someone

tromped on them before they were handed out or that they

were copies of copies of copies and haven't been changed

for years. And in this day and age, with computers,

there's no excuse for not having a clear-to-read GPL in

sufficient point type.

 MS. HARRINGTON: Okay, now, let me ask you,

Lisa, Randall's point is that if he did those things, he

would -- his business would suffer, that he has -- he

relies in good part on reputation in order to maintain

his business.

 What's your take on the business model or the

business plan for businesses that give out GPLs that
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look like they've been tromped on or are copies of

copies of copies? Do they have a different market? Are

they not --

 MS. CARLSON: Sometimes they're the only funeral

home in town, so who else are they going to use?

 MS. HARRINGTON: Okay.

 Okay, let's hear from Edith and then from Scott

and then from Maynard.

 MS. CHURCHMAN: I would like to echo Randall's

remarks, and I do think he looks remarkable to be a

hundred, that I don't give a consumer a price list and

walk away. I go over that price list item for item for

item with the consumer so that they understand exactly

what it is that they're paying for and exactly what it

is that they're purchasing.

 MS. HARRINGTON: Thank you.

 Scott?

 MR. GILLIGAN: Just to get back to the cremation

fee, NFDA is not opposed and we would agree to add a

disclosure onto the mandatory disclosure which

accompanies the direct cremation fee to indicate whether

the price of cremation is or is not included. That's

not a problem.

 What we do oppose, though, is having to include

in the price of direct cremation what that cremation fee
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is when for most funeral homes they have no control over

what the crematory down the street charges, and for them

to have to update their price list every time that

crematory might change prices or take the risk that

they're telling the consumer the wrong price and the

crematory has raised their price in the meantime, we

certainly would object to that, because we don't have

control over them.

 But we certainly -- if the price of direct -- if

the price of cremation is not included in the direct

cremation package, we would agree to add a disclosure to

indicate that to consumers.

 MS. HARRINGTON: Okay, a quick rejoinder of

something from Lisa.

 MS. CARLSON: Yes, under the current GPL, the

appearance is that a direct cremation is the only

cremation, and so we are asking for the cost of the

crematory fee to be listed separately on the GPL as well

as included in any cremation package.

 The average consumer does not -- they are

shocked when they find out there is an additional $200

cash advance item for the crematory fee. How can you

have a direct cremation without cremation? Who would

think to ask?

 The friend of one of the guys that worked in my
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office, a friend of his mother died, and so I said, Call

the local society in Albany and get a price for the

immediate cremation. And I said, Did you ask if it

included the crematory fee? He said, What do you mean?

You're crazy. I said, Call back. No, it didn't include

the crematory fee.

 But who would think to -- and if that was the

only source of information, then it's misleading.

That's deceptive.

 MR. GILLIGAN: And that's why we would agree to

put that line that discloses that. If it is included --

 MS. CARLSON: But that's on the GPL. This was

on the telephone. How much is your price for an

immediate cremation? And there's no -- nothing saying

that the funeral director has to say, By the way,

there's an extra $200 fee for the crematory.

 MR. GILLIGAN: If they ask about the price of

direct cremation, that would not be a problem to add

that on, that they have to disclose that.

 MR. EARL: Excuse me, Eileen, just one

question.

 Were you talking to a funeral home or a memorial

society?

 MS. CARLSON: Someone in my office called a

funeral home to get a price.
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 MR. EARL: Okay.

 MS. HARRINGTON: Okay, now we're going to hear

from George.

 MR. CLARKE: Thank you.

 I just wanted to point out that under the rule

as it's currently written and looking at the FTC

compliance guidelines, it does provide for the choice to

be made on the part of the funeral director whether the

price of the actual cremation is included on the GPL.

 If I may, if you own a crematory, it would be

appropriate to include the cremation charge in this fee,

under the direct cremation; however, if you use a

crematory that someone else owns, you may treat this

charge as a cash advance item. In that case, you should

make clear to the customer that there will be an added

charge by the crematory. So, there is already a

provision for this in the rule.

 MS. HARRINGTON: Bill?

 MR. SEALE: I'm willing to not do -- as he says,

to put it in the price list that it does not include the

cremation -- the crematory's charges. It happens that

about two months ago, we had a case -- we don't have a

crematory in our town. We had the amount, $185, for

cremation on there.

 When we got through, we called the crematory and
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said we're going to bring Ms. So and So over there at a

certain time and everything, and it will be $185 for

cremation. No, ma'am, we get $225 now. And guess

what? We lost 40 bucks.

 MS. HARRINGTON: G. V.?

 MR. AYERS: Concerning the price of the

cremation in there, we've talked about the issues, and I

think it was touched upon just a little bit ago when

someone read from the rule -- I'm trying to get this all

sorted out in my head here -- when the same entity --

when the same funeral home also owns the crematory,

which is allowed and has happened in California, then

you have -- you have a situation where the individual,

where the seller knows what the crematory fee is going

to be and the cremation itself, and there is no need or

no requirement at all to put that on there. To me, it

seems like if it can be known, it might be appropriate

to be on there.

 MS. HARRINGTON: Billie?

 MS. WATSON-HUGHES: In the Washington

metropolitan area, for example, it would be extremely

difficult for us to include the crematory charge,

because we use various crematories, and their charges do

change from month to month sometimes, and depending upon

the day of the week even that the cremation is going to
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take place. So, it has to be listed as a separate item

in our case.

 MS. CARLSON: May I ask how many different

prices -- how many different prices you're dealing with,

how many different crematories?

 MS. WATSON-HUGHES: Basically three to four.

 MS. HARRINGTON: Okay, Maynard?

 MR. CHERIS: Thank you.

 This is not about cremation charges, but I do

have something --

 MS. HARRINGTON: Could you speak into the

microphone and loudly?

 MR. CHERIS: Oh, I thought I was.

 This is not about cremation charges but rather

something I feel should be --

 MS. HARRINGTON: Let's give you a different

microphone. We seem to be having problems on that

mike.

 MR. CHERIS: Thank you.

 MS. HARRINGTON: Much better.

 MR. CHERIS: Okay, this is not about cremation

charges but rather something else that I would like to

see added to the general price list. We have consumers

who come to our stores and when they buy our product or

are thinking of buying our product, they almost always
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ask will I get penalized or is there an extra charge at

the funeral home, and, of course, we assure them that

reputable funeral homes don't do that.

 But I think it would be helpful to re-assure the

consumer in the form of a disclosure if we could make a

statement that says caskets and other funeral goods are

available through third parties without penalty.

 MS. HARRINGTON: Okay.

 Edith?

 MS. CHURCHMAN: I think that's a fine

disclosure, and I think you should put it on your price

list when the Federal Trade Commission regulates you.

 Aren't we trying to keep this process simple for

the consumer? Does it say on the price list what the

price of direct burials is? Should we include on there

the range and gamut of cemetery prices? You're making

the funeral director -- if you want to include the

cremation price on the price list, you're making the

funeral home work for the crematory.

 I work with about five different crematories,

and the price can range from a simple $150 for a

cardboard container to over $500 for a metal cassette.

So, there is a wide range of prices.

 MR. NINKER: Maynard, you already have us

unloading your caskets. You don't have to have us do
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your advertising, too.

 MS. HARRINGTON: Excuse me, Robert, excuse me,

but you need to be called on here.

 Scott? You had your card up.

 MR. GILLIGAN: Yeah, I did, and I just wanted to

say pretty much what he just said, and that is that the

disclosure recommended by Maynard, in the absence of any

showing that funeral homes are imposing handling fees,

which they are not, it's ridiculous to have that on

there. That serves no purpose for the consumer.

 MR. CHERIS: It's consumer education. They're

asking the question.

 MR. GILLIGAN: And you're answering the question

to them. That's satisfactory.

 MS. HARRINGTON: We are going to give Lisa the

last word in this segment, because I am not really

hearing -- I'm not interested in sparring between

competitors here on this.

 Lisa?

 MS. CARLSON: We didn't touch on private family

viewing or medical school donation.

 MS. HARRINGTON: Okay.

 MS. CARLSON: I did a very limited survey. We

faxed out to Vermont funeral homes, 27 Vermont funeral

homes, a question on how had it changed in Vermont,
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because by regulation we now have private family viewing

and body donation.

 For the most part, they said it hadn't changed,

that they were comfortable with it, although it was

ironic that three who claimed that they had private

family viewing already on their GPLs lied -- two of the

three lied, because we have got their GPLs prior to.

But in any event, the overall feeling was they were very

comfortable with it. It was no problem.

 MS. HARRINGTON: Okay, hold on just a minute.

We have to huddle off.

 (Discussion off the record.)

 MS. HARRINGTON: All right, here's what we're

going to do for the rest of the afternoon. We are going

to take an unscheduled ten-minute break so that

everybody can go out and cheer up. Then we're going to

spend 45 minutes on the last item, the basic services

fee item, which adds 15 minutes to what somebody earlier

had asked if we could extend it by ten, we're doing 15.

 And then at 3:45, we will evaluate whether or

not we are in need of a leg stretch break, and then

we'll head into our public participation segment so that

we can make sure to give the people who have been

listening attentively all day and wanting to speak an

opportunity.
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 And I want to say that I certainly am expecting

that all of the participants will remain through the

public participation portion of the discussion, because

this is very important. So, let's take a ten-minute

break. We'll resume at 3:00. Everybody cheer up.

 (A brief recess was taken.)
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 SESSION V

 BASIC SERVICES FEE

 MS. HARRINGTON: Okay, we're headed down the

sort of final stretch here. Okay, here we go. Now

we're going to talk about the basic services fee issue,

and as the agenda notes, the comments that we've

received reflect disagreement among commenters as to

whether providers should be allowed to charge a

nondeclinable service fee.

 The first question is a basic question, does

such a fee still serve a useful purpose? In 1984, the

Commission felt that it did. Does it still serve a

useful purpose? Looking for yes, no and supporting

rationale.

 Lisa?

 MS. KARLSON: According to our nationwide price

surveys, the nondeclinable fee is now 40 percent of all

service charges. That is too much for the consumer to

have no control over.

 MS. HARRINGTON: Do you think that there is a

need for a basic services fee? Does the -- setting

aside the amount of the basic services fee, should there

be an option to include a basic services fee?

 MS. CARLSON: No, what we recommended was a fee

called an estate and records fee, but again, it would be
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optional. The estate and records fee could be used for

filling out insurance, veterans' claims, Social Security

and any lengthy procedure in obtaining the death

certificate. We know that doctors don't cooperate, that

sometimes getting the death certificate takes an

inordinate amount of time, but that should be optional.

 Most families probably will not choose to do

that themselves, but many times the doctor will be more

cooperative with the family than the funeral director.

 MS. HARRINGTON: Okay. Now, for probably a

different point of view, let's go to John.

 MR. CARMON: Thank you, Eileen.

 Certainly on behalf of the National Funeral

Directors, I would like to support the fact that this

fee is a simple and a consistent disclosure of a price

that the consumer can measure and can compare, use for

comparison, and it should be retained in its present

form.

 Many have spoken here about simplicity, all

around the table, that seemed to have been a theme all

day, and certainly to keep the price list simple, to

keep this price that is very inclusive of so many

different services that the funeral home and funeral

director provides, including certainly the arrangement

conference, securing these permits and certificates,
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making all of the arrangements for the disposition,

sheltering the remains during this time, placing notices

and a tremendous amount of work in each one of these

areas, just the counseling of the families alone, that

AARP had been quoted in that survey that they did that

said that -- what was it, almost a 90 percent

understanding of the general price list as it was

presented, certainly points to the fact that there is

certainly an understanding of this.

 Mercedes said earlier that the GPL is working,

and it allows people to make comparisons and also to

understand the services and the charges that are made by

the providers. It's an easy and available, and it also

then puts a burden on the funeral home to explain all of

the things that they do.

 We have, in these 15 years or so that we have

been involved in this, I have served several thousand

families personally, and I can honestly say that I have

not had any concern, any objection or any lack of

understanding on the part of those families on the part

of this -- on the basis of this fee.

 It's effective for 99.9 percent of the

circumstances, and then funeral homes do have in those

other circumstances the right to make deductions or make

changes in that as they see fit. That already happens I
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think in some of the packaged prices that are already

required. In the case of direct cremations, forwarding

or receiving remains or immediate burial, many funeral

directors do make allowances in those for something less

than the amount of services involved.

 MS. HARRINGTON: Are there basic services that

apply to all situations?

 MR. CARMON: Absolutely.

 MS. HARRINGTON: What are those?

 MR. CARMON: As an example, making arrangements

with the family, that can vary widely depending upon

their needs. Two days before I came to Washington, I

met with a very -- some friends, people I had known for

many years. Because of the differences in their family

situation with divorces and children that were out of

town, the original arrangements actually to sit down and

plan this funeral actually took about four hours.

 It became very difficult for them to even make

some of the critical decisions, because some people

weren't there. We were back two hours later to go over

and review some of this information. They had a

particularly difficult situation with some of their

children, looking for our advice and counsel about

that.

 These are issues that you never know what you're
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going to be dealing with, but for the most part, they

are an all-encompassing way in serving a family.

 MS. HARRINGTON: All right. So, the

arrangements conference is one service that's common.

Any others?

 MR. CARMON: That's one. The next would

certainly be securing the death certificate, obtaining

the signature of the physician. As we all know, with

managed care today, doctors are not all in the little

communities they once were. They're clustered around

hospitals and medical centers, and Lisa aptly pointed

out that this can be a very involved process. We

actually have a person and a half on staff just to do

some parts of this.

 MS. HARRINGTON: Okay, getting the death

certificate? Anything else?

 MR. CARMON: Absolutely, and to continue to file

that and the registrar and obtaining the permits.

 MS. HARRINGTON: Getting it and filing it,

okay.

 MR. CARMON: The follow-up on the arrangements,

once you have spoken to a family about what it is that

they want to do, making calls to clergy, churches,

musicians, cemeteries, and many cemeteries, not like

maybe some that are represented at the table, but around
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the country, huge numbers are small entities, they don't

have offices.

 In many instances, we have to actually take the

family to the cemetery to make absolutely sure where the

gravesite is going to be opened, the importance of

making sure of that before the event, newspaper

deadlines. And again, with call-backs from clergy, it's

the same situation. Our world has changed. No -- a lot

don't have offices. The back and forth, the hours that

are involved in that are considerable.

 MS. HARRINGTON: And, of course, the cemetery

follow-up wouldn't apply in all situations, because not

everyone would want necessarily to involve a cemetery.

 MR. CARMON: No, but then there would be --

there would be arrangements made with a crematory or

whatever that disposition, maybe it would be an airline

if you're going to ship someone somewhere, and the time

involved in just making sure those arrangements, being

liable for those arrangements in that time is

considerable.

 MS. HARRINGTON: So, you would say that the

three elements that are basic services in all situations

are the arrangements conference, implementation of

choices made during the arrangements conference and

obtaining and properly filing the death certificate.
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 MR. CARMON: That's correct.

 MS. HARRINGTON: Okay.

 MR. CARMON: There are other issues like

preparing the obituary that you do often times in

concert with the family. Some families may wish to do

this themselves. Very few do.

 However, often times most newspapers will only

accept obituaries from the funeral home for verification

purposes or they have a special format now. Again,

because of the technology that they're all involved in,

many of them want it on a specific format that many of

us have had to purchase computer programs in order to

format those obituaries in properly.

 It's just a lot of time and a lot of equipment,

as well as those general overhead issues that would be

associated with that. Again, the shelter of that body

during this process, maybe even before you can have

authorization to embalm or even to refrigerate.

 MS. HARRINGTON: All right, but now we're

getting off of the basic in all situations. I

understand that --

 MR. CARMON: Well, but they are common to many,

Eileen. It's important to remember that, again, with

the change in demographics today, with people that all

don't live in the same community, that being able to
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reach family members, often times there's, you know,

between a day, two, three days, even longer often times

before arrangements can be completed, and that's not the

exception. Often times that's the norm.

 MS. HARRINGTON: Okay, thank you, John.

 Pat?

 MR. GRAHAM: Well, I agree totally with what

John is saying, but there's some other -- there are also

some other items that are coincidental, the shelter of

the remains for the day, two to three days prior to the

funeral, compliance with FTC, OSHA rules. Every state

has its own licensing authority. We're required to

provide licensed personnel and have them available.

 Whether the family chooses minimal arrangement

or not, we still have to provide all of those services

to the public, 24-hour availability. I know in my small

town, I have to have someone there. There's someone

there right now that I am paying while I'm gone. There

has to be someone there ready all the time.

 Granted, that family -- particular family

probably doesn't need me except at that one particular

time, but I still have to be available all the time, and

those are costs that are unique to the funeral business,

and we have to recoup those costs no matter what

services --
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 MS. HARRINGTON: Well, although it's not unique

for businesses to have costs, you know, I'm thinking

that many other businesses have costs.

 MR. GRAHAM: Right.

 MS. HARRINGTON: All of them, in fact.

 MR. GRAHAM: Very few other businesses are

required to itemize and offer --

 MS. HARRINGTON: Right, not all --

 MR. GRAHAM: -- services that can then be

declined.

 MS. HARRINGTON: Right, not all businesses are

required to list services that you then cannot bundle.

 MR. CARMON: Can I make a comment?

 MS. HARRINGTON: Sure, then we will go to Jeff.

 MR. CARMON: It is important, because those

other items on the general price list can accurately

reflect the cost to provide those individual items, and

that's the fairest way for the consumer. You know, they

should not only know and be able to make their choices,

but they also should be educated well and also be

charged appropriately for those items. Each one of

those shouldn't be bearing some other cost that it

doesn't belong to, and that if they either eliminate it,

that they're given a fair credit, and if they add it,

we're given a fair addition.
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 MS. HARRINGTON: Would it be more reasonable to

just impose an hourly charge for all these things, for

professional services rendered or --

 MR. CARMON: I don't think an hourly charge --

no. In fact, we've tried that, and we've tried that in

some unique circumstances. The difficulty with that is

it then would be almost impossible to tell the consumer

up front exactly what it was going to be. It would be

almost akin to charging by the number of people that

came to a visitation or the number of cars in a

procession. It just -- and then afterwards to be

surprised because it took an extra 10 or 15 hours, I

don't think would -- I know it would not serve the

consumer well.

 They tell us they're glad that when we finish

the arrangement conference and a memorandum of goods and

services is made out and broken down and discussed with

them, that they fully know exactly what that is at that

point.

 MS. HARRINGTON: So, your position is that by

including all of that in a-- nondeclinable basic

services fee, consumers know with certainty when they

make their arrangements what this is going to cost?

 MR. CARMON: Exactly.

 MS. HARRINGTON: Okay.
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 MR. CARMON: And it still gives the funeral

director the right to make changes. I mean, we're still

serving people on public aid, infants, children and

making major adjustments to this. It's not like this is

some mandatory fee that's there no matter what.

 MS. HARRINGTON: Okay, Jeff?

 MR. KRAMER: Yeah, I agree with John about

simplicity being important, but simplicity doesn't

necessarily mean less information, and I think what we'd

like to see is when you provide, you know, information

on what your basic service fee is that you do break it

down and tell people exactly what that fee includes,

those kind of things Eileen was getting at, and if you

provide a different service than someone else does under

their fee, then at least a consumer at that point -- I'm

not saying pick and choose between that fee, but at

least you know which services you're getting with that

fee so you can go to someone else and say, you know --

at least compare, compare apples to apples and see if

there's an orange thrown in there that you don't want.

 MR. CARMON: I think you'll find most GPLs will

include a very accurate description of what is included

by that funeral home under that.

 MS. HARRINGTON: Okay, Billie?

 MS. WATSON-HUGHES: In the Washington
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metropolitan area, you'll find that most of our funeral

directors do spell out exactly what the basic service

charges are for, and in --

 MS. HARRINGTON: How do they do that?

 MS. WATSON-HUGHES: Because they use --

 MS. HARRINGTON: No, how do they do it?

 MS. WATSON-HUGHES: Oh, they spell it out on the

general price list itself. They spell out exactly what

is included in those charges, the arrangement

conference, the planning, the filing of certificates,

sheltering of the remains, obtaining authorizations and

permits, coordinating with the various allied

suppliers.

 Also included in this, many times the cost of

having a private visitation by the family is thrown into

this -- is lumped into it. That's part of our

counseling process. We bring the immediate family in to

make sure everything is all right. This is part of our

educational process with the family.

 In our community in particular, we have to go

through an educational process a lot of times. For many

people, it's the first time they have ever dealt with a

death. They don't know what to expect when they come

into a funeral home. So, it takes time.

 Sometimes we can't even make the arrangements on
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the same day the family comes in because they're still

in such an emotional state that they just can't deal

with the hard facts of dollars and cents at that point.

So, you have to work through that process with them

first.

 And once you get them to a point where they're

in a agreement with what needs to be done and what they

want to be done, then you can proceed with the

arrangement conference. And sometimes that's done on

another day and time, but if we were to break all of

that out and itemize it, it would charge -- be more of a

charge to the consumer. This way, it's simplistic,

everything is there, they know in advance how much it's

going to cost, and they're not given the hidden charges

at the end of an arrangement.

 MS. HARRINGTON: I would just note that our

compliance guides on this item, by example, include a

description of what's included in the basic services

fee, and the provision of the rule on this point, at

least the second proviso, would require that, and the

first suggests some description, as well. So, it

already is in the law, as well as by example, that this

should be a descriptive item on the list.

 Merc?

 MS. BERN-KLUG: There's another item that didn't
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come up in our recent enumeration of what's included in

the core services, but it came up this morning, and that

was profit, so I just would like to have that on the

record.

 The discussion did not convince me that in every

funeral home the basic services lists are the same, and

this discussion has not convinced me that these services

that are included in the basic services fee are unique

or are common to all consumers, and that's my

understanding, that the only reason we should have this

basic services fee is that because it's going to cover

fees that are common to all consumer situations, and

that's not the case at all.

 The implementation of choices should be priced

with the choices, not with the basic services fee. By

making this fee nondeclinable, we automatically assure

that consumers cannot really control the price of their

funeral services or final arrangements. Absent a core

set of activities, there should not be an FTC allowance

to allow funeral homes to charge a basic services fee.

 In Kansas City, that fee ranges from $690 to

$2,770, and I have with me today, if it's not too late

to put in the record, a listing of just all the general

price list basic services fees, and you will see such

heterogeneity within these listings that it is not in
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the consumer's best interests to have this fee here,

because you really don't know what you're paying for.

 And you should not be expected to cover all the

overhead in basic services fee, because then -- I mean,

then what is the difference between what you're paying

for a casket and what you're selling the casket for?

Part of that should be your overhead, too. To put all

the overhead in one fee and then say it's nondeclinable

means that everything else that you're getting more

money for than you paid for is all profit, and that

makes me very uncomfortable.

 We need to give families the last word in

choosing just what they want and only what they want,

and if we put all this packaging in basic services that

does not apply to every service, it's unfair to

families. I'd like to go ahead and circulate these if

anyone's interested in seeing it. [Exhibit A].

 MS. HARRINGTON: Yeah, and we'll put that in the

record with the stenographer so that she can include

that.

 MR. CARMON: Eileen, could I respond to that,

because there are some inaccuracies to --

 MS. HARRINGTON: Well, I want come back to you,

but I want to get to Jonathan, who has had his card up,

but I will get back to you on this.
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 MR. SIEDLECKI: Thank you, Eileen.

 I've got a few points to make. In listening to

this discussion here this afternoon, we have heard over

the course of this day many people already testify to

the fact that consumers apparently are familiar with the

price list as it -- the format of the price list as it

is currently established. We've been doing this for 15

years.

 I would caution all of you that one of the aims

of our endeavor here this afternoon is to allow people

to easily compare and to competitively price funerals.

If we go to change the format, we are going to throw a

monkey wrench into that. They are already comparing,

they are already utilizing this price list, and they are

familiar with it.

 I would also move quickly to tell you that we're

trying to keep it as simple as possible. By changing

this price list, we are putting in other items and

changing the format, we are making it more complicated.

If the aim is to make it simple, I say leave it alone.

 Number three, when we are looking at and

discussing previously to this pre-need arrangements,

ladies and gentlemen, I have hundreds of pre-need

arrangements. How would changing this now affect

those?
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 And let me offer this out as a question: If we

were to elaborately change it, as some of the people

here are asking us to do, and, for example, a family

opted to select and make their own death certificate

filing, and then when the person died, there was nobody

to do it, what am I supposed to do?

 Okay, number four, nondeclinable fee.

Nondeclinable fee, ladies and gentlemen, where would

somebody tell me, please, there is forever a

nondeclinable fee? That individual family can do

several things. They can say, Jonathan, your fee is

outrageous, I'm walking next door. They can say,

Jonathan, I am not going to deal with you with that fee,

we're going somewhere else.

 And I have heard people say, Well, the body is

already at the funeral home. Not in all cases. In

fact, not in the majority of cases. And I can tell you,

ladies and gentlemen, I have personally been involved in

situations when for whatever reason a family has had a

body at another funeral home, they have come to me and

said we've changed our mind, we want you to handle the

arrangements, go and pick up that body, and ladies and

gentlemen, I don't know -- I have never been refused by

a funeral director or given any complication in doing

that. We've done it.
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 The fifth thing is, everybody's talking about,

Mercedes -- excuse me, did I pronounce it correctly --

okay, is talking about the range in price. Well, the

whole point of the FTC was not to establish a price,

ladies and gentlemen; it was to establish a format to

compare those prices. We're not supposed to say you can

only charge $472 for removal, you can only charge $76.75

to file a death certificate. We're supposed to say that

that is supposed to be easily comparable.

 And I'm telling you that a range of price is why

we're all sitting under that dome down the street here.

This is America, this is the land of the free, this is a

capitalistic system, and so that's good.

 MS. HARRINGTON: Okay. Lisa?

 MS. CARLSON: It's obvious that Mr. Carmon

doesn't understand the disclosure on his GPL that says

this price is already included in our charges for direct

cremation, immediate burial, forwarding and then

receiving remains. Monkeying with that price is what

prompted me, when grading GPLs from around the country,

with magical math.

 If you have a nondeclinable fee of $1,295 and a

direct cremation of $895, please, sir, tell me how it is

included.

 MR. CARMON: I will, I will.
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 MS. CARLSON: The original intent of the

nondeclinable fee was to be minimal, small enough that

indeed it could be included. It was supposed to be

those things that were common to all arrangements. I

don't believe -- currently, I think the majority of the

things under the nondeclinable fee belong elsewhere on

the GPL.

 You need the death certificate for removal.

That should be part of the removal fee. Any other

permits are part of the removal fee. In arranging an

immediate cremation over the telephone with Margaret in

California for her mother in Connecticut is going to

entail far less in the way of coordination with other

providers than someone who's coming in and arranging for

a one-of-everything funeral.

 And so I think that it's important to assign the

costs of -- to the services that the consumer is, in

fact, picking. When you are the only funeral home in

town, consumers do not shop around, generally speaking,

but with a nondeclinable fee, they can't shop among the

services you offer in a way that will allow them to

limit their costs.

 MR. CARMON: I --

 MS. HARRINGTON: John?

 MR. CARMON: Could I respond?
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 MS. HARRINGTON: Sure.

 MR. CARMON: Yes, first of all, the reason --

and talking about the math in that part of the

nondeclinable service fee, the reason that that is

stated that way is that that is the exact disclosure

that is required by the Federal Trade Commission. I

used to say in ours that a portion of the professional

service fee is included in that, and counsel corrected

that and said you must use the exact wording.

 That's why that states that, but it still is the

funeral director's right, when he sees -- he or she sees

that there is less services involved in one of those

limited cases, that they can make those adjustments, and

we are doing it all the time in others.

 MS. HARRINGTON: Lisa?

 MS. CARLSON: The whole point was that it was

supposed to be a basic fee, not a floating fee.

 MR. CARMON: But it's the basic fee when it's

included in all arrangements. These are adjustments

that we can make, and that's good for the consumer. The

consumer saves.

 MS. CARLSON: Actually, your comment verifies

why we should do away with it and you should charge

according to the services you provide.

 MR. CARMON: In those limited circumstances --
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 MS. CARLSON: Whether a direct cremation or a

one of everything.

 MR. CARMON: In those limited circumstances it's

appropriate and, in fact, appropriate that those limited

circumstances were recognized by the Federal Trade

Commission when they delineated a direct cremation, a

forwarding or receiving remains or a direct burial.

 MS. CARLSON: That's a perfect example of why we

need to get rid of it.

 MS. HARRINGTON: Okay, very good exchange.

 David?

 MR. SWIM: An example of abuse was in San Diego

where a large local firm was acquired by another

company. We were -- it was brought to our attention by

a family, because they had been quoted the competitive

prices, embalming, visitation all those things that were

intended to be pretty much in line with all the rest of

the funeral homes, but surprisingly, overnight, the

nondeclinable had gone from $995 to $1,995, and this was

stated by a couple counselors that, well, we have got

new owners now and, of course, they have got to pay for

the things.

 And John, in response to your question there,

knowing that some families take four hours, six hours,

other families are in and out in half an hour, they're
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business like and want to get it done, why should the

family who takes a half hour to take advantage of those

services pay the same amount as the family that takes

six hours?

 And so by breaking up the nondeclinable, we're

finding that it's just now a lump-all for expenses that

have not been required to really be -- usually on phone

disclosure we find that families aren't told about the

nondeclinable. They are told about every other fee.

The nondeclinable is kind of brushed over.

 MR. CARMON: Well, it shouldn't be.

 MS. HARRINGTON: Edith?

 MS. CHURCHMAN: I keep hearing people talk about

choice. If -- and I know we can go to the internet, we

can come to the memorial -- Funeral Memorial Society,

and we can get a list of the basic service charges and

all other charges of a funeral home, then the consumer

does have a choice. The choice is that you have chosen

to come to me.

 The nondeclinable fee is 40 percent of basic

services? My word, I would love to work there. That's

not how mine operates. All of my overhead is not

recouped in my basic fee. And finally, profit is not a

dirty word. It's not a dirty word, even for funerals.

You have a choice when you buy a loaf bread. You can go
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to the corner store, you can go to a grocery store, or

you can go to a discount club. And certainly in most

scenarios, the consumer does have a choice about which

funeral home they want to go to, and if you look at your

price lists, you will see where the lowest prices are.

 MS. HARRINGTON: George?

 MR. CLARKE: Thank you.

 There's been some discussion that's been raised

regarding charges and profits of funeral homes, and

again, at the risk of being repetitive, I must state

again that I think the purpose of the FTC is not to

regulate price but to ensure access to the information.

 The second point I'd like to make is that in the

course of preparing our comments, NSM sought the

assistance of Dr. Robert Tollison (phonetic), who was

the director of the Bureau of Economics of the FTC at

the time that the original rule was promulgated, and we

asked Dr. Tollison as part of his work to take a look at

the profits that funeral home -- the profit margins that

funeral homes have realized over the last 20 years.

 And it is documented, the research to this point

is unrefuted, that between 1978 and 1998, funeral prices

increased an average of only six-tenths of 1 percent per

year, and that's corrected for inflation, which in our

view is really the only accurate way to look at these
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numbers.

 At the same time, I think it's important to note

that the operating costs for funeral homes for that same

period increased at a rate of almost twice that. They

had an average annual increase of 1 percent. So, as we

begin to talk about or perhaps continue to talk about

profit margins of funeral homes, we think it is really

important that we actually look at the real numbers, the

real dollars corrected for inflation before accusations

are made regarding the profits of funeral homes.

 Thank you.

 MS. HARRINGTON: Jim? Your card is down now?

Okay.

 Merc? Your card is down, too.

 MS. BERN-KLUG: Well, I can -- I'd like to just

make a little clarification on that.

 MS. HARRINGTON: Okay.

 MS. BERN-KLUG: I'm the person who brought up

profits at least in the afternoon, not in the morning

session. I have no problem with funeral homes making a

profit. I understand how business works. I am a

capitalist. What I have a problem with is the

nondeclinable nature of an expense that does not seem to

be standard, and if we -- is what is included in basic

services at funeral home A the same thing that's
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included in basic services in funeral home B and C?

That has not yet been determined.

 And what I think I'm hearing from some people is

that yes, it is the same, but it doesn't come out that

way on the general price list. So, if I'm not going to

work through a clergy, why am I paying a basic services

fee for my funeral director to work with the clergy? If

I am not going to go to a cemetery, why does my basic

services fee include dealing with the cemeterian?

 You are lumping a lot of costs together that may

be applying to many but not to all, and unless we can

come up with a list that applies to all, I don't think

there's any rationalization to have a nondeclinable fee

that families cannot opt out of it.

 MS. HARRINGTON: Merc, would you favor going to

hourly billing, then, for the funeral director's time,

even if that meant that -- excuse me, even if that meant

that there couldn't be a certainty to the cost

disclosure at the time of contract?

 MS. BERN-KLUG: I favor -- if -- if the funeral

director and the funeral director and her staff or his

staff spend three or four hours talking with a family

about making arrangements around a funeral service, to

me, that is priced with the funeral service, you know,

that should be priced with using the funeral home.
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 If it's -- if you're including time to track

down a cemetery or a clergy, then price that with, you

know, hosting the service there or things like that. It

seems like it's a hodgepodge of prices put together.

They no longer apply to anybody -- to everybody. And

furthermore, with the increasing diversity in the

American ritual and tradition based on more Hispanics

and Asian people coming to this country, this set that

was defined today as core services is going to be even

less meaningful as time goes on. Unless we come up with

a core set that applies to everybody, there's not a

basis for the fee.

 MS. HARRINGTON: Okay, hold on, John. Randall's

had his card up for a while. I am going to get to you.

 MR. EARL: Thank you, Eileen.

 You know, it seems that we've resolved the

conversation here to dollars and cents rather than

protecting the consumer. I thought that we were coming

together today to discuss consumers and what was best

for them, not dollars and cents. It's clearly stated in

the FTC rule that was promulgated in 1984 what the basic

service fee included. It's right here in your book.

And I'm having a real hard time understanding why that

is hard to understand, it's in black and white --

 MS. HARRINGTON: Okay.
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 MR. EARL: -- as to exactly what it --

 MS. HARRINGTON: Got that point.

 MS. BERN-KLUG: I understand what it says.

 MS. HARRINGTON: We are going to need to move on

for time purposes, so if we could make our points

quickly, that would help me a lot. Thank you.

 Go ahead. It's simple, it's in the rule.

 MR. EARL: It's very simple. Don't complicate

it.

 MS. HARRINGTON: Okay.

 MR. EARL: I can tell you one thing. If we do

as the funeral industry go to an hourly rate, you will

definitely not help the consumer. The funeral directors

are doing it for nothing right now.

 MS. HARRINGTON: I was just asking.

 MR. EARL: I mean, I'm just asking --

 MS. HARRINGTON: This is just discussion. We're

not having pronounced regulation, don't worry.

 MR. EARL: Okay, thank you very much.

 MS. HARRINGTON: Okay, thank you.

 MR. CARMON: I think I can be brief.

 MS. HARRINGTON: Okay, good. Show me.

 You've done a good job, I'm sorry, that's unfair

to anyone.

 MR. CARMON: Just the point again about the
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charge. Again, if price is a consideration to that

family, it is certainly a very easy way to make that

comparison, much easier than if it is broken down into

several -- into several items.

 The other point is that there are differences

that can be reflected in this and can reflect the

difference in a state, for example, that does require

the viewing or identification prior to a cremation, that

that can be included. That is where that can be

included into that charge, and that there are a core set

of -- a core set of arrangements and issues that you

deal with with every single family.

 And Mercedes, you made the point about the

diversity that we are, the changes that we are, the

demographic changes. All these have made that even much

more complicated. I mean, the family does not come in

today that knows exactly what they want to do. The

amount of discussion, the amount of options, the walking

through all the authorizations, even understanding the

cremation process. One or two family members may, but

all of them need to, and that's what's so important

today. There's so much more.

 The counseling aspect of what we do, and on a

normal, day-to-day basis with every family, everyone has

different issues when they walk in the door. We want to
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be able to respond to them.

 MS. HARRINGTON: Okay.

 Edith and Jim?

 MS. CHURCHMAN: I again would like to keep this

simple for the consumer. If we take the arrangement

charge and put it onto the facility charge, I have a

problem with that. I have a real problem with that. I

think that what we're doing is taking this little old

lady who's coming in to make arrangements that maybe

we're with her for two hours and now we're with her for

four hours, because we have a laundry list of 50 items

that we are going to ask her, do you use this, did you

not use this. People trust me. They come to Churchman

Funeral Home because they trust Edith Churchman. So,

diversity costs much more for me.

 I'm now providing funeral services for people

from the Caribbean, from West Africa, from East Africa.

It's taking me more and more time, not less and less

time. Let's keep things simple for the consumer.

 MS. HARRINGTON: Jim?

 MR. PINKERTON: I think the idea or the concept

of using hour fees, if you look at it from the aspect of

pre-arrangement and at-need, I think it's totally

inappropriate. There is no way that we can quote an

advanced fees so that people do know the fees in
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advance, and in order to be objective for those families

and treat them honestly, we need to take whatever time

we need to take without concern that you're adding up

billable hours for that family.

 MS. HARRINGTON: Pat?

 MR. GRAHAM: I'm not sure who it was a few

minutes ago mentioned that the basic service fee varied

in Kansas City, I believe it was, from $695 to $2,000.

To me, that's the whole point of competition. That's

where somebody can look at it and say, Well, gosh, they

charge $2,000, I am going to go over to the people who

don't charge that much, and there's your choice.

 MS. HARRINGTON: All right, the last word on

this goes to Lisa.

 MS. CARLSON: Anything that is nondeclinable

takes away consumer choice.

 MS. HARRINGTON: Okay, that's the end of --

 MR. ELVIG: I have a question to ask on time.

Are you done?

 MS. HARRINGTON: Yes.

 MR. ELVIG: Can I say something then to you?

 MS. HARRINGTON: Sure. Well, we are not

done-done, because we are going to move into the next

segment, but --

 MR. ELVIG: Well, you are done with us, right?
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 MS. HARRINGTON: Well, I don't know, we might

think of something else to do with you.

 MR. ELVIG: What I want to say, we have watched

you now for hours, and I think, without asking the

others, that we owe you a round of applause.

 MS. HARRINGTON: Oh.

 (Applause.) 

 MS. HARRINGTON: Thank you. I want to -- I

think that this has been -- I want -- we could just

repeal the rule and let me decide this on an ad hoc

basis then.

 MR. ELVIG: We won't go that far.

 MS. HARRINGTON: I'm joking. That's a joke,

that's a joke.

 Well, I want to commend you. This is a process

that depends on people who come to the table, reading

each others' comments, being familiar with one another's

points of view and being willing to extend the

discussion past the comments, and I think that this has

been -- I've done a number of these workshops in a range

of -- concerning a range of consumer issues and

industries, and I think that this is a very high-caliber

group of participants.

 Myra selected you, and she chose well. Based on

the criteria, of course, she made those selections, not
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on an ad hoc or arbitrary basis but based on the

criteria.

 In terms of process, we're going to get to the

public comment, but I just want to reiterate one thing.

We are at the beginning of this rule review process, and

if we go forward, for example, with -- if the staff

decides from looking at the record to recommend to the

Commission that it's appropriate to publish an advanced

notice, indicating that the Commission is considering

changes to the rule, then it's very likely that we will

use this process again, as well as the written comment

process.

 And I'd like you all to bear that in mind,

because the alternative is to take written comments and

then ask you all to file more written comments to rebut

what the people who happen to disagree with you say, and

our experience is that that isn't very helpful to us,

because, of course, if you're filing a written comment

to rebut what somebody who disagrees with you says, then

it just doubles the disagreement.

 It doesn't help us identify areas of common

ground that could be achieved. It doesn't give us the

benefit of the expertise and the insight that you all

have to really pierce one another's arguments and reveal

that there may not be much to somebody's opposition.
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So, that's why we use this process.

 And last, we think it's very important for this

kind of important government process to be very open and

transparent, and so I appreciate very much everyone's

hard work here.

 And what I think I would like to suggest that we

do, we need -- we need 51 minutes for the public comment

portion, and I think what I would like to do is just

move right into it -- hold on, I'm hearing something.

 No, we need a few minutes to set up. So, hold

on. We need ten minutes to set up. So, what we're

going to do is take a little ten-minute stretch here and

resume at 3:50, and if any of you participants bug out,

you won't get invited back. I want the participants to

stay at the table.

 (A brief recess was taken.)
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 SESSION VI

 PUBLIC PARTICIPATION

 MS. HARRINGTON: Now, I think it's very good

that our participants are facing those who they will be

listening to and perhaps engaged in discussion with

without any request for direction, very good.

 Maynard is moving for us so that our public

participants can see this timing device that we have

here, which is just like the one that they use at the

Supreme Court and on the Price is Right and at

congressional committee hearings.

 Do we have a microphone that works there now?

 VONI: I am using two of them because they are

kind of low in volume.

 MS. HARRINGTON: Yes, and I think the first one

works really well especially.

 VONI: This one?

 MS. HARRINGTON: Yeah, so the one that's pointed

straight back is going to be the microphone of

preference.

 Now, while she's standing there -- Voni, don't

you move -- the person who did all of these

arrangements, who has made all of this go is Voni

Eason. Thank you. And we all work for her at the

Federal Trade Commission.
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 All right, I'm going to just -- may I take the

list? I am going to call out the first several names on

the list so people know -- in fact, I think I'll call

them all out so you have an idea of the order in which

we'll be asking for you. The first person we are going

to hear from is Tom Crean, C R E A N, then David McComb,

then the Reverend Patrick Pollard, John McDonough,

Sylvia Brown, Gere Fulton, John Harron, Allisone

Lasacco, Dino James, Steven Sklar, Robert -- is it Green

or -- G R E A R or -- someone who's a funeral director

for 50 years, who would be a good friend of Randall, who

has been in business for a hundred years.

 Doug Stowell, Richard Santure, Eileen

Santangelo, Samuel Frane, Shirley VanArsdale, John R.

Harmon. That's who we're going to be hearing from.

 Okay, so let's hear from Tom. Let me explain,

Tom, and all the rest of you how this works. When the

green light is on -- we'll hit the timer, you will see a

green light until you are at 2:30 into your three-minute

time. The yellow light will come on at 2:30 telling you

you have 30 seconds left, and the red light comes on

when you have ten seconds left. So, if you can watch

the light, it will give everybody a chance to talk and I

hope that I don't interrupt anyone.

 I don't know how to turn this on, Myra. Okay,
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start. Hit it, Tom.

 MR. CREAN: Thank you.

 As I said, my name is Tom Crean. I'm the chair

of the Family Funeral Home Association. We're a

fledgling association with about a hundred members, 80

percent of whom are based in the United States, and our

focus is to advocate on behalf of the bereaved, and we

wanted to make some statements today about the status of

cemeteries with respect to the rule.

 We do support the commercial cemeteries being

placed under the rule; however, we want to speak in

support of the nonprofit cemetery community, because we

independents are very dependent upon them, and that

partnership is a big part of what we perceive is our

ability to survive in the future.

 The commercial cemeteries have a great ability

using all kinds of pre-need techniques, and especially

if there is no licensing for pre-need people, there's an

ability to train unlimited numbers of these on a monthly

basis. One report I heard was 40 a month. These people

are able to go out, sell friends, relatives and

associates, and sadly, in 60 days, there's not much

business for them, but that's a tremendous route into

the community for the commercial cemeteries, and the

independents are concerned about that.
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 Also, disclosure of ownership. In September of

1997, it was reported that family firms on average spent

$3,000 caring for each family as opposed to the

clustered corporations that were spending $2,000. So,

we think there's a substantial difference between the

service that's provided by independent, family-owned

funeral homes and the consolidator clusters, at least in

the big cities.

 So, on that basis, if you combine the data

that's in the newspapers talking about big differences

in terms of prices charged for funerals, and I think we

can see that there could quite easily be differences

there that are substantial multiples, and we would put

forward that if you're looking at a difference in value

of 100 percent or 200 percent, then that goes past

capitalism into something which I would call

opportunism.

 Those in the -- the representation that Service

Corporation mentioned earlier that there is a lot more

available -- information available for the consumer

today, which is a positive thing, also mentioned that a

lot of that information is available on the website.

Our website address a familyfuneral.org, and I would

invite any of you to guess who owns familyfuneral.com.

 MS. HARRINGTON: Thank you, and let's give a
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hand to Tom because he came in at two minutes and 19

seconds. It's not that we don't want you to take your

full three minutes, but -- okay, let's -- see, now this

would be -- hold on, let's start him over, stop.

 MR. HILE: You can take the microphone off of

the rack and hold it in your hand.

 MS. HARRINGTON: If you want to.

 MR. MCCOMB: Okay.

 MS. HARRINGTON: And before you start the clock

-- before we start the clock, please give us your name

and spell it.

 MR. MCCOMB: Okay, my name is David McComb, M C

capital C O M B.

 MS. HARRINGTON: Okay.

 MR. MCCOMB: There's a bunch of smart people in

this room here today, and I'm certainly glad to be in

front of you, very proud to be here in front of you.

Like I just said, my name is David McComb. I'm from

Fort Wayne, Indiana, which is northeastern Indiana,

among the corn and so forth, and I'm here today just

from our funeral home. I'm not with any specific

organization here. I'm a member of a couple of them,

but I'm just here basically on my own.

 My feeling is the consumer is king, and for them

to remain king, there needs to be competition within
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every service and every product of this industry, and I

feel very, very sure about that.

 Madam Chairperson, I have something new, I heard

you asking for something new earlier, so I am going to

offer something new here. There shouldn't be any

exclusive services like I mentioned, specifically, I

have two things in mind, one of which is the opening and

closing of a gravesite, and the other one is setting of

a memorial, preparing of a memorial foundation.

 Opening and closing of gravesites in our

marketplace and around the country is becoming a larger

and a larger percentage of the overall funeralization

cost, and I have a study and a graph produced by an

Indiana University professor that is here that shows

over the course of the last number of years how opening

and closing has exceeded inflation by five to ten times

as much as inflation. [Exhibit B].

 There is a cemetery in Battle Creek, Michigan

that even boasts in its marketing pieces that the

increase in opening and closing in Battle Creek at their

particular cemetery goes up 15 percent a year.

Meanwhile, inflation goes at less than 3 percent.

 The practices of exclusivity for opening and

closing of graves and the monument foundations is the

direct result of cemeteries' rules and regulations.
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Most states grant cemeteries the ability to set rules

and regulations. Some states have even codified these

exclusive provisions in state laws.

 We, for instance, in Indiana now have codified

the exclusive rights for cemeteries to open and close

gravesites and also prepare monument foundations.

 The ICFA, they have a model law that addresses

the definition of opening and closing, and I want to

read the definition, because it has some interesting

things in it you would not expect. The process -- I'm

-- the definition goes as follows:

 "The process of making an interment including

but not limited to administrative, clerical, legal and

mechanical services performed by the cemetery authority

in conjunction with the opening and closing of an

interment space in preparation for the interment of

human remains and the subsequent closing of the

interment space after the interment has been

performed."

 I thought it had something to do with moving

dirt. Apparently not. But opening and closing needs to

be provided by third parties. There can be

competition. There's already people out there that have

ingress and egress to cemeteries, and they would love

the opportunity to do this.
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 MS. HARRINGTON: Thank you, good job.

 MR. MCCOMB: Thank you very much.

 MS. HARRINGTON: And thank you for coming on

your own behalf all the way from Indiana. That's really

much appreciated here.

 Reverend Patrick -- is it Pollard?

 REVEREND POLLARD: Yes, that's correct.

 MS. HARRINGTON: Would you identify yourself and

spell your name for our reporter.

 REVEREND POLLARD: I am the Reverend Patrick

Pollard, P O L L A R D. I'm a Catholic priest and the

archdiocean director of the Catholic Cemeteries of the

Archdiocese of Chicago. In the Archdiocese, there are

42 cemeteries which I direct, and we enter 20,000

persons annually.

 I'm also representing the National Catholic

Cemetery Conference. This conference has been in

existence for 50 years, and within the conference we

represent 155 Catholic diocese across the country, which

cover about 5400 Catholic cemeteries and inter over

154,000 people in 1988.

 I'm here to speak against the inclusion of

religious cemeteries under the funeral rule. The

Catholic cemeteries in the United States are an integral

part of the Roman Catholic Church, and one of the
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church's vital and integral missions, the corporal work

of burying the dead.

 One cannot isolate the belief of the church. It

is a composite of all its missions and ministry,

including funeral rituals. Catholic cemeteries further

the church's religious mission by bearing witness to our

faith and ministering to our faithful. The teachings of

the Roman Catholic Church include the resurrection of

the Body of Christ and the continuation of life after

death.

 The church believes that God did not abandon the

creation of humanity to death but rather sent God's son

to save humanity. The interment of the body of the

deceased in a Catholic cemetery honors the body in death

as it was honored in life, which is essential to what we

believe. God is the source of all creation.

 The Catholic cemetery has been seen as a part of

the church from its beginning. Since the earliest

catacombs, the church's priests, ministers and faithful

have exercised a ministry of service, care and

compassion, service for the needs of families, arranging

for the burial of loved ones, care for the deceased

awaiting the resurrection, and compassion for the

families of the deceased.

 Catholic cemeteries are owned and operated by
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the church and are deemed by church law to be sacred

places dedicated to the rituals of Catholic burial. The

creed of the National Catholic Cemetery Conference

acknowledges the sacred religious function of the

Catholic cemeteries.

 The Roman Catholic Church, the National Catholic

Cemetery Conference, holds that the religious nature of

the Catholic cemeteries is under the direction and

supervision of the local church authority.

 The purpose of the funeral rule is to provide

information so that whoever is planning a funeral and

burial can make an informed decision. In addition, the

funeral rule is designed to prevent individuals from

taking advantage. The conference's members are Roman

Catholic, not-for-profit organizations. Rather, our

mission is to provide burials for all and just not for

those who can afford it.

 Thank you.

 MS. HARRINGTON: Thank you, Father. Let me ask

you a question. Does your -- uh-oh --

 REVEREND POLLARD: I'm sorry, I caused a beep.

 MS. HARRINGTON: That was my fault. I'm not

going to touch that again.

 Does your association have a code for its

members or guidelines for its members about disclosure?
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 REVEREND POLLARD: Yes, I apologize, my

statement wasn't long enough, and that was the one

positive I was going to suggest. As you were looking

for new ideas, it would be appropriate for the Federal

Trade Commission to encourage the National Catholic

Cemetery Conference to regulate -- self-regulate,

self-govern the members of the association to comply in

the spirit.

 MS. HARRINGTON: Has it done that?

 REVEREND POLLARD: We have rules in effect.

 MS. HARRINGTON: Okay. Did you file a comment?

 REVEREND POLLARD: We did not as a national

group file a comment. Some individual diocese may have

filed comment.

 MR. GRAHAM: May I ask a question? When you say

that you are not for profit, however, aren't a number of

cemeteries throughout the nation that are owned by the

Catholic church leased or otherwise have an arrangement

with for-profit groups to operate those cemeteries and

the monuments and so forth?

 REVEREND POLLARD: There are just a few of

those, very few.

 MR. GRAHAM: I've run into it.

 REVEREND POLLARD: The vast majority are not.

 MS. HARRINGTON: Okay, thank you, Father
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Pollard.

 MR. WALLENSTEIN: May I ask a question, as well,

or do you not want to do that?

 MS. HARRINGTON: Very brief.

 MR. WALLENSTEIN: Father, my question to you is

does the conference have a policy with respect to the

sale of memorials by Catholic cemeteries and how would

you justify that fitting in with your religious mission

since it's a purely commercial venture?

 REVEREND POLLARD: Well, we wouldn't consider it

a purely commercial venture, because we're providing

whatever is the service for burial, and, of course,

marking the grave in memorialization is part of that

service.

 MS. HARRINGTON: Thank you very much.

 John McDonough? And after John we are going to

have Sylvia Brown.

 MS. HARRINGTON: John, would you say your name

and spell it for our reporter?

 MR. MCDONOUGH: Oki-doke. My name is John

McDonough, M C D O N O U G H. I represent -- I founded

the Electronic Funeral Service Association and operate

pretty much online with funeral service professionals

all over the country. I just have a few little comments

here. You guys did a great job. You should all be
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proud of yourself, excellent. You did a really nice

job.

 There are points I want to make on funeral home,

mortuary people, cemetery people, they should tell the

contracting consumer whether or not they are an owner,

that they're a salaried employee or that they are a

commission-based employee. I think it's important that

the consumer know that when they're getting a

presentation.

 The first page of the general price list, and

maybe this general price list that I have seen around

the country, they are getting pretty thick, but the

first page should include -- I like the idea of the

direct cremation, immediate burial, I like that idea.

 In the same vein, a package price that would

include a one-day visitation followed by an in-house

service the next day, a product list price, a product

list -- in other words, it doesn't include the casket or

any product, just a generic package price of a one-day

visitation followed by a service in the funeral home the

next day, which is one of the most popular services in

the country, to help the consumer shop.

 Next, oh, the price lists, okay? The price list

right now, a little bit of confusion on that in the

industry. I'd like it to just have three or four or
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five of your least expensive products that you provide,

whether they be caskets, urns, vaults, monuments, have

your three or four or five least expensive of those

particular items on your price list.

 Right now, we in the industry are understanding

we have to put all of our caskets on the price list.

Therefore, we're pretty much selecting one casket

company to do business with. So, if I have a special

line of caskets that, in other words, there are some

caskets coming from Canada right now that are less

expensive that I want to start to use, so I'm going to

change the price list to incorporate those into the

list, but it would be easier for me to incorporate those

into my price list on a trial basis by not having those

caskets on the price list at all, by letting me have

special caskets whenever I want. As long as I have

those five in stock for people to look at all the time,

that's cool.

 Confusion is do funeral service -- do funeral

homes have to serve those families that buy a casket

elsewhere? We don't know. Got to speed this puppy up.

States cannot regulate the issue. They can't, okay? As

I watched this poor woman down in Texas, Eliza May,

okay, who was publicly held up to ridicule for a

decision she made, crucified, and then taken away from
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her position.

 Lastly, internet people, internet companies,

they should list geographically exactly where they can

be located.

 Thanks.

 MS. HARRINGTON: Thank you, thank you.

 Sylvia Brown, and then after Sylvia we're going

to have Gere Fulton, so if Gere could be in the back --

Gere could be on deck, that would be good. We will have

a little on deck circle.

 MR. HILE: The mike on the side is what you want

to use.

 MS. HARRINGTON: Thank you, Sylvia.

 MS. BROWN: Sylvia Brown, B R O W N.

 MS. HARRINGTON: All right, thank you.

 MS. BROWN: Thank you, the dreaded consumer.

I'm here on behalf of my family, and I came on my own.

I'm from Greensboro, North Carolina, but my main

dealings with cemeteries has been in New Orleans.

Before I go into my sad story about that, I would like

to say that I learned something here today. Two people

I'm going to contact about my problem, and the other

thing is that I discovered on that casket price list

thing, on page 15, that thing's been violated twice in

my family, so -- another thing was we got charged once
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for an embalming fee that we didn't need.

 MS. HARRINGTON: Well, we would like to know

about that, so --

 MS. BROWN: Oh, really?

 MS. HARRINGTON: Yes.

 MS. BROWN: Not now, but sometime?

 MS. HARRINGTON: Yes, absolutely.

 MS. BROWN: And then another time, the last

funeral that I was involved in helping to plan, we were

shown two vaults, the $99 version, the $999 version,

which lasts for a hundred years. Now, my problem with

that one was who's going to check it, you know? I

didn't see the logic behind that. So, I don't --

 MS. HARRINGTON: Randall.

 MS. BROWN: When I buy one, I'm calling him.

 But on the cemetery, we need to have some type

of federal regulation over cemeteries. I've been

involved with a struggle with a municipal cemetery in

the City of New Orleans. They govern themselves.

 Now, when you get into complaining to them about

what they did, they buried my father-in-law, but -- and

they put it down on paper, but you can't take that piece

of paper and find the spot, and the row of graves that

he's buried in, there's 88 graves, 444 bodies.

 Now, needless to say, in New Orleans, they don't
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go six feet deep. You've got four, five, six people per

grave. Now, if you're only four feet down, somebody's

left out, right, but the way they're left out, their

bones are scattered all over the place. I have

pictures, I have videos. We went many times down there,

and we're in the process still yet researching, trying

to just go backwards through the records.

 I send for records all the time. I

painstakingly go back through them and figure out some

of the people that are in some of these spots, and it's

slow going, but eventually I'll get there, and when I

do, I do plan to share that information with the city,

but it would have been so much easier if I had had some

federal persons to call on to help me with my dilemma.

So, please consider that.

 Thank you.

 MS. HARRINGTON: Thank you. Thank you very much

for coming. Sylvia, we really would like to know about

the violations that you've experienced, so one of our

people will get with you.

 MS. BROWN: Okay. Okay, thank you.

 MS. HARRINGTON: Okay. Gere Fulton and then

after that John Horan.

 MR. FULTON: Good afternoon, Madam Chairperson

and members of the panel. My name is Gere Fulton. I
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should probably spell the first name, it's G E R E,

really is pronounced "Jerry," last name is Fulton.

 I have been for the last eight years president

of the Memorial Society of Northwest Ohio and for the

past two years serving as a member of the FAMSA board,

where I also serve as chair of the labor committee.

 I would like to speak to two basic issues.

First of all, before I do that, let me say hearing the

discussion this afternoon, I think many of you at the

table give consumers far too much credit for how much

they understand. My experience has been very different

than that.

 Among other things that I do, what I do for a

living, my salary is paid by the University of Toledo,

where I have been a professor for the last 30 years in

the Department of Public Health, and one of my jobs

there is teaching undergraduate course on death and

dying. So, I do a lot of work with funeral directors in

the area, do a lot of work with students.

 Two concerns that I have. One goes to the

question of standardization of the GPL. Every two

years, our memorial society, like many of the other 125

memorial societies throughout the country, do price

surveys, and whenever we do that, I get to sit down in

front of 50 GPLs and try to make some sense of them.
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 Some of those GPLs are one side of an eight and

a half by 11 piece of paper, most of the information

provided in 10-point type or smaller, so that it is both

unreadable and also cluttered in a horrible fashion.

Some of the other GPLs go on for as many as 15 to 18

pages.

 Now, I would suggest that when I get those

things and sit down and try to make some sense out of

what are different funeral homes charging for different

services and having done this for 20 years and have

trouble doing it, I would suggest that many consumers

are going to have even more trouble in doing that.

 I heard Mr. Gilligan talk to the matter of not

being able to do creative marketing if everyone were

forced to use the same GPL. I think the answer to that

is since the information is required by law at this

point in time, provide that basic information and do so

in a uniform fashion, and if you want to have pamphlets

or brochures or books or whatever it is you wish to use

to promote a specific service, you can do that along

with it, but when consumers are sitting down to try to

figure out where their dollars are best spent, it is

very helpful if they can do that in a simple and direct

and easily comparable format.

 The other problem that -- I realize I won't have
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time to go into this in detail -- has to do with the

basic enforcement of the rule. I know the GAO has

recently spoken to that. I think in many respects the

group assembled here today doesn't need to be

regulated. That comment has been made frequently, and I

think it's probably true, but there are lots of people

in your industry who do need to be regulated. Filing a

complaint with the FTC, with all due respect, is like

throwing paper into a black hole.

 I know that because I've tried to do it, and

it's taken us three years to finally get a funeral

provider in Toledo to issue a GPL. We have had the --

we have had the Attorney General on it. Enforcement is

really a problem.

 MS. HARRINGTON: Okay, thank you, Gere.

 MR. FULTON: Thank you very much.

 MS. HARRINGTON: John and then Allisone.

 MR. HORAN: Hi, I'm John Horan. I'm a funeral

director from Denver, Colorado. I'm a family-owned

funeral director for Tom Crean's benefit, which I'm

proud of, fifth generation of my family. For 109 years

my family has served families in the Denver metropolitan

area.

 I didn't come up intending to talk about the

Catholic Church, but I do have to point out that I
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compete with the Catholic Church in the Denver area.

The Mount Olivet Cemetery and the Archdiocese Mortuary

are both nonprofit organizations that I compete with.

They sell vaults, caskets, markers, headstones, graves,

funeral services, the works. So, you know, I didn't

come up here to necessarily speak about it, but I do

think I need to make that point, that I'm competing toe

to toe with these people every single day.

 I take pride in the fact that for over a hundred

years my family has never turned anyone away for a lack

of money. A discounted package benefits consumers at my

firm. One out of every six families that we serve

selects a discounted package, and these packages are

usually selected by families who are either needy or

families who prefer simplicity. They enable me to set a

consistent guideline for my staff and myself.

 I've offered these since the 1980s. They're

simple to understand and available to every family that

I serve. They're incorporated in my general price

list.

 These packages have enhanced my reputation in

the community among clergy, among hospice workers, and

in the very positive word of mouth from the families who

have benefitted from these more affordable options. My

conclusion is that there are thousands of families that
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I've served through Horan & McConaty who have benefitted

from these discounted packages. If you take them away,

then it's going to make it much more difficult for me to

offer this benefit to these families.

 Secondly, I would like to talk about the basic

services. It was said that consumers have no control

over this fee. We talk to shoppers all day long.

Shoppers is our language for people who either call us

on the telephone or walk in to get information. They

have got control. The control is in their feet, as the

-- this funeral director pointed out. They always have

the option to go somewhere else.

 It's very easy to compare our charges with other

people's charges. I've made thousands of funeral

arrangements since the rule took effect in 1984, and I

have never heard from a family who did not understand

the fee for basic services.

 So, if you want to complicate this, if you want

-- if you want to divide it into more expense

categories or create hourly charges, I'll figure out a

way to adapt, but I just want you to know that I think

it's going to make it more difficult for the consumer.

I strongly believe that the consumer loses with

unnecessary overcomplication, as I think was pointed out

so well.
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 Thanks so much.

 MS. HARRINGTON: Thank you very much, John, and

thank you for coming all the way from Denver.

 We are going to hear from Allisone and then --

you didn't come all the way from Denver?

 MR. HORAN: Denver, Colorado.

 MS. HARRINGTON: And then it's Dino --

 MS. JAMES: Deicie James.

 MS. HARRINGTON: That's not you?

 MS. JAMES: Yes, it is.

 MS. HARRINGTON: What happened to Allisone?

 MS. JAMES: She went outside.

 MS. HARRINGTON: Well, there you go. You are

from Milwaukee.

 MS. JAMES: Deicie D E I C I E, May James from

Milwaukee, Wisconsin.

 MS. HARRINGTON: Okay.

 MS. JAMES: I'm here on the deceased's rights of

Evergreen Cemetery of Milwaukee, Wisconsin. We had to

move our daughter -- my daughter from there. We had

peoples buried on top of one another. I discovered this

on May 18, 1998, when I went to look for my daughter

after I had buried her, that I couldn't find her.

 And when I went through, discovered all of these

bodies, it was more than one, I got over 2000 signatures
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of peoples who can't find their loved ones. We found

some of them, and we didn't find a lot of them, and

they're still looking for them. Thanks to Ms. Jacobi --

I can't hardly pronounce her name -- she came there to

help us. She's been helping us with this, and after she

told me about the meeting today, I came, and I really

enjoyed it, and I got something out of it that I will

take back to the rest of my consumers to let them know

what's going on up here.

 So, I have a lot of things that I could share

with everybody. These are the pictures that we took

from bodies that we couldn't find and bodies that we

found. That's not all. I know you don't want to hear

all my story. And I have had two heart attacks since

then, but thank God I made it through. Finally I made

it.

 And I lost another daughter, I buried her, but I

didn't bury her there. So, I moved my daughter from

there to Wisconsin Memorial. So, that's all I have to

say.

 MS. HARRINGTON: Thank you so much for coming.

Let me ask you a question. Have you been in touch with

Attorney General Doyle's office in Wisconsin?

 MS. JAMES: No, I haven't. The one --

 MS. HARRINGTON: Have you been in touch --
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 MS. JACOBI: He is now working in the midst of

an investigation into many aspects of the case at this

time.

 MS. HARRINGTON: I think he would very much want

to know about this, and so if there's anything that we

can do to help you get directly in touch with Attorney

General Doyle, we would be glad to do that, and one of

our people will get your name and address and phone

number so we can follow up with you, okay?

 MS. JAMES: Okay.

 MS. HARRINGTON: Voni, will you do that?

Thanks. Thank you so much for coming.

 MS. JAMES: Thank you.

 MS. HARRINGTON: Steven Sklar, and after Steven

we are going to hear from Robert -- Robert Creal.

 MR. SKLAR: My name is Steven Sklar, with a V

and S K L A R. I serve as director of the Maryland

Office of Cemetery Oversight. We're the regulators of

the cemeteries and monument dealers in the State of

Maryland, a new office of about two years in existence.

I also speak as chair of the consumer affairs committee

for the North American Cemetery Regulators Association.

We have an existing member, an alumnus here, and I want

to acknowledge their contribution to the proceedings.

 The question that was posed by Chair Harrington
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earlier was is the FTC the appropriate regulator or is

it the states? Our position is, and I think you've

heard it from industry, you've heard it from others and

you've heard it -- maybe a contrary point of view, but

our position is that the state regulators are the most

effective and capable regulators of the cemetery

industry vis-a-vis the option of the FTC and expansion

of this rule.

 It's our feeling that there is plenty of work

out there and plenty of consumer interest and help

that's required of us. You build a state regulator's

office, and they will come, and they have. In less than

a year and a half, Maryland now has about 700 inquiries

and complaints a year. Other states have in the

thousands.

 And it's not just complaints. It's requests for

advice. What does this mean? What is the purchase

required? How much do I have to pay? What else do I

have to pay for interment? We all require that now in

regulations.

 We require not only price lists, because that

has some value, and if it's a question of more

information than less information, more information is

preferable, but that's not the only way to do it. We

feel that brochures, like the one in Maryland, maybe
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some that AARP has developed for its millions in

membership, targeted alliances I might add in the senior

citizens, and other states, these are the ones that are

even more important to a consumer.

 They list not only their right of having a price

list made available, but advice on how to proceed, how

to go shopping, how to make an informed decision, how to

approach a purchase, very important. These brochures

are more important, we think, than just price lists.

 We think that not only is the brochure

important, but it's the question of access. When there

are disputes and misunderstandings with the cemetery

industry, many of these, two-thirds are straightened out

right away, and a state regulator can resolve and

mediate something immediately and fairly before it

becomes confrontational, expensive and adversarial.

 We would ask that if there is an expansion that

there be due options in the provisions that states gain

an opting out clause if they have the same or greater

protections written into their structure. We thank you

for your deliberations and thank you for your

attention.

 MS. HARRINGTON: Thank you. Let me ask you a

question. Is there -- do you have a member body in

Wisconsin?
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 MR. SKLAR: We have a representative there, but

I don't know exactly who it might be, but I could refer

this issue there.

 MS. HARRINGTON: I would appreciate it if you

can, independent of the Attorney General, which we will

take care of.

 Okay, Robert Creal followed by Doug Stowell.

 MR. CREAL: I thank you for the opportunity to

come before you today. Robert L. Creal, C R E A L, St.

Petersburg, Florida, where we operate two funeral

homes.

 I was exposed to the funeral service at age 13,

and at the age of 21 or 23 I was licensed and I've owned

my own business since 1955. My concern is unique, I'm

told, that it's not really an issue, so for 19 years

I've been trying to get this issue before the public,

and that involves cash advances and refunds as related

to funeral services.

 Most of us as funeral directors know, if you

deal with middle class people, everybody who experiences

death does not have ready cash available. If a family

has ready cash, sometimes it's in the way of insurance

or other benefits, maybe an estate, which could take

weeks, months or years before this money is able to be

converted.
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 So, we have third-party vendors who demand pay

before they serve. It's a judgment call as to how the

funeral director handles these charges. I understand

there's some fast funding industries that has been

created, and I understand from most funeral directors

that they do not advance cash for third-party vendors.

I think it's a judgment call as to how each funeral

director will handle it.

 First I'd like to mention that I'd like to see

the term "cash advances" banished from the language and

these transactions identified as third-party vendor

transactions, which is what they are according to the

FTC. Any service provided by third-party vendor and

paid for by the funeral home is actually a third-party

vendor, and it's confusing to say cash advances, because

I find that most accountants don't seem to understand

cash advances.

 They can come up with all kind of ideas, and the

source of the money is rarely determined. We have a law

in Florida that was set up by the Florida Legislature,

adopted by the legislature in 1993, which allows a

funeral director to operate escrow accounts for paying

third-party vendors and for refunds of money in excess

of the funeral bill.

 This would allow a funeral director to show that
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I had this money here, I took it and I used it to pay

this third-party vendor, and when I collected it, I put

it back, which is a washed-out transaction. This is a

determination by the Federal Trade Commission; however,

the Federal Trade Commission say the law exists, but

they have no enforcement power.

 Internal Revenue says if you pay a third-party

vendor, you're entitled to a deduction, so now that you

have had your deduction, you cannot take a double

deduction, so everything that you collect is taxable

income. So, it's double taxation of what -- the

taxation that the Internal Revenue is doing. So, this

Florida law would help to simplify this rule so that

accountants can understand it.

 Accountants have experience with the IRS rules,

but they very rarely have experience with Federal Trade

Commission rules, and this is my proposal, that this

Florida law be brought up for consideration for a

national law and that further study be done for this

issue.

 MS. HARRINGTON: Thank you, Mr. Creal. Thank

you for coming all the way from Florida.

 Doug Stowell and then Richard Santure.

 MR. STOWELL: Thank you. My name is Doug

Stowell, S T O W E L L, I'm an attorney from
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Tallahassee, Florida. I'm here on behalf of Funeral

Services, Incorporated, which is the master trust for

independent funeral directors in Florida.

 My involvement with funeral service first began

in the mid-seventies when I was secretary of the

Department of Professional Regulation, and the Board of

Funeral Directors and Embalmers was under that

department. I subsequently became more involved with

the profession, having represented the Florida Funeral

Directors Association as well as FSI.

 One of the things I would like to point out to

you, I noticed that nobody on this panel is from the

State of Florida. Florida is the -- has the largest

population percentage of persons over the age of 65, and

it's projected that that will continue over the next 15

years. We have very extensive laws that regulate both

pre-need and at-need sale of funeral services. We, in

fact, had an itemization and disclosure law before the

FTC adopted its rule, and it is essentially the same --

the same law.

 What I'm concerned about here in listening to

what you all have to say, we started out with pre-need

as an example with about six pages of statutory

requirements. We now have 24 pages of statutory

requirements, plus -- well, 40 pages of statutory
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requirements and another 25 or 26 pages of rules, and if

-- our view is that the regulation in Florida far

exceeds anything that is done at the federal level and

maybe at other state levels.

 While I recognize that your charge is

disclosure, it -- with the funeral rule, it is difficult

for practitioners to comply with disclosure when it's

not done in concert with, in fact, a transaction and the

laws that deal with transactions. I would submit to you

that you ought to include people from Florida in your

studies. I would submit to you that you should consider

allowing states that have extensive laws to be the lead

agency or the lead authority in the regulation of both

pre-need and at-need funeral service. I think that

consumers are well-served by the Florida law and that

you all should at least consider that.

 Thank you.

 MS. HARRINGTON: Thank you very much.

 Richard Santure and then Eileen Santangelo.

 MR. SANTURE: Yes, ma'am, Richard A. Santure,

S A N T U R E. Please forgive me. I wear hearing aids,

and one of them has a dead battery, so I was having -- I

was very attentive, and I believe it was you -- I don't

-- I'm sorry, I don't have your name, but I thought you

had made a comment regarding the fact that -- talking
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about the nondeclinable fees, that that should be

abolished and a funeral director -- home should take

their service charge and spread it out across all of

those items, including caskets.

 Did you say something like that?

 MS. BERN-KLUG: Something like that.

 MR. SANTURE: Well, obviously then you have no

problem with a funeral home having a markup on a casket,

and if that be correct, then I ask all of the funeral

directors in this room, how do you arrive at that

figure? Having been a funeral director myself, I have a

pretty good idea.

 Did you take a dart and throw it up against the

wall and say that's a good number, or did you analyze

what your costs and services were and what you were

providing a family, and if that be the case, without

actually spelling it out, what you had to include in

there was a casket handling fee, even though it wasn't

called such. So, you're playing with words, okay?

 There was a gentleman of a few minutes ago who

said he didn't like the term "cash advances," he liked

"third-party vendors." Well I -- when I was a

practicing funeral director, we called it cash advances,

and we still do, and it was my understanding at that

time that unless a funeral home was making a profit on
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it, he had to put it under the -- the cash advance

items, so a crematory charge would normally go under a

cash advancement charge.

 So, perhaps some funeral directors are a little

careless in their wording, which is perhaps

unforgivable, but the reality is if you say to me, how

much do you charge for a casket -- a cremation, and I

say $1,000, it makes no difference really what the

number is, and I don't say, and the crematory also

charges you another $595, I didn't lie to you and I

didn't mislead you. You asked me my charge. I should

have, in fact, been a little bit more elaborate, but you

can't penalize me for that I don't think.

 Finally, there are a number of self-interest

groups here, aside from funeral homes or funeral

directors, and I kind of wonder how many of those

groups, not the individuals, but the groups were

represented when the first FTC hearings began way back a

gazillion years ago.

 And at that time my question is while funeral

homes and funeral directors were fighting we don't want

this, you either remained mute or said you've got to

have it. Now, it seems as though there's a role

reversal here. Funeral homes don't seem to have a

problem with the rule. In fact, they're working under
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that rule very comfortably, and they're saying, Hey,

fellow, how about joining us? You liked it in the first

place. Why can't you like it today?

 MS. HARRINGTON: Thank you, Mr. Santure.

 MS. HARRINGTON: Okay, Eileen Santangelo,

followed by Samuel Frane, but first, a towel. We have a

little water problem up here.

 MS. SANTANGELO: Hi there. I'm Eileen

Santangelo, S A N T A N G E L O. I represent Evergreen

Memorial Gardens down in Southern Maryland, not the

Evergreen that buried Mrs. James' daughter. I come

today on behalf of the consumers in my cemetery and my

area.

 I serve a population of about 85,000 consumers

down in Southern Maryland, and in our community, we have

two funeral directors. I took the cemetery over two and

a half years ago. At that time, the funeral directors

were the ones who were providing all of the products and

services and were paying the property owner a fee for

the grave. Since I took it over, I have given them --

families the opportunity to purchase vaults, caskets and

memorials.

 In doing that, I have had -- my grave digger has

been cut off, told by the funeral directors that if you

cut -- if you dig for her, I will not use you. The
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vault company will not serve me in my community. I have

to go three and a half hours out of my area. I have

been told that -- families have been told that I make my

caskets in the basement, so I had to resort to going to

the casket warehouse and taking a picture and showing

them that I do not make my caskets in the basement.

 When a consumer is -- comes to me to buy a

casket, they -- their question is, well, is there going

to be retaliation against dad's body? Is he going to be

okay? I try to assure them that they are a

professional, but it is still a question in their mind.

 So, I would ask at this moment that a handling

fee be not assessed to the caskets, because the only

other alternative the families have in my area is

myself. I have gone out to other areas, I've shopped

for the consumers, and I have a general price list, a

book with them in it, and I show my families if they

would like to go out of the area, and they can.

 And I hope that we don't have to put a handling

fee on that, because that would surely eliminate any

kind of a choice that they might have.

 MS. HARRINGTON: Have you had any contact with

Attorney General Curran's office about your experience?

 MS. SANTANGELO: No, ma'am, I haven't. I have a

family who had a situation that they were going to go to
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the Board of Morticians and then found out that one of

the funeral directors in our area is on the Board of

Morticians, so they threw the paper up in the air and

said, Well, nothing's going to happen. Their loved one

was embalmed without permission, and so there is a very

strong influence there. One is over a hundred years old

down in the community, and people felt that they just

didn't have choices. And I reap the benefits of -- not

the benefits, the retaliation daily when families do go

to these funeral homes.

 MS. HARRINGTON: I'd be glad to help you get in

touch with the right person in Attorney General Curran's

office, because there are state laws that prohibit

unfair methods of competition as well as federal laws,

and those -- there may be implications under those laws

arising from your experience.

 MS. SANTANGELO: Okay.

 MS. HARRINGTON: So, Voni will get your name and

phone number and will be in touch with you in the next

few days and try to hook you up with the Attorney

General's Office. Thank you very much for coming.

 Samuel Frane, followed by Shirley Brown

VanArsdale.

 MR. FRANE: Good afternoon. My name is Samuel

Frane, I'm a second generation funeral director from
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Indiana. My brother and I operate a funeral home that

does about a hundred calls a year. It's been in our

family for about 40 years. I appreciate the opportunity

to make comments to the Commission here today.

 I'd like to comment on two areas, the first

regarding cemetery inclusion in the rule. It was

estimated earlier the number of cemeteries that would be

affected and how hard it would be for the Commission to

patrol or police those cemeteries. I believe the number

was greatly exaggerated. I believe the number would

probably be more in the area of 500 -- excuse me, 5000

to 10,000 cemeteries would be affected nationally.

 I think when you take into account the number of

cemeteries, especially in rural America, that are

township-owned cemeteries or small municipal-owned

cemeteries that have no boards, have no office, have no

staff, do not sell goods or services, and the funeral

director provides the grave opening in those cemeteries,

they would not be affected by inclusion in the funeral

rule. The cemeteries that would be are the ones that

have offices, have sales staffs, and do conduct sales of

services and merchandise.

 So, I would ask that the FTC do consider

including them when they do sell goods and services. I

think the comment was made irregardless of who you are,
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if you sell funeral goods or services, you should be

included in the rule, and I believe that to be

accurate.

 The other area would be changes to the GPL.

I've been working with the GPL since its inclusion 15

years ago in 1984. My families understand the GPL. I'm

like the woman from Maryland. I take time with my

family. They understand the GPL. It's easy for them to

accept. It's easy for them to work with. It's simple.

 And that's the key word we've heard all day,

keep it simple. It already is simple. I don't know how

you can make it any simpler than it is. So, I would

just ask that before you make major changes, you take

into consideration where we're at today, where we'll be

if you make changes to the GPL.

 Thank you.

 MS. HARRINGTON: Thank you. Thank you for

coming all the way from Indiana.

 Shirley Brown VanArsdale?

 MS. VANARSDALE: Brown, B R O W N, V A N A R S D

A L E. Excuse me, I think I'm losing my voice today.

 I am a very small funeral home owner. We have

approximately 100 services a year. This year I will

serve as chairman for NFDA on their governmental affairs

committee. I've never been involved with the FTC except
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when it began in '84, because that's when my dad, who

had been a funeral director, and our firm is 114 years

old, and I have taken different vitamins than Randall,

so he was -- after 58 years of being there, really could

not handle the change with FTC coming into his funeral.

 He had done business with one sheet of paper and

a handshake, and trust and the reputation of our firm

has been very important, and I hope it will continue to

be, so as voiced by Edith with her firm.

 I now have two sons with me in my business, and

so we want to continue. With that, our families are

very appreciative of the GPL. It made me a better

business person to have to go in and analyze my costs.

My dad had two businesses, a furniture store and a

funeral home, and as long as there were funds to feed us

and raise a family of two, it was not an issue of what

things cost.

 He provided a service. He was there when

families needed him. And that's what we've continued to

do, only after '84, I needed to do it because my brother

took over the furniture store and we split the

corporations.

 My dad used to sit in our lobby and say Shirley,

you will never make it. You cannot survive on just the

funeral home. He always thought the furniture store
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carried the funeral home.

 MS. HARRINGTON: Did he tell you that girls

didn't do that business?

 MS. VANARSDALE: Yes, and that was very

difficult.

 MS. HARRINGTON: I'm getting the picture.

 MS. VANARSDALE: You got it. Anyway, I have

succeeded, and bless his heart, he was a dear father, he

passed away in '93, and I have succeeded since '84, and

our funeral home is growing, and our community has,

too.

 With that in mind, I want to tell you that

families do appreciate the GPL, but I do have a problem,

and I have experienced one casket coming from a casket

store. I was somewhat appalled by what I had to deal

with. It was delivered, I never thought about the

family being there to sign for it, and I want you to

know it said there are no warranties on this casket once

it leaves our outlet.

 So, I called my attorney quickly and said what

do I do? He said type a disclaimer on the bottom and

make sure that it says that you are not responsible for

this piece of merchandise if it does fail. It did not.

It looked fine. I could not find a serial number or

name anywhere.
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 I think that the casket stores and the

cemeteries need to be included so that my family would

have had some recourse, and maybe they did when they

purchased it at the store, but there was no

documentation that I saw.

 I had a family member in front of me before I

came voicing concern on another funeral home, three

states away. She came in because mom said go talk to

Shirley, you can trust her. I told her what I was

coming here for, that you guys were discussing prices

and how we're regulated, and her exact words were, and I

told her if I had a chance, I would say it over and

over, you cannot legislate integrity. Thank you.

 MS. HARRINGTON: Where are you based?

 MS. VANARSDALE: I'm out of Gardiner, Kansas.

 MS. HARRINGTON: Thank you. Thanks for coming.

Got a lot of good midwestern people here today. That

makes me happy. The Chair likes the midwest. The chair

is a cheese head.

 Okay, John Harmon. John? There you are.

 MR. HARMON: Thank you. First of all, my name

is John Harmon. I'm from Tyler, Texas. I'm an

independent funeral director there and I come here on my

own, and I have truly enjoyed today. I journeyed here

to be -- I'm a member of the NFDMA, Ms. Churchman and
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all the members are here, and I would just like to say

I'm glad to be here, I have enjoyed it, and I'm proud.

 MS. HARRINGTON: Thank you. We're really glad

that all of you are here and with your participation. I

went to Texas -- the first time I ever went to Texas

was, oh, I don't know, 15 years ago, and I was called in

on short notice to give some testimony before a

legislative committee, and I don't know if you all know

that the Texas legislature is only in session every two

years, and for only about three days or something, so

they do floor action all day and then they do -- I'm

sorry, I know it feels like way too long in Texas, but

they do floor action all day, they do committee hearings

all night.

 And so I walked into this room, and it was the

transportation committee, and this was in the eighties,

and there weren't any other women in the whole room, and

there were about 200 guys who were all there on

transportation issues, and they all looked at me.

 I stood in the back, and one by one people came

up and said, New here? And I said, Yes, I am, I haven't

been here before. Welcome to Texas. And I said, Thank

you so much. Isn't it wonderful here? So, I wanted to

-- I thought of that when I said the Chair likes people

from the midwest. We also like that chauvenism that you
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all from Texas bring to it.

 We are finished now. We missed one person who

stepped out. Did she come back? Did Allisone come

back?

 Well, I want to thank all of you again, and last

and certainly not least, my colleagues, Myra Howard and

Allen Hile, who have been here all day and have done a

huge amount of work and will continue to in this area.

Myra prepared our agenda after carefully reading all of

your comments, has focused the issue and is the person

who has principal responsibility for this proceeding,

along with Allen, and I want to thank you again for

coming and urge you to keep in touch with us.

 This is an open process, as I said, and when we

know what it is that's going to happen next, we will

make sure that all of you know it in a very prompt

manner. So, thanks a lot for coming, and let us see you

again.

 (Applause.) 

 (Whereupon, at 4:50 p.m., the workshop was

adjourned.)

 - - - - -
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 C E R T I F I C A T I O N O F R E P O R T E R

DOCKET/FILE NUMBER: P984407

CASE TITLE: Funeral Rulemaking and Marketing Practices

HEARING DATE: November 18, 1999

 I HEREBY CERTIFY that the transcript contained

herein is a full and accurate transcript of the notes

taken by me at the hearing on the above cause before the

FEDERAL TRADE COMMISSION to the best of my knowledge and

belief.

 DATED: 12/3/99

 

 SUSANNE Q. TATE, RMR

C E R T I F I C A T I O N O F P R O O F R E A D E R

 I HEREBY CERTIFY that I proofread the transcript

for accuracy in spelling, hyphenation, punctuation and

format.

 

 DIANE QUADE