1186 FEDERAL TRADE COMMISSION DECISIONS 

VOLUME 140

Commission Advisory Opinion 

The Honorable Dan Flynn 

Texas State Representative 

House District 2 

P.O. Box 2910 

Austin, TX 78768-2910 

Dear Representative Flynn: 

This responds to your letter dated April 12, 2005, in which you 

request a Commission opinion on the lawful construction of the 

term “cash advance item” as used in the FTC’s Funeral Rule, 16 

C.F.R. § 453.1(b) (“the Funeral Rule” or “the Rule”). 

Specifically, you question whether a Texas trial court is correct in 

ruling that “all goods or services purchased from a third-party 

vendor, even though not included on the contract, are ‘cash 

advances’” under the Funeral Rule.1 Correct interpretation of the 

1 It is our understanding that your request is prompted by the 

May 2004 decision granting partial summary judgment in Hijar v. 

SCI Texas Funeral Services, Inc., No. 2002-740, Order Granting 

Plaintiff’s Motion for Partial Summary Judgment and Establishing 

Issues Under Rule 166a(e), T.R.C.P. and Denying Defendants’ 

Second Motion for Summary Judgment (County Court at Law No. 

3, El Paso, May 21, 2004), in which the court held that the 

defendant violated the cash advance disclosure provision of the 

Funeral Rule by failing to disclose each fee charged to the plaintiff 

for the cost of advancing funds on behalf of the plaintiff for goods 

and services purchased from third parties and resold to plaintiff. 

The Court in Hijar based its holding on an interpretation of the 

term “cash advance item” that would include the following items, 

when purchased from a third party and resold to persons arranging 

funerals: “direct cremation; immediate burial; forwarding 

remains; receiving remains; embalming; refrigeration; other 

preparation; transportation; casket/cremation casket; alternative 

container; outside enclosure; clothing/shroud; memorial booklet; 

service folders/prayer cards; acknowledgment cards; flowers; 
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Commission Advisory Opinion 

term “cash advance item” is important because it determines the 

breadth and impact of certain substantive provisions of the 

Funeral Rule that employ that term. 

The Commission believes that the court is incorrect in ruling 

that all goods or services purchased from a third-party vendor are 

cash advance items. This interpretation sweeps far too broadly, 

potentially bringing within its scope every component good or 

service that comprise a funeral. This was not and is not the 

Commission’s intention in the “cash advance” provisions of the 

Rule. In our opinion, the term “cash advance item” in the Rule 

applies only to those items that the funeral provider represents 

expressly to be “cash advance items” or represents by implication 

to be procured on behalf of a particular customer and provided to 

that customer at the same price the funeral provider paid for them. 

This conclusion is based on the analysis set forth below. 

Analysis 

The Funeral Rule2

 defines the term “cash advance item” as 

follows: 

[a]ny item of service or merchandise described to a 

shipping container; crematory services; crucifix; escorts; certified 

copies; public transportation; outside funeral director’s expense; 

vault installation; clergy/religious facility; musicians or singers; 

hairdressing; and permits.” 

The Commission promulgated the original Funeral Rule on 

September 24, 1982, making it fully effective on April 30, 1984. 

47 Fed. Reg. 42260 (Sept. 24, 1982). The Commission amended 

the Rule in 1994, following a lengthy review proceeding, and that 

1994 amended Rule continues to be in effect. 59 Fed. Reg. 1592 

(Jan. 11, 1994). All references to “the Funeral Rule” or “the 

Rule” are to the 1994 amended Rule, currently in effect. 

References to the 1982 Rule are to “the original Rule.” 
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purchaser as a “cash advance,” “accommodation,” “cash 

disbursement,” or similar term. A cash advance item is also 

any item obtained from a third party and paid for by the 

funeral provider on the purchaser’s behalf. Cash advance 

items may include, but are not limited to: cemetery or 

crematory services; pallbearers; public transportation; clergy 

honoraria; flowers; musicians or singers; nurses; obituary 

notices; gratuities; and, death certificates. 16 C.F.R. 

§ 453.1(b). 

The first sentence of this definition quite clearly states that any 

item a funeral provider describes expressly using the words “cash 

advance” item (or similar words or phrases) is, in fact, a cash 

advance item for purposes of the Funeral Rule. The second 

sentence broadens the definition to cover situations when a funeral 

provider purports to act “on behalf” of a particular customer, more 

as that customer’s procurement agent rather than as a retailer 

serving the general public. The third sentence merely provides an 

illustrative list of the various types of goods or services that 

funeral providers typically may treat as cash advance items. 

Certain substantive provisions in the Funeral Rule employ the 

defined term “cash advance item.” Specifically, §§ 453.3(f)(1)(ii) 

and 453.3(f)(2) require a funeral provider who is charging a 

customer more for a cash advance item than the funeral director 

paid for it to disclose that material fact (i.e., the existence of a 

mark-up, but not the amount) to the customer on the statement of 

funeral goods and services selected by the customer.3 

3 Also, the statement of goods and services that the funeral 

provider must give to the customer at the conclusion of the 

discussion of funeral arrangements must itemize any cash advance 

items that are part of the agreed-upon funeral arrangements, and 

must state the price, or if not known, the estimated price, of those 

items. The Rule states: “(These prices must be given to the 

extent then known or reasonably ascertainable. If the prices are 

not known or reasonably ascertainable, a good faith estimate shall 
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 The Commission included these “cash advance” disclosure 

provisions in the Rule to address a practice in the marketplace that 

the Commission had identified as being harmful to consumers. 

Specifically, some funeral providers misrepresented that they 

would obtain goods or services for their customers at cost, when 

in fact these funeral providers profited by marking up the price of 

the items.4

 The Final Staff Report on the original Funeral Rule, 

which is part of the rulemaking record on which the Commission 

relied in adopting the Rule, succinctly describes the problem: 

Cash advance charges are completely separate from, and 

additional to, the funeral director’s own charges. They 

usually appear on the funeral bill under such headings as 

be given and a written statement of the actual charges shall be 

provided before the final bill is paid.)” 16 C.F.R. 

§ 453.2(b)(5)(i)(B). 

This mark-up was achieved both directly and indirectly. As 

noted in the Final Staff Report, “[s]ometimes, [the mark-up] has 

been accomplished by simply inflating the amount of the charge 

on the customer’s bill. In other instances, the same effect has 

been achieved by the funeral home securing some form of 

kickback or rebate from the supplier of the cash advance item 

after charging the customer the full price.” Final Staff Report 

(June 1978) at 249. Marking up cash advance items was not an 

uncommon practice. The Commission noted, in adopting the 

original Rule, that “the evidence demonstrates that many 

individual funeral providers do charge mark-ups for cash 

advances. In a 1976 survey of California funeral directors, 12% of 

the 291 respondents admitted charging ‘in excess of the amount 

actually advanced for any items of service labeled as ‘cash 

advances’ or ‘accommodation items.’ [The National Funeral 

Directors Association’s] annual survey of funeral homes indicates 

that, on a national level, funeral homes are receiving a 5% markup on cash advance items. . . .” 47 Fed. Reg. 42279 (Sept. 24, 

1982).
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“accommodations,” “cash disbursements,” and “cash 

advanced for your convenience.” This terminology clearly 

indicates the basic conception, both by the funeral home and 

the consumer; that is, that the family is simply reimbursing 

the funeral director for cash outlays. The traditional use of 

such terms, as well as the obvious fact that these items are 

being provided by the third party, create the expectation that 

the amount billed is the same as that paid or owed. . . . Our 

investigation revealed, however that some funeral homes 

have generated extra revenues by charging their customers 

more for cash advance items than the funeral home actually 

paid out.5 

Based on the record evidence of this problem, as summarized and 

analyzed in the Final Staff Report, the Commission adopted 

§ 453.3(f) to remedy it. As noted in the Statement of Basis and 

Purpose issued by the Commission when it adopted the original 

Rule, § 453.3(f) is intended to prevent consumers from being led 

to believe, incorrectly, that the cost to the consumer for a 

particular item is the same as the cost to the funeral provider: 

[C]onsumers believe that items labeled “cash advances” . . . 

are being provided at cost. There is an implicit 

representation that the cash advance transaction involves 

merely a forwarding of cash by the funeral provider and a 

subsequent dollar-for-dollar reimbursement by the consumer 

. . . . The use of this term in connection with items such as 

flowers, obituary notices, etc., which the consumers could 

easily obtain from a third party, creates the expectation that 

the amount billed the consumer is the same as the amount 

paid by the funeral provider. Given this expectation, the 

failure to disclose the existence of a mark-up is a deceptive 

practice.6 

5 Final Staff Report (June 1978) at 249. 

6 47 Fed. Reg. 42278-42279 (Sept. 24, 1982). 
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The Commission found that, in describing a particular item to a 

customer, a funeral provider’s express use of the term “cash 

advance item” (or alternative formulations such as 

“accommodation” or “cash disbursement”) implies that the cost 

to the customer for that item is the same as the cost to the funeral 

provider. Thus, in cases where a funeral provider describes an 

item in this manner, yet charges the customer more for it than the 

funeral provider paid for it, the Commission requires a corrective 

disclosure to prevent the customer from being deceived. 

Specifically, in such a circumstance, the Funeral Rule requires 

that the following disclosure be placed on the statement of funeral 

goods and services selected: “We charge you for our services in 

obtaining: (specify cash advance items).”7

 This is the scenario 

addressed by the first sentence in the “cash advance item” 

definition. 

The second sentence of the definition, indicating that “[a] cash 

advance item is also any item obtained from a third party and paid 

for by the funeral provider on the purchaser’s behalf,” is in the 

nature of a “fencing-in” provision.8 The Commission’s intention 

in including this sentence is to bring within the ambit of § 453.3(f) 

any situation where a funeral provider might, without using the 

specific term “cash advance,” offer to obtain an item for a 

particular customer that the customer could obtain on her own – 

purporting to act “on behalf” of that customer, more as that 

customer’s procurement agent than as a retailer serving the 

general public. Specifically, the purpose of this fencing-in aspect 

of the definition is to deter the less scrupulous funeral provider 

from evading the Rule by eschewing express description of an 

7 16 C.F.R § 453.3(f)(2). The Rule also specifically prohibits 

this type of affirmative misrepresentation. 16 C.F.R 

§ 453.3(f)(1)(i). 

8 Under the “fencing-in” doctrine, the FTC may frame a 

remedy which extends beyond the precise illegal conduct found. 

Bristol-Myers Co. v. FTC, 738 F.2d 554, 561 (2d Cir. 1984). 
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item as a “cash advance item” (or alternative formulations), yet 

nevertheless conveying to a customer acting reasonably under the 

circumstances that obtaining the item involves merely a 

forwarding of cash by the funeral provider and a subsequent 

dollar-for-dollar reimbursement by the customer. The 

Commission’s intention, in sum, is that this part of the “cash 

advance item” definition function to foreclose funeral providers 

from attempting to sidestep the strict letter of the Rule by using 

implied misrepresentations rather than express ones. 

In the absence of either the funeral provider’s express 

representation that an item is a “cash advance item” or implied 

representations that the item is procured for a particular customer 

at the funeral provider’s cost, a consumer, acting reasonably under 

the circumstances, would not believe that the amount he or she is 

billed for an item is the same as the amount the funeral provider 

pays its supplier. Indeed, such a belief would be contrary to a 

reasonable consumer’s most elementary experience in the 

everyday marketplace. In these circumstances, the funeral 

provider is generally acting like any retailer who purchases goods 

or services from third parties for resale to consumers. 

The Commission believes that reasonable consumers generally 

understand that the price charged by a retail seller – including 

funeral providers – includes profit.9

 Thus, the corrective 

disclosure about cash advance items that § 435.3(f)(2) requires is 

unnecessary when the funeral provider does not mislead the 

customer through either express representations that the item is a 

“cash advance item” (or alternative formulations), or implied 

representations that the customer is paying no more for an item 

than the amount the funeral provider paid for it. 

9 As the Commission noted in the Statement of Basis and 

Purpose for the original Rule, “The Commission does not suggest 

that it is improper for funeral providers to profit on items obtained 

from third parties. It is clear that it is wholly proper for providers 

to do so.” 47 Fed. Reg. 42278 (Sept. 24, 1982). 
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It is worth noting that the text and structure of the Rule overall 

reflect the fundamental distinction between cash advance items 

and non-cash advance items. For items that are typically non-cash 

advance items, the Rule requires disclosure of the retail price of 

specified goods and services offered for sale by a funeral 

provider.10 An obvious example is the Rule’s treatment of 

caskets, for which it requires a separate price list containing only 

the funeral provider’s retail price.11 Therefore, items that must 

appear on a funeral provider’s price list12 would not trigger 

10 Funeral providers must “[i]nclude on the [general] price list, 

in any order, the retail prices (expressed either as the flat fee, or as 

the price per hour, mile or other unit of computation) and the 

other information specified below for at least each of the 

following items, if offered for sale . . . .” The rule then lists: 

forwarding of remains to or receiving remains from another 

funeral home; direct cremation; immediate burial; transferring 

remains to the provider’s premises; embalming and other 

preparation of the body; use of the provider’s facilities and staff 

for viewing, for a funeral ceremony, or for a memorial service; use 

of the provider’s equipment and staff for a graveside service; the 

use of the provider’s hearse or limousine; and the provider’s basic 

services fee. 16 C.F.R. § 453.2(b)(4). (Emphasis supplied.) 

11 “The funeral provider must offer the [casket price] list upon 

beginning discussion of, but in any event before showing caskets. 

The list must contain at least the retail prices of all caskets and 

alternative containers offered which do not require special 

ordering, enough information to identify each, and the effective 

date for the price list.” 16 C.F.R. § 453.2(b)(2)(i). (Emphasis 

supplied.) 

12 Section 453.2(b)(4)(i)(C) of the Rule sets forth the 

minimum information that must be included on a funeral 

provider’s general price list. These items include: caskets; outer 

burial containers; forwarding of remains to or receiving remains 

from another funeral home; direct cremation; immediate burial; 
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the cash advance disclosures unless the funeral provider expressly 

represents the items as “cash advance items” (or alternative 

formulations) or represents by implication that items can be 

procured on behalf of the particular customer and provided at the 

same price the funeral provider paid for them. 

Accordingly, the Commission wishes to be clear that the term 

“cash advance item” does not apply to every good or service that a 

funeral provider obtains from a third party. This overbroad 

interpretation, which potentially brings within its scope every 

component good or service of a funeral, does not comport with the 

Commission’s intention in promulgating the “cash advance” 

provisions of the Rule. Rather, based on a review of the original 

Rule and the rulemaking record, the Commission finds that the 

term “cash advance item” in the Rule applies only to those items 

that the funeral provider represents expressly to be “cash advance 

items” or represents by implication to be procured on behalf of a 

particular customer and provided to that customer at the same 

price the funeral provider paid for them. 

transferring remains to the provider’s premises; embalming and 

other preparation of the body; use of the provider’s facilities and 

staff for viewing, for a funeral ceremony, or for a memorial 

service; use of the provider’s equipment and staff for a graveside 

service; the use of the provider’s hearse or limousine; and the 

provider’s basic services fee.