Each year, American consumers arrange more than 2 million funerals at a total cost of billions of dollars. During 1997, according to Conning & Company, an insurance industry publications and research firm, almost 27,000 funeral service providers, such as funeral homes and crematories, had sales revenue of about $10 billion. The National Funeral Directors Association (NFDA) reported that in 1997, the average adult funeral cost about $5,500, including casket and vault. Table 1 shows NFDA data on the average cost for the most commonly selected funeral items as of January 1997. NFDA also maintains some data on the cost of final disposition, such as burial and cremation. For example, in 1997, according to NFDA, the cost of an individual grave space ranged from about $150 to over $1,900, and the cost of opening and closing the grave ranged from $125 to $750 for nonovertime work. In addition, according to NFDA, the cost of cremation ranged from $75 to $395; a bronze urn to hold cremated remains cost from $230 to $1,800; and in-ground placement of an urn ranged from $450 to $1,250. Although the variety of choices and the range of costs make it difficult to precisely estimate the cost of a typical funeral and burial, AARP estimated the cost in 1998 to be about $8,000 and as much as $10,000 in some markets. Furthermore, AARP reported that the cost of funeral and burial arrangements is increasing. In fact, according to data collected by the Bureau of Labor Statistics (BLS), funeral expenses have grown faster than the rate of inflation. Figure 1 shows the extent to which funeral expenses have exceeded the rate of inflation, as indicated by the consumer price index (CPI), since 1990. FTC has a major role in protecting consumers during death care transactions. The FTC Act declares unfair or deceptive acts or practices to be unlawful when they affect commerce. Under its authority to promulgate rules, FTC has issued a trade rule entitled Funeral Industry Practices—more commonly called the Funeral Rule. The Funeral Rule was designed to (1) ensure that consumers receive the information necessary to make informed purchasing decisions and (2) lower existing barriers to price competition in the market for funeral goods and services. The Funeral Rule, which became fully effective in April 1984, declares it an unfair or deceptive act or practice for funeral providers to (1) fail to furnish accurate price information to funeral consumers, (2) require consumers to purchase items they do not want to buy, and (3) embalm deceased human remains for a fee without authorization. The Rule further declares it a deceptive practice for funeral providers to make certain misrepresentations, such as that embalming is required by law when it is not, that caskets must be used for cremation, or that funeral goods and services have certain preservation and protection capabilities. To prevent those practices, providers of funeral goods and services are to, among other things, (1) give detailed printed information about prices, including certain legal disclosures, to consumers who inquire about funeral arrangements; (2) allow consumers to select only those goods and services they desire (rather than offering goods and services only in predetermined packages); and (3) seek express approval before embalming the deceased for a fee. Since the Funeral Rule’s inception, it was amended once in 1994. In April 1999, FTC announced that it was beginning to review the Funeral Rule to determine if it should be further amended, maintained as is, or repealed. Appendix I contains a copy of the Funeral Rule that was in effect as of July 1999. State and local governments also have a role in regulating and overseeing funeral homes and cemeteries. Commercial cemeteries are regulated primarily at the state or local level. According to a 1998 book on making funeral arrangements, funeral homes and cemeteries are regulated by state boards as well as other agencies, including offices of attorneys general and departments of health and insurance. In addition, the book points out that licensing and minimum education requirements for funeral directors and embalmers differ from state to state. State laws also are the primary source of regulation over preneed funeral contracts. According to a 1996 law journal article, although every state, with the exception of Alabama and the District of Columbia, has enacted some sort of regulatory action to oversee preneed contracts, the laws vary from state to state.Examples of areas of differences in state statutes include the funding options available to consumers, limitations on where proceeds from preneed funeral contracts may be invested, and the percentage of preneed sales proceeds required to be placed in trust. One of the major changes in the nature of death care industries is the increase in preneed contracts. Conning & Company estimated that the preneed funeral market, including preneed trust deposits and preneed insurance contracts, amounted to over $21 billion in 1996. Another change, according to FTC, is that cemeteries and casket retailers are now competing with traditional funeral providers, such as funeral homes, in the sales of caskets and other funeral goods and services. At the same time, an NFDA official said that there has been a movement away from independent family-owned funeral homes and a movement toward corporate or publicly owned homes. And according to reports in the media, there is a growing incidence of funeral homes and cemeteries being owned by the same few organizations. To meet our objectives, we did our work primarily at FTC in Washington, D.C., and Dallas, TX; and at state funeral and cemetery regulatory offices in five states—California, Florida, Maryland, New York, and Texas. As agreed with your offices, we focused our efforts on five states because of time and staffing constraints. We selected California, Florida, New York, and Texas because these states had the highest number of deaths of all 50 states in 1998. We selected Maryland because it recently had established a state regulatory agency with oversight responsibility for all but certain religious nonprofit cemeteries and because of Maryland’s close proximity to our headquarters. In addition, we interviewed selected national representatives of industry trade and regulatory associations and consumer advocacy groups that deal with death care issues (see app. II for the organizations of the representatives and officials we spoke with). From each of these organizations we collected and reviewed available documents on such matters as issues affecting death care industries and consumers, sales and revenues of death care providers and average costs of death care goods and services, and federal and state regulatory issues. We also did a literature and Internet search for information on issues affecting death care industries and consumers and reviewed pertinent books, magazines, trade publications, and periodicals regarding consumer concerns with related death care industries. We did our work between July 1998 and July 1999, in accordance with generally accepted government auditing standards. Appendix II discusses our objectives, scope, and methodology in more detail. We requested comments on a draft of this report from FTC’s Chairman. FTC’s comments are discussed near the end of this letter and are reprinted as appendix VI. We also contacted responsible officials from the regulatory bodies in the five states to verify the information on regulation, oversight, and consumer information in this report. We made technical changes as appropriate. Comprehensive information on consumer complaints that would indicate the overall nature and extent of problems that consumers experienced with various aspects of death care industries was not available for a number of reasons. One reason is that consumers can complain to a variety of organizations about death care issues and can complain to more than one organization about the same incident. Another reason is that no single organization or combination of organizations collects and compiles all complaints into one database. Also, each organization can have its own way of compiling and maintaining complaint information, which would confound efforts to compile and analyze aggregate complaint data. Although the organizations we contacted were able to provide some data, the number of complaints about death care was generally low compared to complaints about other categories of consumer issues. Among the reasons these organizations gave for the relatively low number of complaints was the personal or emotional component of the death care situation. Consumers can complain to a number of organizations about death care issues—from FTC at the federal level, to funeral licensing boards at the state level, to local consumer groups. Thus, it is difficult to determine the universe of organizations accepting complaints. In addition, consumers can lodge the same complaint to more than one of these organizations. For example, although consumers can lodge a complaint with FTC, intervening in individual disputes is not something FTC does. Instead, FTC refers consumers to other organizations for complaint resolution. Thus, FTC officials said that a single complaint could be contained in the files of multiple organizations. At the state level, consumers may complain to a variety of organizations. For example, in Texas, a consumer may complain to the state’s office of the Attorney General and also to regulators responsible for any particular aspect of the death care industry, such as the Texas Department of Banking, which is responsible for regulating cemeteries and preneed funeral arrangements; or the Texas Funeral Service Commission, which is responsible for regulating funeral providers. Consumers also can register complaints with nongovernmental organizations, both those that handle consumer complaints in general and those that specialize in death care matters. One of the best-known general consumer complaint organizations is the Better Business Bureau (BBB), which accepts complaints and can intervene on behalf of consumers through its local bureaus. One specialized organization that accepts complaints only about death care is the Funeral Service Consumer Assistance Program (FSCAP), which provides consumer information, problem-solving resources, and recommendations for action concerning funeral services. According to FSCAP, it attempts to work with consumers to resolve their concerns, but if it cannot, FSCAP officials refer them to the appropriate state or local government agency.