National Funeral Directors & Morticians Association, Inc. Office of the President 1800 E. Linwood Avenue (6) BOARD EXIST STATEWISE. IT IS MY THINKING THAT A FEDERAL CON TROL COULD BEST SERVE THE INTERESTS OF THE CONSUMER BY ESTABLISH ING GUIDELINES RATHER THAN BY REGULATORY LAWS. LAWS AND MORE LAWS ARE HAVING A TENDENCY TO EVOKE RESENTMENT IN OUR PUBLIC SECTORS, WHICH IN TURN CREATES A CLIMATE OF INTRIGUE AND DIS- HISTORICALLY, THE FUNERAL BUSINESS, MORE THAN OTHER BUSI NESSES, HAS BEEN THOROUGHLY POLICED BY PUBLIC OPINION. THE COMPETING MEMBERS, DID NOT ARRIVE AT THE SUMMITT BY ROADS OF BUILT UPON OUR REPUTATIONS AND IS CALLED FOR BECAUSE OF PREV IOUS SERVICE RENDERED A FRIEND OR RELATION. VERY SELDOM DOES MEDIA ADVERTISING BECOME THE SOLE SOURCE OF OUR BUSINESS, MOST OFTEN IT IS BY REFERRAL. FOR THESE TWO HUNDRED YEARS SINCE OUR FOUNDING, AMERICA HAS SET THE PACE FOR SOPHISTICATED AND CIVILIZING CULTURES. WE ARE KNOWN THROUGHOUT THE WORLD FOR OUR HUMANENESS TO THE LIVING National Funeral Directors & Morticians Association, Inc. Office of the President 1800 E. Linwood Avenue (7) AND THE DEAD. I FEAR THAT SHOULD THE FUNERAL SERVICE BECOME OVERLY-REGULATED, OUR SOCIAL CUSTOMS WOULD BECOME STRANGELY COLD AND INDIFFERENT. HONORABLE CHAIRMAN, I SINCERELY BELIEVE THAT MUCH OF WHAT ARD PRACTICE. WHEN COMPLAINTS OR CHARGES ARE MADE BY A CONSUMER AGAINST A FUNERAL DIRECTOR WHO HAS NOT SHOWN HIMSELF TO BE ETHICAL, THEN I THINK THAT CASE SHOULD BE DEALT WITH ON ITS OWN MERITS AND PROPER ACTION SHOULD ENSUE. BUT I CANNOT SUPPORT THE THEORY THAT 4,200 BLACK FUNERAL PRACTICES AND THAT THEY NEED THE WEIGHT OF THE FEDERAL GOVERNMENT TO POLICE THEIR ACTIVITIES. THE NFD&MA TAKES THE POSITION THAT THE RULE CONSTITUTES AN UNFAIR RESTRAINT ON THE FUNERAL SERVICE AND THAT IT DISCRIMINATES AGAINST THE SERVICE BECAUSE THE COMMISSION DOES NOT APPLY THE [Correspondence from Hon. William L. Hungate, dated July 30, 1976, to William P. Golden, Federal Trade Commission, follows:] Mr. WILLIAM P. GOLDEN, Esq., JULY 30, 1976. Bureau of Consumer Protection, Division of Special Projects, Federal Trade Commission, Washington, D.C., DEAR MR. GOLDEN: At last week's FTC hearing, I was asked to provide my personal opinions concerning sections of the proposed rule which I might have some questions on. As you know, I am very concerned about the effect this regulation would have on the small funeral director. If passed as is, I am sure that many small funeral homes would have no choice but to close their doors. This would only lead to more larger homes or what I prefer to call "funeral supermarkets." I would be more than happy to outline some of my personal concerns with the various sections of this regulation: Subsection P defines a memorial society. I would like to know if it is the Commission's intent to regulate legally memorial societies in this same proposed rule. Since a memorial society is defined, I would assume they would be covered, for example, by Section 453.3 dealing with misrepresentations. The Subcommittee received the impression during the hearings that the memorial societies felt they were not covered by the rule. If they are not, I find this rather strange, since actually they are a funeral home's competitor in a sense and certainly have a great deal of power in a community over the image and business of a funeral home merely by their oral representations to society members. SECTION 453.2 EXPLOITATIVE PRACTICES Subsection A deals with embalming without permission. The inference here seems to be that this procedure is an exploitative practice by the funeral director for monetary gain. I have serious reservations about this. For one thing, if you don't embalm, there had better be refrigeration facilities available. It is my understanding that this is just not the case in most small funeral homes. It would be a substantial financial burden if they had to acquire such facilities. Also, obtaining written or oral permission may not be the easiest thing to do. What about a sudden death in a distant location? What about an accidental death? Subsection D deals with profit on cash advances. I think very few people involved in the trauma of a funeral have either the time or the inclination to arrange for their own flowers, pallbearers, singers, obituary notices, etc. This seems to me to be a service part of the funeral and I see nothing wrong with a reasonable profit for the director. It costs the director time and manpower to arrange for all these items. Why should he not be adequately paid for his services? I have previously, before the Commission, stated my views on Subsection A (1). I have great reservations about this subsection and the question of freedom of speech. I also question the enforceability of this section. Subsections 2 and 3 seem to me to be breaking new ground in the regulation of businesses. Why should the funeral director be responsible for not only providing all the laws and public health requirements dealing with funerals, but be required as well to explain them fully? SECTION 453.5 PRICE DISCLOSURE Subsection A requires price information over the telephone. I am basically against this, no matter what we are discussing. Discussion of things like this over the telephone just leads to confusion. I should think this would be especially true in the case of funerals. Also, other questions would arise; for example, do you have to have 24-hour telephone service? What about the time and manpower this would use? For example, someone calls up and says, "Give me the rundown on your cheapest funeral." The rest of this section just involves such a paperwork burden for the small funeral home that I really don't see the point of all of it. Included in this is an itemized price list. If you have an itemized price list, the price of each item must include some overhead costs. This would make it impossible to lower prices for less fortunate customers, unless, of course, you just wanted to make it a charity funeral. I don't think I need to discuss the problems this would cause, especially in the midst of a funeral. I am especially intrigued by the whole itemization argument, since the impression I have received is that the consumers feel funerals cost too much. In my experience, itemizing always leads to higher costs due to basic human nature. New Jersey has itemization and funeral directors and consumer advocates alike seem to agree that people are spending more than ever on funerals in that state as a result. Retroactively, itemization with allocation of overhead costs may work fine. It might also work for big business where the volume is such that you could safely rely on statistics and fulfillment of the law of averages. However, as to small business and the requirement to provide these prospectively, which is what you demand, the situation becomes almost impossible. How many people will die in a town of 3,000 in the next three months? If there are two or three funeral homes in that town, after you estimate the prospective deaths, now estimate how many will go to each of the respective homes. While a large firm is more apt to have the statistical averages come true than a small one and is also in a better position financially to survive a miscalculated year, such factors could destroy a small business. SECTION 453.7 RETENTION OF DOCUMENTS Three year retention of all the documents which will be required by other sections of the rule will constitute a substantial financial burden to the small funeral director. In fact, it probably will require at least one more new employee per funeral home just to prepare the documents, keep them updated and keep the files in proper order. I would like to make some final comments on this proposed rule. An important point concerning the financing of funeral costs has not been discussed in detail, to my knowledge. The purchase of a funeral is unique when compared with the purchase of a color TV, automobile, etc. The Subcommittee learned from statistics supplied by the funeral directors and conversations with funeral directors from states throughout the nation that there are several means of financing a funeral. Quite a few funeral directors, for example, give a cash discount if the cost is paid in full immediately. The majority of funeral directors use a sales contract which very often provides for no finance charge until 90 to 120 days after the funeral has taken place. Furthermore, funeral directors from small towns and rural areas have told us that many of their funerals are conducted on a "pay me when you can" basis. People will pay so much a week or so much a month or, in a few cases, whenever they have some money. This process can often take one year or longer (examples of a funeral director having to wait for payment would be the settlement of an estate and the workings of a bureaucracy, such as the payment of a lump sum to veterans). I feel these various methods of paying for a funeral are significant if we are going to conduct a dialogue on the cost of a funeral and, even in some cases, attempt to relate it to other consumer costs. It appears that the Commission, with some allied groups, has run a press campaign for these proposed regulations, intimating widespread rip-offs by funeral directors. As one example, American Association of Retired Persons alleged that they had received over 15,000 complaints. The Subcommittee asked to see them and found there were less than 500. The Commission regulation advocates then shifted gears and said, "Oh, you don't need complaints to make regulations." They then asked, "Why not have these regulations?" This placed the burden of proof exactly backwards. In a democracy, it is not required that the public prove why the government should not regulate them. The burden is on the government to show why they should issue regulations against their citizens. We then hear another argument, which is that we are getting more big business and less small business in this industry anyway. Therefore, it seems to be argued, it makes no difference even if these regulations accelerate the demise of small business. The logic of this argument could be applied to the energy crisis. Since each year our reserves of gas and coal become less, there is really no need to conserve fuel since it will ultimately run out anyway. This is the ridiculous thesis these regulations would advance. At the hearings, after it was established that in certain major cities (New York, Chicago, Philadelphia, and St. Louis), 90 percent of the black funerals are held at night, advocates of these regulations shifted gears to say that this was irrelevant. Its relevance lies in the fact that it shows a complete unfamiliarity with a vast segment of the funeral industry, while having no hesitancy in regulating it. Just recently, at a Subcommittee field hearing, we were told that an independent trucker might pass by a gas station selling fuel for 30 cents a gallon. A few miles down the highway, the next gas station would be charging 49 cents a gallon. To you and me, the difference may seem inexplicable, but its significance lies in the fact that there is a state line and a weigh station between the two fuel stops. Regulators attempting to alleviate truckers' problems would not think twice about this situation, if they did not know the industry. Again, a situation which on the surface appears irrelevant may be very relevant indeed. Mr. Golden, I am sending several copies of this letter along with the original. I would appreciate it if you would see that a copy is given to all interested parties and also that you make the original letter a part of the official record. Thanking you in advance for your cooperation, I am (By Hon. Martin A. Russo, of Illinois, in the House of Representatives) Mr. Russo. Mr. Speaker, the House Small Business Subcommittee on Regulatory Activities has held a series of hearings this year on proposed trade regulations developed by the Federal Trade Commission affecting the funeral industry in the United States. Under the astute leadership of my esteemed colleague, the Honorable William Hungate, the subcommittee has discovered a number of serious methodological shortcomings with the preparation of the FTC proposed regulations. In addition, the basic premise of the regulations has tended to cast a suspicious eye on over 22,000 of our Nation's smallest businessmen. Although our subcommittee has taken no formal position on the proposed FTC rulemaking, it is my firm hope and belief that the Federal Trade Commission will utilize our hearing record and pay heed to our findings. It is my personal view that the evidence uncovered by the subcommittee has failed to indicate the type of widespread fraud and abuse that would necessitate such heavyhanded Federal regulation. At this point, Mr. Speaker, I would like to insert the recent testimony submitted to the Federal Trade Commission by Chairman Hungate and ranking minority member Representative John Y. McCollister. I fully support the findings and statements of my two colleagues. The testimonies follow: TESTIMONY OF CONGRESSMAN WILLIAM L. HUNGATE I. SUBCOMMITTEE INTEREST The Subcommittee on Activities of Regulatory Agencies of the House Small Business Committee has investigative jurisdiction over the administrative procedures and regulations of all federal regulatory agencies as they affect small business. In the fall of 1975, the Subcommittee began receiving a large volume of mail complaining about the Federal Trade Commission's proposed trade rule for the nation's funeral industry. Many of the letters complained generally about the rule, many more cited specific sections of the rule. Many more questioned the possibility of a significant paperwork burden if the rule were to be passed as is. Others questioned the basis for the Commission even proposing the rule. Others questioned whether the FTC Improvements Act authorized such expansion of FTC rulemaking jurisdiction. How many complaints had they received? How widespread was criticism of the industry? |