In an unusual move for a death care regulator, the Federal Trade Commission weighed in on the preneed turf war that has erupted between Pennsylvania funeral directors and StoneMor Partners. At the request of the chairman for a Pennsylvania legislative committee, the FTC responded with a detailed letter warning against various bill proposals aimed at curtailing preneed sales by cemeteries. The FTC letter addressed preneed trusting and delivery procedures by cemeteries, and concluded that proposed legislation could lessen competition between cemeteries and funeral homes, and cause higher prices to consumers without providing any countervailing consumer benefits.
The Commission acknowledged that raising the trusting requirement for cemetery preneed sales from 70% to 100% would preclude the cemetery from recovering overhead, selling and administrative expenses associated with preneed sales. This would discourage cemeteries from using trust funded preneed, and that would likely increase the costs of serving the pre-need market, and deny the consumer the lowest possible price and a full array of pre-need alternatives and pricing options. The FTC went on to recommend that the General Assembly consider alternatives to raising the trusting requirement for cemeteries. What the FTC should have suggested, but failed to, would be to lower the trusting requirement imposed on Pennsylvania funeral homes so that they could offer more preneed alternatives to their families. Pennsylvania’s 100% trusting requirement for funeral contracts limits the proactive preneed programs to using insurance that pays sufficient commissions to fund preneed overhead, marketing and selling expenses.
But, the environment in Pennsylvania is far more complicated than just the trusting requirement. For the background of those issues we would refer readers to two articles published by the Daily Times News: Voices Raised About Catholic Cemeteries and Funeral Directors Cry Foul Over StoneMor. We will take a look at the constructive delivery issues in a future blog post.