Washington Report 122002

Date Published: 
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

Funeral home owner and ICFA Board Member Mark Krause testifies at the Federal Trade Commission office in Washington, D.C.


ICFA Testifies at FTC Public Workshop on Internet Casket Sales

by Robert M. Fells, Esq.
Signaling the federal government's increasing concerns with electronic commerce over the Internet, or "e-commerce," the Federal Trade Commission convened a first-of-its-kind public workshop to investigate possible anticompetitive restrictions in state laws and industry practices affecting online sales.
The workshop was held over three days, October 8-10, with various panels discussing the Internet sale of a variety of products, including caskets. The ICFA participated in the casket sales panel and was represented by Mark Krause, a funeral director and member of the ICFA Board of Directors. Krause also operates a casket store in a Milwaukee, Wisconsin, shopping mall.
The FTC staff asked whether any states prohibit casket sales over the Internet and whether there are any studies documenting the volume of online caskets sales. The panelists agreed that Internet casket sales are such a new and emerging area that studies are not available. On behalf of the ICFA, Mark Krause said there appear to be no state laws restricting online casket selling, but approximately 14 states have laws allowing only licensed funeral directors to sell caskets. While these restrictions may not extend to out-of-state online casket sellers, the existence of these laws may have a chilling effect on Internet sellers.
The ICFA raised concerns that casket retailers that are neither funeral homes nor cemeteries but sell caskets preneed would not be subject to the trust fund requirements most states have to assure delivery of goods and services. "The ICFA strongly recommends that reasonable trust deposit requirements in an amount sufficient to defray the casket provider's costs should be mandatory for all casket retailers, whether through online or 'brick and mortar' selling."
Other panelists represented the National Funeral Directors Association, the National Casket Retailers Association, the Maryland Office of Cemetery Oversight and an attorney for the Institute for Justice, which has filed litigation in federal courts to overturn state laws allowing only licensed funeral directors to sell caskets.
Independent casket retailers claimed that unfair trade practices by funeral homes and casket manufacturers were undermining their ability to compete. Krause said that his casket store would be financially unprofitable if its merchandise were not supplemented by the funeral services from his nearby funeral home. Later, Krause said two other funeral homes that operate casket stores in different market areas experienced the same problem. The ICFA urged the FTC to study the economic model under which independent casket sellers operate in order to determine whether the merchandise offered is too narrow in scope to defray operating expenses and be profitable.
Another panelist, an economics professor, discussed a survey he did of state casket laws, saying that states that allow only licensed funeral directors to sell caskets have lower cremation rates than states with no such restrictions. In post-hearing comments, the ICFA suggested the survey results may be skewed because the study specifically ignored religious and socioeconomic factors in determining consumer cremation preferences. For example, the Wirthlin surveys commissioned by industry trade associations, including the ICFA, found that consumers with higher income and educational levels prefer cremation.
NFDA recommended that all Internet casket sellers be covered by the FTC Funeral Rule. Both the ICFA and the independent casket retailers questioned whether there are enough consumer complaints related to online casket sales to justify expansion of the rule.
The NFDA's written comments quoted the Tennessee Funeral Board's position that only licensed funeral directors should sell caskets, apparently in agreement with that viewpoint. In a related development, the FTC had filed a "friend of the court" brief in an Oklahoma federal court stating that the Funeral Rule was not intended to restrict casket sales only to licensed funeral directors.
FTC staff is currently reviewing the public workshop testimony, and it is unclear what further action the commission may take in the future. Comments filed by the public and by all the parties to the casket panel discussion can be viewed on the FTC Web page. The ICFA's post-hearing comments to the FTC can be viewed by clicking here.