The Death Industry Is Getting Away With Murder

How funeral providers are ripping off grieving American families.

When Lamar Hankins’ parents bought four cemetery plots in 1960, they believed they were securing a place for themselves and their two children to be buried forever. The location seemed ideal: Greenlawn Memorial Park—just a few miles from Hankins’ childhood home of Port Arthur, Texas—had been family-run since 1898.

In 1998, however, a conglomerate called Service Corporation International (SCI) bought out the cemetery. Because SCI did not change its name, Hankins and his family didn’t know about the sale until they showed up two years later to bury Hankins’ brother. At first, Hankins didn’t think much of it. He had a good rapport with the longtime owner, who still worked there, and the burial went without a hiccup.

But after the owner left, his next experience there was different. Hankins returned following the deaths of his mom in 2008 and his dad in 2011, when SCI told him that the state of Texas required him to pay a “second interment fee” to combine their ashes into one cemetery plot. It also said he had to purchase a polystyrene covering for his mother’s remains, which together totaled $1,200.

To the benefit of cemeteries and funeral homes, many grieving Americans just accept these extra charges in order to put their loved ones to rest. If, like Hankins, their family already purchased a cemetery plot, the temptation to pay the fees and move on is strong. But Hankins was primed to fight back. He had worked as a funeral consumer advocate since 1993, so he knew the cemetery was lying to him. Texas had no such burial requirements.

He complained to SCI, but when they didn’t budge, he decided to move his family to another cemetery. “I wasn’t gonna pay them any extra fees,” he recently told me. “I was just done with them.” (Greenlawn did not respond to a request for comment.)

While SCI’s actions were clearly exploitative, they likely don’t violate federal law. According to Hankins, the company was within its right to add those costs. In fact, the contract for the cemetery plot his parents bought included a provision that allowed Greenlawn to change the terms at any time—language that courts have upheld so long as the changes are “reasonable.”

Hankins, however, argues that death-care companies are essentially given free rein. “They don’t have to have a reason,” he said. “It’s their cemetery, and because they’re not regulated, they can do anything they want. They don’t care about anything except making money.”

Companies like SCI often get away with taking advantage of bereaved consumers because of tenuous oversight. In 1984, the Federal Trade Commission implemented the watershed Funeral Rule, one of the only federal regulations on the death-care industry, which is designed to curb hidden fees by requiring “funeral providers” to share the prices of their services by phone or in person. But it has some major loopholes: for one, many cemeteries—unless they also sell funeral services—aren’t subject to its mandates. What’s more, the statute is grossly outdated: it contains no mention of the internet.

The death-care industry is a small world. About 20,000 to 25,000 funeral homes and roughly 10,000 cemeteries handle the more than 2.8 million deaths in the U.S. each year. The industry is also rapidly changing: last year, 53 percent of Americans who died opted for cremation over traditional burial, nearly double the rate in 2003 (29.6 percent).

While the shift toward cremation is costly for funeral homes—SCI estimates that for every one percent of customers who opt for cremation, it loses $10 million in revenue— there is another market trend that is even more precarious for the death industry: an increasing consumer desire to “shop around” for funeral services.

With 1,481 funeral homes and 481 cemeteries, SCI is by far North America’s largest death-care corporation, claiming an overall market share of 16 percent. For funeral homes specifically, their market share is even higher: SCI earns 22.4 percent of all funeral profits in the United States.

But unlike major chains in other industries, SCI tends to charge more than virtually all of its competitors. One study from the Consumer Federation of America found that SCI prices were “47 to 72 percent higher” than other funeral homes and cemeteries.

Exorbitant costs for services might hurt your run-of-the-mill business, but SCI has a unique blanket of security. Increased costs hardly register in the death-care world. That’s partly because customers shop with a different mentality when grieving. “Most people, when they’re making that purchase, either go where their family has always gone, or they just go somewhere close because they’re in a moment of grief,” said Virginia R. Beard, a sociologist at Longwood University in Virginia. “They’re not shopping around.”

While the Funeral Rule—which the FTC plans to review this year for the first time in more than a decade—has facilitated a modest rise in comparison shopping by making funeral prices more available, it isn’t foolproof. A Funeral Consumers Alliance survey discovered that just 27 percent of U.S. funeral homes with websites posted even a single price online.

“They want to keep their prices hidden because an ignorant customer is an easier customer to exploit,” the group’s executive director, Joshua Slocum, told me. “It is easier for them to sell a big funeral to a customer who has no idea of what the competition is charging and no idea what SCI is charging until they actually show up.”

California is the only state that requires funeral homes to list their prices online. But the law mandating that practice, passed in 2013, contained an exception pushed for by the California Funeral Directors Association. It allowed funeral homes to write “price by request” instead of the actual price. All of the funeral homes that took advantage of that option, according to the same Funeral Consumers Alliance survey, were owned by the same company: SCI.

The cost of death services has long exasperated Americans. In December 1856, a New York Times editorial argued that “nobody that is not comfortably off in this world’s goods can afford to die” because “to pass into the hands of the undertaker is positive bankruptcy.” A century later, Bill Davidson noted in a 1951 Collier’s article that “while the cost of living has risen 347 percent in the last 122 years, the cost of dying has rocketed as much as 10,000 per cent.”

There have been myriad reasons why. The National Funeral Directors Association, for one, actively blocked its members from advertising their prices until 1968. But, as Jessica Mitford found in her 1963 investigation The American Way of Death, the industry was uniquely successful in asserting control over state legislatures.

Mitford’s book inspired federal regulators to crack down on predatory pricing. In a June 1978 report, the FTC discovered that funeral homes and cemeteries were “refusing to quote prices over the telephone, refusing to maintain or distribute price lists and refusing to cooperate with funeral price surveys.” Fewer than a quarter of funeral homes, the regulators realized, provided prices on request. “The lack of price information and price competition has caused consumers to pay higher-than-necessary prices for funerals,” they wrote.

When the Funeral Rule later went into effect, it also banned funeral homes from telling consumers that federal law required bodies to be embalmed—a common misconception that funeral directors have historically used to turn a profit. There is no similar federal ban on extraneous cemetery charges, like a second internment fee.

Still, funeral homes regularly flout these rules. Since 1996, the FTC has inspected 3,200 of their facilities and found that 559 were far enough out of compliance to sanction them. A recent NPR report pegged the number of violations as high as 50 percent in certain regions.

If there’s anything a review of the Funeral Rule could accomplish, it might be to galvanize the FTC to update the scope of the regulation.

The last review was in 2008, when the commission made no changes after its public comment period. But this year may feature a more robust debate. An FTC presentation in February noted that the failure of funeral homes to list prices online was among its “Hot Issues.” Indeed, advocacy groups, like Slocum’s, have made clear that they plan to push for an online pricing provision. At the same time, the National Funeral Directors Association and SCI and are preparing to vigorously oppose any such rule.

That is hardly a surprise. The SCI approach has become so successful, there’s a Wall Street truism that SCI stock never dies. “The reality is that the grieving people who go to the SCI funeral homes and pay for funerals, those are not SCI’s customers,” Slocum said. “SCI’s customers are their investors.”

Few consumers, after all, have probably ever heard of SCI. When the company buys out a new funeral home or cemetery, it keeps the original name, so patrons often mistake it for a local, family-run business.

“For other corporations that are trying to get you to come in the door, it’s all about brand recognition,” said Beard, the Longwood professor. “You have the McDonald’s golden arches, the Nike swoosh. SCI has taken a very different approach. They keep the name of the family funeral home so people think that they’re dealing with this family that’s owned a funeral home for 56 years.” She went on, “The general consumer is not going to know, ‘Oh, I’m walking into a chain, basically a McDonald’s of funeral homes right now.’”

Market consolidation isn’t the only reason some funeral homes have been able to rip off America’s bereaved. It’s the very business model these companies have adopted, targeting grieving people who don’t take the time to compare prices and services the same way they would for buying a new lawn mower.

Private attempts to change this system have fallen flat. Two comparison search engines, Funeralocity.com and Parting.com, have cropped up to collect prices from funeral homes and put them online. But consumers just aren’t using them.

According to Scott Gilligan, an attorney for the National Funeral Directors Association, one of his organization’s surveys found that few consumers contact more than one funeral home for price information. “For the last 30 years, one of the questions we asked is, ‘What is the most important reason you pick the funeral home you picked?'” Most respondents, he said, cite previous experience, location, and reputation. “And usually, fifth, sixth place is price.”

Regulations can’t force consumers in need of death-care to sleuth out fair prices. But requiring greater price transparency is important in and of itself, especially in an industry that has built itself off of opacity. People in the throes of grief should at least know their range of options. But despite online shopping becoming the norm in nearly every other sector, the death industry maintains its aversion to technology. 

“I think the Funeral Rule is archaic,” said Beard. “If I want to buy a pair of shoes or a dress, I can go online and, in the click of a button, figure out what’s the cheapest.”

Making arrangements for a loved one’s death shouldn’t be any different.

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Michael Waters

Michael Waters is an editorial intern at the Washington Monthly and a student at Pomona College.