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Advice & More December 2014

Dollar Sense

Even Death Does Not Stop Pocket-Pickers: End-of-Life Scams and Pitfalls

By Teresa Ambord

Since many people feel the amount they spend on a loved one’s funeral is a reflection of their love for the deceased, it’s common to spend more than is affordable. That makes these people excessively vulnerable to high pressure tactics. To counteract that, back in 1984, the Federal Trade Commission passed the Funeral Rule, to prevent the funeral industry from taking advantage of people in grief.

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Like every industry, scam artists selling pre-need plans have learned to tap into ways to steal from customers. As a result, Americans have lost roughly $500 million from purchasing fraudulent pre-need plans. Unfortunately, pre-need plans are governed by state law (not the FTC Funeral Rule) and state laws vary.

Those inclined to steal have little or no concern for the victims, which is why they often prey on the vulnerable. Who is more vulnerable than a person who has just lost a loved one? Some scam artists use fake obituaries to lure in victims (see sidebar below). Others, unfortunately, are actually part of the funeral industry, or claim to be. That may mean high pressure, emotional appeals to get you to buy more than you need or can afford. Or it might mean selling pre-need plans that are sketchy, and possibly worthless. Since everyone has a 100% chance of dying someday and in the meantime, we all lose loved ones at some point, there is no shortage of victims. That’s why we need to be on the lookout for the unscrupulous thieves who perpetrate end-of-life scams.

 

When You Contract for Funeral Arrangements

You should know that most funeral homes are run by honest and deeply caring professionals. With that said, it’s also true that they are not doing this work for nothing. They are in business to make a profit and there’s nothing wrong with that. Often when problems arise with well-run funeral homes, it’s a misunderstanding, made worse by the emotional turmoil of the customer.

Some funeral homes may try to up-sell people trying to arrange a funeral. That’s neither illegal or immoral (up to a point), but it can be upsetting. People who study the funeral industry say a person selecting a casket is most likely to choose from among the first three caskets they are shown. That’s why some funeral directors will start by showing the most expensive items first. Not illegal but also… not nice.

Elderlawanswers.com says a modest casket costs $400 to $600, and range from there up to many thousands of dollars. Since many people feel the amount they spend on a loved one’s funeral is a reflection of their love for the deceased, it’s common to spend more than is affordable. That makes these people excessively vulnerable to high pressure tactics. To counteract that, back in 1984, the Federal Trade Commission passed the Funeral Rule, to prevent the funeral industry from taking advantage of people in grief.

Among the requirements the Funeral Rule places on funeral homes is that when you inquire face-to-face about the cost of arranging a funeral, you must be given an itemized price list of options.

This is also true if you contact them by phone, but only if you ask for the list. Also:

  • When you purchase a funeral and the related services, you must be given an itemized list of every charge.
  • The funeral home is prohibited from requiring you to purchase services which may be optional.
  • It is not mandatory that you purchase a casket from the funeral home that does the service.
  • And the funeral home cannot refuse to handle a casket purchased elsewhere, and cannot charge you more for their services if you don’t buy a casket from them. They can, however, offer discounts for purchasing one of their caskets.
  • They cannot require you to pay for services that are optional.

 

Best Advice

When you go to arrange a funeral, take a friend who is not emotionally involved. Let the funeral director know up front what your budget is, and ask to be shown caskets in your price range.

Even if they do not have the one you want, it’s probable that it can be ordered in time. Don’t agree to goods and services that you do not want or need. If the funeral home insists that you must purchase certain things, like memorial cards, ask to be shown a copy of the law that requires the purchase. If they can’t show you the written law, go elsewhere.

The Federal Trade Commission uses “undercover shoppers” to ensure that funeral homes are operating within the law. But in 2013, one in four funeral homes was found in violation of some sort. An FTC representative did indicate the violations were most often the result of sloppiness rather than an effort to deceive. That may mean you need to call it to the attention of the funeral home if you suspect a lapse. If, on the other hand, you suspect an outright deception, contact FTC.govand complain.

 

Prepaid Funeral Arrangements – A Fine Idea, But Be Careful

The desire to lift the financial burden from your grieving family when you pass away is a wonderful thing. Be sure that, whatever plans you make, you let your family or friends know of the arrangements and who to contact.

Before you pay out a penny or sign any contract, you need to do some serious homework, or ask your attorney to do it. Like every industry, scam artists selling pre-need plans have learned to tap into ways to steal from customers. As a result, Americans have lost roughly $500 million from purchasing fraudulent pre-need plans. Unfortunately, pre-need plans are governed by state law (not the FTC Funeral Rule) and state laws vary.

 

There Are Honest Pre-need Plans

Don’t assume that there are no legitimate pre-need plans. In fact, attorneys sometimes urge clients to purchase these arrangements as a legitimate way to deplete the resources of someone who needs to qualify for Medicaid. If this is something you choose to do, ask your attorney to help you find a reputable funeral home. To avoid falling prey to a worthless prepaid plan, ask these questions:

  • If you retire out of state, will your prepaid funds be honored? These plans are governed by state law, which could mean the terms of the plan will not transfer out of state, or if the plan does transfer, there may be added cost.
  • What will happen to your funds if the funeral home goes out of business?
  • Is the plan price locked in? If it isn’t your loved ones might get hit with unexpected charges after you are gone.
  • What becomes of the interest income on money that you’ve prepaid and is it put into a trust account?
  • Can you cancel the contract and get a full refund if you change your mind?

If you believe you have been victimized by a funeral home or a pre-need fund, contact FTC.gov, or your state attorney general office to file a complaint. You can also contact your local Better Business Bureau (BBB.org) for help. Find more information at: Elderlawanswers.com/10-facts-funeral-directors-don39t-want-you-to-know-3379.

 

SIDEBAR: Fake Funeral Notices

Funeral-related scams do not all arise from funeral homes. Thieves have been known to steal the logo of a legitimate funeral home, to create and distribute what appears to be a real funeral notice. I’ve received several of these by email. Some say “Funeral Notification,” some say, “Passing of Your Friend,” or like the one below, which was an actual email I received, labeled “Death Notification.” The original notice appeared in the stolen logo of a legitimate funeral home. It was so spam-laden that I could not send it in this article without stripping the fraud elements out of it.

The notice appears to be an invitation to a funeral or memorial service for a friend or acquaintance. The only problem is, it does not reveal who died. To find out the name of the dearly departed and other details, you are advised to click on a handy link (which I took out to prevent accidental clicking). Of course, when you do, it unleashes a malware into your computer to steal files, passwords, and sensitive information.


 

Hubbard Funeral Home

Death Notification

 

We would like to express our deepest sorrow for the untimely death of your beloved friend and inform you about the life service celebration that will take place at

Hubbard Funeral Home on February 24, 2015 at 2:00 p.m.

Please follow this link to get funeral invitation.

Please be there to honor the memory of your friend with her closest people.

 

Our best wishes and prayers,

Jason Guy,

Funeral home assistant


 

Teresa Ambord is a former accountant and Enrolled Agent with the IRS. Now she writes full time from her home, mostly for business, and about family when the inspiration strikes.

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