Bring Transparency to the Purchase We All Have to Make

June 15, 2016
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Article Originally published by The Huffington Post and Authored by: David Balto

The way the free market system works is simple. Give consumers choice and transparency and competition for consumer loyalty will follow. Prices fall, services improve, and firms produce newer, better products and services. Add the Internet, where price information, price comparison tools and reduced entry barriers have made the consumer king — and the number of new products explodes, prices fall further and the forces of competition intensify due to instant transparency.

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Conversely, consumers suffer where choice and transparency are absent. Shopping costs (the time and money it takes to call or drive around asking for price information) enable sellers to keep prices high and lead the easy life. When product comparison tools are missing, innovation is slow and service suffers.

Most of us probably don’t like the idea that funerals are subject to the same market forces as everything else we shop for. The key difference is that purchasing a funeral is almost unparalleled in its essentiality. While not everyone will personally plan and pay for someone else’s funeral, we all have to face the fact that someone will carry out our own respective funerals. This is a purchase under the most dire and extreme conditions, where our loved ones will be extraordinarily vulnerable. It was with this reality in mind that the Federal Trade Commission (FTC) adopted the Funeral Rule over three decades ago. The Funeral Rule requires basic disclosure of prices and prevents egregious tactics that exploit mourners. The Rule also compels funeral homes to tell consumers they have the right to buy only the goods and services they want; undertakers may not force you to buy an all-inclusive package.

The Funeral Rule isn’t functioning as well as it could be. Research conducted by the Consumer Federation of America and the Funeral Consumer Alliance shows that huge price discrepancies exist in the funeral services market, indicating problems. In their study of 150 funeral homes across the country, it was revealed that prices vary from $2,580 to $13,800 for a full-service funeral. Local price differences exist as well. According to Stephen Brobeck, CFA’s Executive Director, “The huge price ranges for identical funeral services within individual areas indicate that these markets lack effective competition.” Indeed, an article in the Washington Post by Michelle Singletary highlights the frustration felt by grieving family members who just need to find price information without going to extraordinary lengths. And not only do funeral homes not always abide by the way the Funeral Rule is currently written, the rule itself doesn’t reflect 21st Century life.

While you can compare prices on the Internet for almost everything under the sun, this is not the case when it comes to funerals. Considering how important and expensive funerals are for consumers, how can funeral homes be stuck in the past?

The original article stated that the NFDA opposes online price disclosure. The NFDA has not taken a position on online price disclosure at this time.

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