SCI Agrees to Pay $23 Million in California Neptune and Trident Societies Settlement

Funeral Industry News Laws & Regulations May 14, 2024
Law or legislation

SCI Agrees to Pay $23 Million in California Neptune and Trident Societies Settlement

Service Corporation International (SCI) will pay $23 million in civil penalties as part of a settlement agreement with the state of California, the city of San Francisco, and two Bay Area counties. The settlement resolves a lawsuit filed in 2021 against SCI claiming deceptive advertising and pricing practices by the company’s Neptune and Trident cremation societies.

In addition to paying the civil penalties, SCI also agreed to:

  • Pay full consumer restitution to the consumers who canceled their plans but did not get a full refund;
  • Cease selling the Standard Plan or any similar package unless all money paid for the plan or package and money paid for any collateral agreements is placed into trust;
  • Provide clear written disclosures informing consumers of their rights under California law, including that consumers are not required to purchase additional products or services in order to purchase pre-need cremation services;
  • Provide a full refund upon request to any consumer who cancels a pre-need funeral agreement; and
  • Comply with California law when advertising veterans’ benefits.

“Neptune Society’s and Trident Society’s pervasive price manipulation and deceptive marketing affected all their consumer negotiations and contracts for pre-need services, demonstrating how their unlawful business practices were a result of decisions made at the highest levels of the companies,” said Pamela Price, District Attorney for Alameda County, one of the two California counties involved in the suit. 

“Thanks to the collaborative hard work of fellow District Attorney Offices and the Department of Justice, defrauded consumers will be made whole, and the companies will be required to pay $23 million in civil penalties and, more importantly, comply with the law requiring them to place pre-need funds in trust.”  

Everyone dies

The original lawsuit alleged that “Texas-based SCI violated the Unfair Competition Law (UCL) and False Advertising Law (FAL) by engaging in false advertising and unlawful and deceptive acts in its marketing and sale of pre-need cremation packages.” 

In an amended complaint that opens its allegations section with the cryptic phrase, “Everyone dies,” the plaintiffs explained rising cremation rates, how preneed programs work, and the details of the Neptune and Trident Societies “Standard Plan,” which, according to the complaint, 99% of the societies’ customers chose. 

Specifically, the complaint alleged that:

  • SCI’s Standard Plan was “strategically priced to be cheaper than (or comparably priced to) stand-alone cremation services in order to induce consumers into purchasing the Standard Plan.”
  • At signing time, customers were presented with two contracts, “one for heavily marked up merchandise, and one for deeply discounted cremation services.”
  • SCI placed into trust only the discounted funds it allocated to the cremation services, keeping out of trust the funds it allocated to merchandise, and therefore withholding from trust more than half of the total price of the Standard Plan. 
  • When a Standard Plan purchaser requested a refund, SCI only refunded the portion allocated to cremation services, and none allocated to merchandise.

The suit alleged that these practices violated the Unfair Competition Law (UCL) and False Advertising Law (FAL).

“California’s robust consumer protection laws protect all Californians from unlawful, unfair, and fraudulent business and marketing practices,” said California Attorney General Rob Bonta. “Whether in higher education, home insurance, or the funeral service industry, deceptive business practices will not be tolerated. When consumers purchase pre-need funeral services, they expect — and the law requires — their funds to be safe and protected until those services are utilized.”

Marin County reaches out

The agreement requires SCI to make payments of $5.75 million each within 30 days of the May 1 settlement date to the California Attorney General’s Office, the San Francisco District Attorney’s Office, and the Treasurers of both Marin County and Alameda County. When announcing the settlement to its readers, the Marin Independent Journal reached out to SCI for comment.

SCI representative Beth Dombrowa responded to the Independent Journal via email, saying, “Although we have strong defenses to the allegations made by the Attorney General, we have agreed to a settlement with no findings or admission of wrongdoing. We are settling the action to avoid the uncertainties and expense associated with continuing litigation and so that we can move forward with a full focus on serving families.”

Indeed, the settlement documents state that the defendants “deny wrongdoing or liability of any kind but have agreed to resolve the allegations contained in the First Amended Complaint in the People’s Action by stipulating to the entry of the Judgment in the People’s Action.”