	Background

		Regulatory Roles

Funeral homes, cemeteries, crematories, pre-need plans, and third party  sales of funeral goods are all various segments of the death care  industry, and the federal and state governments both have a role in  regulating the industry. In 1999 and 2003, we reported on various aspects  of federal and state regulation of the death care industry.things, we stated that with respect to the federal government’s role in  regulating the death care industry, aside from the FTC’s Funeral Rule,  there is no other regulation that specifically addresses the marketing  practices of the death care industry at the federal level; most regulatory   Among other  responsibilities regarding the industry are handled at the state level. The  FTC’s Funeral Rule, which became fully effective in April 1984, provides,  among other things, that consumers are entitled to price information  about funeral goods and services before they purchase them, which  would enable the consumer to use the information for comparative  shopping if he or she wishes. Federal and State Regulation of the Death Care Industry and the Extent to Which It Has Changed Vary

		Federal Regulatory Structure Largely Unchanged

The Funeral Rule has not changed since it went into effect in1994, and  according to FTC staff, implementation of the Funeral Rule has generally  remained the same since we last reported on the Rule in 2003. The FTC  conducts undercover shopping through enforcement sweeps of funeral  homes to ensure compliance with the Funeral Rule and to maintain  consumer confidence. The FTC reported an overall compliance rate of about 85   Arizona was the only state that reported that some  In addition, the majority of state regulators also reported that funeral  homes, funeral directors, and embalmers are required to be licensed in  their respective states. In Both 2003 and 2011 States Reported Varied Regulatory Requirements, with Specific Rules or Regulations Most Consistently Reported for Funeral Homes

The extent to which state regulators reported that their state (1) had  specific rules or regulations, (2) required licensing, and (3) required  inspections in both 2003 and 2011 varied by industry segment. By comparison, with respect to the inspection of funeral homes and  crematories,
37 of 43 state regulators (86 percent) who responded to our 2003  survey reported that their state required the inspection of funeral  homes, while 35 of the 38 state regulators (92 percent) reported this  in 2011, and
33 of 36 state regulators (92 percent) who responded to our 2003  survey reported that their state required the inspection of crematories,  while 28 of the 34 state regulators (82 percent) reported this in 2011. Many state regulators who responded to our 2011 survey also reported  that their states made changes to their laws or regulations since 2003 that  primarily provided clarification or enhanced consumer protections. State regulators views on the extent to which these changes  strengthened their regulatory program varied, as shown in figure 4. State regulators views on whether they believe that there was a need for  their state government to take a more active role in regulating the death  care industry varied, as shown in figure 6. Appendix I: Survey Methodology

To obtain information on the various ways states regulate the death care  industry, how it has changed, and to what extent more regulation is  needed we developed and administered five web-based surveys to all 50  states to provide current information on state regulation for each of the  five death care industry segments—funeral homes, cemeteries,  crematories, sales of pre-need funeral plans, and third party sellers of  funeral goods. We also  conducted interviews with officials at the Federal Trade Commission and  six national associations to identify any additional issues to follow up on in  the surveys. Licensing requirements for cemetery operators  have changed since we surveyed state regulators in 2003. For nonguaranteed contracts, 100 percent of the  costs of funeral and cemetery goods and services must be trusted. Cemeteries and Cemetery Operators

Licensing requirements. The state regulator who  responded to our survey reported that these changes were a result of  proposals from state agencies.
Why GAO Did This Study

Media reports have identified instances of desecration of graves and human remains at cemeteries, and in one instance, reported that bodies were removed from graves and the sites resold. Allegations have also surfaced about the mismanagement of pre-need plans that are designed to provide consumers the opportunity to fund funeral and cemetery arrangements before they are needed. The FTC's Funeral Rule requires that, among other things, funeral providers give consumers lists that disclose the cost of funeral goods and services before they enter into funeral transactions. Proposed legislation introduced in March 2011 would increase the federal governments role in regulating the industry by, among other things, requiring that the FTC regulate aspects of cemetery operations. GAO was asked to review the regulation of the death care industry. This report discusses (1) how federal and state governments regulate the industry and how regulation has changed since 2003 and (2) state regulators' views on the need for additional regulation.
GAO reviewed FTC's Funeral Rule and interviewed officials representing the FTC and national industry and consumer associations; surveyed state officials to gather data on state regulation of the death care industry; and, where possible, compared the results of the 2011 surveys with those of similar surveys GAO conducted in 2003. The response rate for our 2011 surveys ranged from 78 to 84 percent. GAO also reviewed laws and regulations. GAO is not making any recommendations in this report.

What GAO Found

The extent to which the federal and state governments regulate the death care industryfuneral homes, cemeteries, crematories, pre-need funeral plans, and third party sales of funeral goodsvaries, as does the extent to which regulation has changed since GAO last reported on the regulation of the death care industry in 2003. The Federal Trade Commission (FTC) continues to annually conduct undercover shopping at various funeral homes to test compliance with the Funeral Rule. Of the over 2,400 funeral homes that the FTC shopped since 1996, the FTC reported an overall compliance rate of about 85 percent. With respect to state regulation, consistent with GAOs findings in 2003, the way in which states regulate the industry varies across industry segments and states. Also, the extent to which state regulators reported that they had specific rules or regulations for each industry segment in both 2003 and 2011 varied. Most consistent across states in both years was reporting that there were specific rules or regulations for funeral homes (94 and 95 percent in 2003 and 2011, respectively). In contrast, 77 percent of state regulators of cemeteries reported that their states had specific rules or regulations for cemeteries in 2003, and 88 percent reported this in 2011. Certain state regulators also reported that their states made various statutory or regulatory changes since 2003, primarily to clarify legislation or regulation or to enhance consumer protections, and that they believe these changes strengthened their regulatory program to varying degrees. State regulators reported that these changes came about for a variety of reasons, including accounts of desecration of human remains or proposals from state agencies and industry groups.
State regulators views on the need for additional federal and state regulation of the industry varied, as shown in the figure below.
The FTC provided technical comments, which GAO incorporated where appropriate.