Don't get buried by funeral planning scams

After her husband died in June 2008, Rebecca Watson decided to plan her own funeral. "Everyone needs some type of pre-need funeral arrangements," says the Angie's List member. "It's not fair to the ones left behind to figure out what you might want and to foot the bill."

Watson gave $9,185 to Vance Prestwood, owner of Prestwood Funeral Home in Jacksonville, Fla., with the understanding the funds would be placed in an insurance policy to cover the cost of her casket, vault and services.

"He explained how the policy worked and that it would take several months to receive any paperwork," she says. "It wasn't a red flag to me as I knew nothing about the funeral home business."

However, after nearly a year had passed, Watson started to get anxious and requested a full refund from Prestwood but received no response. Even after filing an F report on Angie's List and a formal complaint to the Florida Board of Funeral, Cemetery and Consumer Services, Watson wasn't sure if she'd ever see her money again.

Following months of calls and emails, Watson says Prestwood finally sent her refund in April - nearly three years later. "I'm concerned there are others who may not have what they think they purchased," she says. Calls by Angie's List Magazine to Prestwood were not returned.

Consumer caution urged

Unfamiliarity with the funeral industry can leave consumers vulnerable to fraudulent schemes that range from overpaying for goods and services to the embezzlement of prepaid funds. Fifty-one percent of Angie's List members responding to a recent online poll have never planned a funeral. Of those who have, 19 percent say the experience was a poor one.

"Theft [of prepaid funds] is the biggest consumer abuse issue," says Josh Slocum, executive director of the Funeral Consumers Alliance, a nonprofit dedicated to educating consumers on funeral regulations. "A lot of people get ripped off blind and don't even know it."

In the $12 billion funeral industry, scams are not a new trend. In 1984, the Federal Trade Commission established the Funeral Rule, which is designed to protect consumers by requiring funeral providers to give adequate information about their services. Yet unscrupulous funeral-home owners continue to make headlines.

In one of the most egregious cases this year, Mark and Lisa Buehler pleaded guilty to bilking nearly 150 customers out of more than $350,000 in prepaid services at their Buehler Funeral Home in Roseville, Mich. The Buehlers never placed their customers' prepaid funds in escrow, instead using it for themselves. Sentencing was delayed until March in order to give the Buehlers time to pay restitution to their victims.

Doing the homework

Finding a reputable funeral home can be a daunting and emotional task. Fifty-three percent of members responding to our poll consider family tradition and reputation the most important factors in choosing a provider - a move Slocum says is the most common and expensive mistake you can make.

"So what if your family has used it before?" he says. "It's a terrible way to choose a funeral home. Prices can vary by thousands of dollars within the same metropolitan area."

Member Jody Gehiker of Coeur d'Alene, Idaho, saved $2,600 by shopping around for just a simple cremation. "When my mom died, I wasn't prepared and ended up paying $3,000," he says. "But when my dad was diagnosed with cancer, I went the pre-need route and made arrangements for about $400. In the stress of the moment, when you haven't planned ahead, it's easy to make too-costly decisions."

Recognizing red flags can help eliminate those costly mistakes. "Any time a funeral director says you have to buy a certain kind of casket, ask why and find out the regulation or law that requires it," says Jack Mitchell, spokesman for the National Funeral Directors Association. "Also, you can tell the quality of a facility by simply visiting it."

Some experts advise against prepaying for funerals. If you do, most states require you to deposit prepaid funds into a trust or insurance policy, but safeguards vary widely, and some laws offer little or no effective protection for the consumer.

Funeral industry regulations

Nine states have established guaranteed funds to cover consumers - to an extent - if their prepaid money goes missing. Slocum recommends individuals preplan by documenting their funeral desires and notifying family, but open their own savings account or CD that's payable upon death. "Keeping control of your money is key," he says.

Taking the time to research is also key. Licensing is mandatory for funeral directors nationwide. Requirements vary from state to state, but most call for individuals to be at least 21 years old, have two years of education that include mortuary science, serve a one-year apprenticeship and pass an exam.

"It's relatively easy for a customer to check out businesses," says Scott Sheehan, funeral director at highly rated Evergreen Washelli Memorial Park in Seattle. "Be diligent, think ahead, and ask hard questions. The end result will be an experience where consumers will feel confident about their choice."


Comments

While it is wise to preplan for your own death or the death of someone close to you, it is important that you understand exactly what you are purchasing, is the agreement a guaranteed contract and can you cancel the agreement at anytime and receive all the money you have paid, including accrued interest.

You are incorrect about a POD. I am to be buried at Palm Mortuary in Las Vegas and I've tried 3 different meetings to beg them to take a POD. They refuse. I just tried again in April and then made a call to the senior funeral director last month. They will NOT DO IT, claiming they need the death certificate to cash it, which takes 10 days, much to long to wait to be buried. They insist they take cash, credit card, or an assignment of insurance. I've tried to tell them, the POD would be payable to their mortuary but they will not even consider it. Again, I've met with them in person, gone 'up the ladder',, etc. I first asked them back in 2000 but now that I'm getting older, it's becoming important.

In Massachusetts funeral homes are prohibited from holding the pre-need funds for just this reason and must use a bank trust dept to hold the funds. The purchaser must sign a contract identifying the entity holding their money. Even with these protections some funeral homes managed to steal the money. Most funeral homes are good, just be careful. I know from personal experience working at a bank - and caught someone doing it. Your best recourse is to go after the funeral director's license. Without that they are out of business.

Many states have a Funeral Consumers' Alliance, which is a non-profit, volunteer run organization. They keep track of funeral costs & services. When my dad was killed, we were lucky that Mom was on the committee - we had a notebook with services, costs & contact information for all local funeral homes. The national website is http://www.funerals.org/

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