How to Avoid Funeral Planning Scams
Scott Sheehan (right), director at Evergreen Washelli Memorial Park, discusses funeral options with clients. (Photo by Mike Penney)
Unfamiliarity with the funeral industry can leave consumers vulnerable to fraud and scams that range from overpaying for goods and services to the embezzlement of prepaid funds.
"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."
Fifty-one percent of Angie's List members responding to an online poll have never planned a funeral. Of those who have, 19 percent say the experience was a poor one. 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 from funeral scams and fraud 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, Mark and Lisa Buehler pleaded guilty to bilking nearly 150 customers out of more than $350,000 in prepaid funeral services at their Buehler Funeral Home in Roseville, Mich. The Buehlers never placed their customers' prepaid funds in escrow, instead using it for themselves. They were sentenced to five years probation and ordered to continue making monthly payments to victims.
Be careful during funeral planning
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 a funeral 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.
Do your 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 funeral insurance policy to avoid scams, but safeguards vary widely, and some laws offer little or no effective protection for the consumer.
Research 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."
CHECK OUT: Angie's List Guide to Funeral Services
Editor's note: This is an updated version of an article originally posted on Sept. 1, 2011.