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By Root 618 0

is the bugbear that is used most effectively by the sellers of prepayment plans. In recent years, however, while inflation has been raising the cost of living generally by 2 to 3 percent annually, funeral costs have been increasing by 6 to 7 percent—which is more than the interest the mortuary is pocketing on your prepaid funeral contract. As the numbers pile up, funeral providers are becoming wary of the trap of the guaranteed price. The Midwestern owner of several funeral homes is quoted in the NFDA organ The Director as predicting: “Ninety-nine percent of the guaranteed preneeds will be performed at a loss.” Likewise aware of the problem, Funeral Service Insider advises against guaranteeing prices on future contracts, suggesting the following disclaimer: “If the death benefits are less than the current retail price at the time of death, an additional amount of funds will be due.” With an escape clause like that, you—the consumer—have saved no money with a pre-need arrangement. All you’ve done is paid part of the money in advance, and committed your survivors to pay the funeral director whatever he’s charging at the time of death—eliminating the chance that your nearest and dearest will be free to shop around for a better deal.

If you have already purchased a guaranteed-price plan—which leaves you with the feeling that you’ve got a great deal because the local funeral home will take care of everything—then what?

It’s a situation that invites abuse. The daughter of one Vermont woman, who a few years earlier had paid $3,000 for her funeral, was billed for an additional $1,000 service charge by the funeral home’s new owner.

How else can the undertaker make up for funeral inflation on a prepaid contract? “Cash Advance” items—cost of the obituary (if there is a fee), the death certificate, flowers, or cemetery expenses—will not have been included in your funeral package. An SCI-owned funeral home charged a Denver husband $200 to fax four copies of his wife’s obituary to area newspapers—where the obits ran for free. A New York widow was told, “We’ll take care of everything.” The mortician charged her $175 to have her husband’s date of death inscribed on the existing family monument. Actual cost of the inscription? $75.

Among the creative ideas currently favored by the industry, none is more profitable, nor more subject to abuse, than its appropriation of the legal fiction of “constructive delivery.” Prepayment laws in most states require that prepaid funds be placed in trust. California, for example, requires 100 percent trusting, but, like many states, has a loophole wide enough to accommodate a Cadillac hearse. It exempts from the trust requirement monies paid in advance for the prepurchase of goods such as burial plots, vaults, markers, and so on—the bulk of the cost of burial—provided that the prepurchased items are stored or warehoused for the customer’s future use. Constructive delivery is in reality no delivery, and it is the rare consumer who will have the wit to even try to ascertain whether or where the prepaid goods are being stored, let alone have the persistence to demand a glimpse of the items he or she presumably owns.

Neptune Society provides an instructive example of the invitation to large-scale fraud afforded by constructive delivery. A recent release by the California Department of Consumer Affairs announced that three of Neptune’s eleven locations (San Pedro, Burbank, and Santa Barbara) were charged with “unprofessional conduct” for allegedly failing to place $12.6 million into a trust fund “or to maintain sufficient merchandise to match purchases.” For this egregious fraud, Neptune must have been delighted to receive no more than the customary slap on the wrist in the form of three years’ probation, during which they were permitted to remain in business. There is also an order to pay $55,000 to reimburse the department for costs, but nothing is said about reimbursing the consumer $12.6 million for the apparently misappropriated boodle.

Of the $12.6 million, $9 million was allegedly for the sale of