Funeral Rule SS '08.FIN_mtd

Supporting Statement for Information Collection
Provisions of the FTC Funeral Industry Practices Rule
16 C.F.R. 453
(OMB Control No. 3084-0025)
1.

Necessity for Collection of Information

The Funeral Rule requires funeral providers to furnish consumers with three basic types
of information, which, taken together, enable consumers to select the goods and services they
want and to comparison shop for them. First, the Rule ensures that consumers receive itemized
price information for the various goods and services that make up a funeral. If a consumer
inquires in a telephone call about price or provider offerings, providers must give accurate price
and other readily available information that reasonably answers the consumer’s inquiry. If a
consumer visits the funeral home, the Rule requires that the funeral director provide him or her a
general price list that itemizes prices of each of the goods and services the funeral home offers.
The Rule also requires a casket price list and an outer burial container price list if the home's
offerings of the listed items are not itemized on the general price list. At the beginning of any
discussion of funeral arrangements, funeral directors must provide a copy of the general price list
for the consumer to keep, and must show the consumer a casket price list and outer burial
container price list before showing him or her the listed items. These requirements apply for
both at-need and pre-need situations when funeral arrangements are being made. The second
type of information the Rule provides is a disclosure on the general price list that a consumer
may choose only the items he or she desires. The third type of information the Rule requires
concerns disclosures on certain legal requirements and options available to the consumer. For
example, the price list must disclose that in most cases embalming is not required by law. The
Rule also requires that, at the conclusion of a funeral arrangement, the funeral home provide a
statement of goods and services that itemizes consumer selections and allows the consumer to
review their selections and make any changes.
Consumers make at-need purchase decisions regarding funeral goods and services subject
to extreme time pressure and emotional vulnerability. In adopting the Rule, the Commission
concluded that the rulemaking record indicated that industry members often failed to give
consumers needed information about the prices of individual components of a funeral and about
funeral-related legal requirements. The price lists and statement of goods and services required
by the Rule increase consumer welfare by (1) allowing consumers to make purchase decisions
based on accurate price information and accurate information about what they are and are not
required to purchase, and (2) allowing consumers review of their selections and the related
prices.
The Funeral Rule also requires that funeral providers retain records demonstrating their
compliance with the price list and other provisions of the Rule for a one-year period. These
recordkeeping provisions help the Commission to monitor and ensure effectively compliance
with the Rule. The recordkeeping requirements do this by assuring that much of the information
that must be disclosed to consumers is readily available for examination by Commission staff
during law enforcement activities.

2.

Use of information

The collection of information required by the Funeral Rule amounts to the production of
price lists and statements of goods and services, including required disclosures, the retention of
these price lists and statements, and the provision of price information in response to telephone
inquiries. The purpose of the information collection with respect to price lists is to ensure that
price information is readily available to consumers so they can comparison shop for funeral
goods and services. In addition, disclosures required to appear on the general price list inform
consumers that they have the right to purchase only those goods and services that they
specifically select. The Rule seeks to promote informed decision-making so that consumers are
able to make funeral arrangements within their means.
The Rule’s recordkeeping provision enables the Commission to monitor compliance with
the Rule. Funeral providers must maintain for a period of one year the information that they are
required to give to consumers. This allows the Commission, at any time, to check on current and
previous compliance.
3.

Consideration of the Use of Improved Information Technology to Reduce Burden

Consistent with the objectives of the Government Paperwork Elimination Act, Pub. L.
No. 105-277, Title XVII, 112 Stat. 2681-749, the Rule permits providers to use a variety of
technologies to reduce the burden of information collection imposed by the Rule. For example,
funeral providers may maintain their price lists and statements of goods and services on
computers and thereby reduce the time it may take to produce or revise price lists and
statements.
4.

Efforts to Identify Duplication

The Rule requires the preparation, distribution, and retention of price lists and statements
of goods and services. No other federal law or regulation requires that these records be prepared
or kept since the records are specifically tailored to the Rule’s provisions. Many states have
disclosure requirements that are similar to those the Rule requires, and these states may also
impose their own recordkeeping requirements. Although states may impose their own
requirements, most incorporate by reference the Rule’s requirements or substantially mirror
them.
5.

Impact on Small Businesses

Many of the approximately 20,300 funeral providers in the United States are small
businesses. A continuing trend in the industry, however, is the corporate ownership of funeral
homes across the country. Corporate or “chain” ownership of funeral homes currently
characterizes approximately 20-25 percent of the funeral industry. This concentration in
ownership of funeral providers has the effect of transferring the impact of the Funeral Rule from
small to large business entities. In any event, the burden of complying with the Rule is fairly
minimal both as to small businesses and large corporations. There is no reporting requirement
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for funeral providers, the price lists that funeral providers must prepare and retain are
uncomplicated, and the recordkeeping requirements are simple and short in duration. The Rule
also allows funeral providers to consolidate the lists that they are required to provide to
consumers.
6.

Consequences of Conducting Collection Less Frequently

Less frequent disclosure of prices and other information relating to funeral goods and
services would undermine the Rule’s purpose. Every consumer benefits from receiving price
and funeral requirement information. Requiring less frequent disclosure of this information
would mean that some consumers would not have the same or similar ability to make informed
funeral purchase decisions.
The Rule’s recordkeeping provision simply requires funeral providers to retain certain
records for one year. A record retention period shorter than that would hamper the
Commission’s ability to verify a funeral provider’s compliance with the Rule. The Commission
would have a narrower provider history to refer to and less time to verify and review complaints
regarding price lists and other disclosures. Moreover, when investigating some Funeral Rule
violations, the Commission may survey a number of former customers of the funeral home.
Commission staff obtains the names and addresses of these customers from the itemized
customer statements that the Rule requires funeral providers to retain for one year. The
Commission seeks to avoid contacting recent mourners, and a record retention period under one
year would make it harder for the Commission to exercise this discretion and to gather related
information needed to pursue enforcement actions.
7.

Special Circumstances

None. The Funeral Rule’s recordkeeping requirements are consistent with the guidelines
contained in 5 C.F.R. § 1320.5(d)(2).
8.

Public Comments/Consultation Outside the Agency

(a) Public comments. The Commission most recently sought public comment on the
Paperwork Reduction Act (44 U.S.C. Chapter 35) aspects of the Rule, as required by 5 C.F.R.
§ 1320.8(d). See 73 Fed. Reg. 16,681 (Mar.28, 2008). No comments were received. The
Commission is providing a second opportunity for public comment while seeking OMB approval
to extend the existing PRA clearance for the Rule.
(b) Consultation Outside the Agency.
In the process of promulgating the Funeral Rule, the Commission provided extensive
opportunities for the public to comment on its provisions. For example, during the rulemaking
proceeding, the Commission held public hearings, with testimony offered from hundreds of
witnesses representing funeral groups, funeral directors and state licensing board

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representatives.1 In addition, the Commission received written comments from over 9,000
consumers, academics, experts, state officials, funeral directors, clergy, and other interested
members of the public, with hundreds of additional comments submitted in public comment
periods. Finally, representatives of all major interested parties participated in two oral
presentations to the Commissioners.
In response to concerns raised during the rulemaking, the Commission amended the
original proposed Funeral Rule in the following ways: (1) the recordkeeping requirement was
reduced from three years to one; (2) required disclosures were incorporated into the price lists
and statement of services selected, eliminating the need to maintain separate disclosure sheets;
and (3) required price information may be incorporated into one document, i.e., a general price
list, thus, enabling funeral providers to choose to list prices for caskets and outer burial
containers once, rather than preparing three separate documents. Each of these modifications
enabled funeral providers seeking to comply with the Funeral Rule to store fewer documents and
still be compliant with the Rule’s recordkeeping requirements.
The initial Rule review, which led to the Rule’s amendment in 1994, also yielded much
information from industry members and consumers and consumer groups,2 including
information addressing the Rule’s recordkeeping requirements. In response to these comments,
the amended Funeral Rule, published in 1994, resulted in modifications. The most significant
reduction of recordkeeping burden derived from the elimination in 1994 of the requirement that
funeral providers give each customer a separate “Statement of Funeral Goods and Service
Selected.” Instead, the amended Rule provided that disclosures that formerly would have
appeared on the statement could be incorporated into the final contract, bill, or other document
that funeral providers already used to memorialize sales agreements with customers. Since such
documents would be retained for at least one year in the ordinary course of business for tax
purposes, the Commission believed that the additional burden imposed by the requirement, if
any, would be minimal.
A second significant modification to the original Rule was made in the 1994 amendment
proceeding. As a result of consultation with the public and funeral providers during the initial
rule review, the Commission concluded that some of the telephone disclosure requirements that
were part of the original Rule were unnecessary because the costs to providers outweighed the

1

The Commission held 52 days of public hearings in six cities during the rulemaking proceeding at which
testimony from 315 witnesses, including 58 funeral group representatives, 42 individual funeral directors, and
21 state licensing board representatives was entered in to the record. Staff also met with met with
representatives of the Conference of Funeral Service Examining Boards (a national organization composed of
state funeral licensing boards) and the Continental Association of Funeral and Memorial Societies (a national
trade association of memorial societies that are non-profit consumer cooperatives organized to provide
information and assistance to their members concerning funeral arrangements).
2

In addition to written comments, several national surveys of funeral directors, state laws, and consumer
opinions were submitted and entered into the record. And, 83 witnesses testified at public hearings and 189
individuals and organizations provided testimonial and other evidence.

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benefits to consumers. Accordingly, the Commission eliminated the Rule’s affirmative
telephone price disclosure requirements in the 1994 amended Rule.
In 1999, the Commission initiated another review of the Funeral Rule, pursuant to its
published schedule for reviewing all rules and guides. The request for comment in this
proceeding elicited 151 public comments from industry and consumer group, including multiple
surveys from various organizations. Staff also held a public workshop in this proceeding, in
which individuals from 24 organizations participated at a round table discussion, and an
additional 16 members of the public made brief statements that were also placed on the record.
Upon the completion of the rule review, the Commission declined to propose various
amendments that some commenters advocated, while concluding that the Rule in its current form
continues to be valuable to consumers and that the benefits of the Rule outweigh the costs.3
9.

Payment or Gift to Respondents
Not applicable.

10.

Assurances of Confidentiality

No assurance of confidentiality is necessary as funeral providers do not register or file
any documents with the Commission. To the extent that information covered by a recordkeeping
requirement is collected by the Commission for law enforcement purposes, the confidentiality
provisions of Sections 6 (f) and 21 of the FTC Act will apply. 15 U.S.C. §§ 46(f), 57b-2.
11.

Sensitive or Private Information

The Funeral Rule does not require the disclosure of any private or sensitive matters.
Some records kept due to the Rule’s requirements may, at the option of the funeral provider,
contain personal information regarding a consumer’s funeral choices, including religious
affiliation, and personal information regarding the consumer. This information, if collected by
the Commission for law enforcement purposes, would be protected by Sections 6(f) and 21 of
the FTC Act.
12.

Estimated Hours Burden

The estimated burden associated with the collection of information required by the Rule
is 20,300 hours for recordkeeping, 101,389 hours for disclosures, and 40,600 hours for training,
for a total of 162,000 hours (rounded to the nearest thousand). This estimate is based on the
number of funeral providers (approximately 20,300),4 the number of funerals annually

3

73 Fed. Reg. 13,740 (Mar. 14, 2008).

4

The estimated number of funeral providers is from data provided on the National Funeral Directors
(continued...)

5

(approximately 2.4 million),5 and the time needed to fulfill the information collection tasks
required by the Rule.
Recordkeeping: The Rule requires that funeral providers retain copies of price lists and
statements of funeral goods and services selected by consumers. Based on a maximum average
burden of one hour per provider per year for this task, the total burden for the 20,300 providers is
20,300 hours.
Disclosure: The Rule requires that funeral providers: (1) maintain current price lists for
funeral goods and services, (2) provide written documentation of the funeral goods and services
selected by consumers making funeral arrangements, and (3) provide information about funeral
prices in response to telephone inquiries.
1.
Maintaining current price lists requires that funeral providers revise their price
lists from time to time throughout the year to reflect price changes. Staff estimates, consistent
with its current clearance, that this task requires a maximum average burden of two and one-half
hours per provider per year for this task. Thus, the total burden for 20,300 providers is 50,750
hours.
2.
Staff retains its prior estimate that 13% of funeral providers prepare written
documentation of funeral goods and services selected by consumers specifically due to the
Rule’s mandate. The original rulemaking record indicated that 87% of funeral providers
provided written documentation of funeral arrangements, even absent the Rule's requirements.6
According to the rulemaking record, the 13% of funeral providers who did not provide
written documentation prior to enactment of the Rule are typically the smallest funeral homes.
The written documentation requirement can be satisfied through the use of a standard form (an
example of which the FTC has provided to all funeral providers in its compliance guide).7 Based
on an estimate that these smaller funeral homes arrange, on average, approximately twenty
funerals per year and that it would take each of them about three minutes to record prices for
4

(...continued)
Association (“NFDA”) website (www.nfda.org), which was accessed in March 2008.
5

The estimated number of funerals annually is taken from the National Center for Health Statistics,
http://www.cdc.gov/nchs/. According to NCHS, 2,448,017 deaths occurred in the United States in 2005, the
most recent year for which final data is available. See National Vital Statistics Reports, vol. 56, no. 10
“Deaths: Final Data for 2005,” available at http://www.cdc.gov/nchs/data/nvsr/nvsr56/nvsr56_10.pdf.
6

In a 2002 public comment, the National Funeral Directors Association asserted that nearly every funeral
home had been providing consumers with some kind of final statement in writing even before the Rule took
effect. Nonetheless, in an abundance of caution, staff continues to retain its prior estimate based on the
original rulemaking record.
7

The FTC has provided its compliance guide to all funeral providers at no cost, and additional copies are
available on the FTC website, www.ftc.gov, or by mail.

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each consumer on the standard form, FTC staff estimates that the total burden associated with
the written documentation requirement is one hour per provider, for a total of 2,639 hours
[(20,300 funeral providers x 13%) x (20 statements per year x 3 minutes per statement)].
3.
The Funeral Rule also requires funeral providers to answer telephone inquiries
about the provider’s offerings or prices. Industry data indicate that only about 12% of funeral
purchasers make telephone inquiries, with each call lasting an estimated ten minutes. Thus,
assuming that the average purchaser who makes telephone inquiries places one call per funeral
to determine prices, the estimated burden is 48,000 hours (2.4 million funerals per year x 12% x
10 minutes per inquiry). This burden likely will decline over time as consumers increasingly
rely on the Internet for funeral price information.
In sum, the burden due to the Rule’s disclosure requirements totals 101,389 hours
(50,750 + 2,639 + 48,000).
Training: In addition to the recordkeeping and disclosure-related tasks noted above,
funeral homes may also have training requirements specifically attributable to the Rule. While
staff believes that annual training burdens associated with the Rule should be minimal because
Rule compliance is generally included in continuing education requirements for state licensing
and voluntary certification programs, staff estimates that, industry-wide, funeral homes should
incur no more than 40,600 hours related to training specific to the Rule each year. This estimate
is consistent with staff’s assumption for the current clearance that an “average” funeral home
consists of approximately five employees (full-time and part-time employment combined), but
with no more than four of them having tasks specifically associated with the Funeral Rule. Staff
retains its estimate that each of the four employees (three directors and a clerical employee) per
firm would each require one-half hour, at most, per year, for such training. Thus, total estimated
time for training is 40,600 hours (4 employees per firm x ½ hour x 20,300 providers).
Estimated annual cost burden: $3,524,000 in labor costs and $1,226,000 in non-labor
costs.
Labor costs: Labor costs are derived by applying appropriate hourly cost figures to the
burden hours described above. The hourly rates used below are averages.
Clerical personnel, at an hourly rate of $13, can perform the recordkeeping tasks required
under the Rule. Based on the estimated hour burden of 20,300 hours, the estimated labor cost
burden for recordkeeping is $263,900.
The two and one-half hours required of each provider, on average, to update price lists
should consist of approximately one and one-half hours of managerial or professional time, at an
estimated $27.50 per hour, and one hour of clerical time, at $13 per hour, for a total of $54.25

7

per provider8 [($27.50 per hour x 1.5 hours) + ($13.00 per hour x 1 hour)]. Thus, the estimated
total cost burden for maintaining price lists is $1,101,275 ($54.25 per provider x 20,300
providers).
The incremental cost to the 13% of small funeral providers not previously providing
written documentation of the goods and services selected by the consumer, as previously noted,
is 2,639 hours. Assuming managerial or professional time for these tasks at approximately
$27.50 per hour, the associated labor cost would be $72,572.50 (2,639 hours x $27.50 per hour).
As previously noted, staff estimates that 48,000 hours of managerial or professional time
is required annually to respond to telephone inquiries about prices. The cost of 48,000 hours of
managerial or professional time for responding to telephone inquiries about prices at $27.50 per
hour, is $1,320,000 (48,000 hours x $27.50 per hour).
The cost of training licensed and non-licensed funeral home staff to comply with the
Funeral Rule is two hours per funeral home, with four employees of varying ranks each spending
one-half hour on training. Consistent with estimates in the current clearance, the Commission is
assuming that three funeral directors, at hourly wages of $27.50, $20, and $15, respectively, as
well as one clerical or administrative staff member, at $13 per hour, require such training, for a
total burden of 40,600 hours (20,300 funeral homes x 2 hours total per establishment), and
$766,325 [($27.50 + $20 + $15 + $13) x ½ hour per employee x 20,300 funeral homes].
The total labor cost of the three disclosure requirements imposed by the Funeral Rule is
$2,493,847.50 ($1,101,275 + $72,572.50 + $1,320,000). The total labor cost for recordkeeping
is $263,900. The total labor cost for disclosures, recordkeeping and training is $3,524,000
($263,900 for recordkeeping + $766,325 for training + $2,493,847.50 for disclosures), rounded
to the nearest thousand.
13.

Estimated Capital/Other Non-Labor Costs Burden

The Rule imposes minimal capital costs and no current start-up costs. The Rule first took
effect in 1984 and the revised Rule took effect in 1994, so funeral providers should already have
in place capital equipment to carry out tasks associated with Rule compliance. Moreover, most
funeral homes already have access, for other business purposes, to the ordinary office equipment
needed for compliance, so the Rule likely imposes minimal additional capital expense.

8

Based on the National Compensation Survey: Occupational Wages in the United States, June 2006, U.S.
Department of Labor, Bureau of Labor Statistics (June 2007) (“BLS National Compensation Survey”) (citing
the mean hourly earnings for funeral directors as $22.11/hour), available at
http://www.bls.gov/ncs/ocs/sp/ncbl0910.pdf. As in the past, staff has increased this figure on the assumption
that the owner or managing director, who would be paid at a slightly higher rate, would be responsible for
making pricing decisions. Clerical estimates are derived from the above source data, applying roughly a midrange of mean hourly rates for potentially applicable clerical types, e.g., bookkeeping, file clerks, new
accounts clerks, data entry.

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Compliance with the Rule, however, does entail some expense to funeral providers for
printing and duplication of price lists. Assuming that two price lists per funeral/cremation are
created by industry to adhere to the Rule, 4,800,000 copies per year are made for a total cost of
$1,200,000 (2,400,000 funerals per year x 2 copies per funeral x $.25 per copy). In addition, the
estimated 2,639 providers not already providing written documentation of funeral arrangements
apart from the Rule will incur additional printing and copying costs. Assuming that those
providers use the standard two-page form shown in the Compliance Guide, at twenty-five cents
per page, at an average of twenty funerals per year, the added cost burden would be $26,390
(2,639 providers x 20 funerals per year x 2 pages per funeral x $.25). Thus, estimated non-labor
costs are $1,226,000, rounded to the nearest thousand.
14.

Estimated Cost to the Federal Government

Staff estimates that the yearly cost to the Federal Government resulting from
administration of the Rule’s disclosure requirements is estimated to be $84,500 (1.3 work years
among staff attorneys and investigators at an average annual salary of $65,000).
15.

Adjustments

The estimated annual hours burden has decreased approximately 7,000 hours from prior
clearance terms, which is due to the decline in the number of funeral providers. Estimated nonlabor/capital costs have correspondingly declined $2,000 to $1,226,000 as detailed above.
16.

Plans for Tabulation and Publication
There are no plans to publish any information.

17.

Display of Expiration Date for OMB Approval
Not applicable.

18.

Exceptions to Certification
Not applicable.

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