Tuesday, August 7, 2012

New York City Inquisition

Ask any 5th Grader when the Inquisition was and the answer you receive will likely be the 1400’s. And, that would be a correct answer.

Ask any funeral director in New York City and the answer will be 2012. Also a correct answer.

More than 25 years ago the Federal Trade Commission created the “Funeral Rule”. This “Rule” was established to protect consumers against fraudulent and misleading practices within the funeral industry. Unlike many other industries the funeral industry is not allowed to be self-governing.

We also need to consider a little thing like “States Rights”. Without attempting to write a history lesson, basically Federal Laws are the supreme law of the land, State Laws are those laws not covered by Federal Law or if they are covered by a Federal Law any State reserves the right to expand on that Federal Law. The City of New York also (as a local municipality) has “States Rights” privileges. New York City can expand any State Law and therefore Federal Laws as well.

Normally this is not a problem. Where issues arise between Federal laws and State and Local guidelines generally have to do with air/water pollution. Please don’t chastise me for over simplifying this, the issue here is the FTC “Funeral Rule” and the one were the New York City Department of Consumer Affairs (DCA) is flexing it muscle.

What appears to be going on is this: Employees of the Department of Consumer Affairs in a misguided attempt to protect consumers have started a new inquisition. Taking parts of the FTC “Rule” out of context and attacking Funeral Directors.

I can only guess, but I would say, the DCA received complaints regarding funeral service, and rather than contact the New York State Department of Health or going to the Federal Trade Commission seeking help and guidance, took it upon themselves.to investigate. All too often when that happens confusion and suspicion and distrust rears its ugly head. The DCA, without the background and experience of experts, did their own interpretation of the “Rule”, made what they considered improvements to the “Rule” and sent out inspectors with little or no training to shop funeral homes for violations of the law.

Someone at DCA must, at best, suspect that what they are doing is not right, fair or just and deals are being cut on outrageous fines. Pay us this now or the fine will be doubled if we need to go to court; and since there is no possible way of complete victory Mr. Funeral Director is a loser. It’s cheaper to pay.

The dumbest of the new New York City Regulations is; Funeral Directors are required to tell prospective clients the cost of their average funeral for the preceding year.

First the question is: How much is a funeral? If you ask a funeral director his answer is going to be, the total of his charges PLUS cash advances. You ask Aunt Millie and her answer is the total of the funeral directors charges AND the cash advance items combined, because that’s the amount of money it took to put Uncle Harry in the ground. The fact is, neither answer is wrong.

Now let’s look at this from the view point of the FTC. The funeral director is right. But Mr. Funeral Director is dealing with the DCA and while they acknowledge Cash Advance items DCA  is not telling what you need to base your average funeral on; and since Cash Advance items can vary greatly and because we are viewing this as the FTC would Cash Advance items are not being considered.

Now let’s examine the concept of average pricing.

Let’s say you did 100 funeral services last year. Of the 100 funerals, 50 were at $2,000.00. that’s $100,000.00. You did 25 funeral services at $3,500.00 that’s $87,500.00 and you did 25 funeral services at $4,500.00 that’s 112,500.00. To reach the average you need to add $100,000. plus $87,500. plus 112,500. That’s $300,000. Now you need to divide that by total number of funeral services 100. And your average funeral is $3,000.  That’s $1,000.00 greater than 50% of the funeral services you conduct. You are now sublimely suggesting a family spend $3,000. for a funeral service. Now if you were to do that and the DCA reviewed you books you might just find yourself guilty of price gouging because the average you quoted is $1,000. higher than 50 percent of the funerals you conducted.

What can you do to protect yourself and be in compliance with the DCA of the City of New York? Pray! Because the New York State Department of Health can’t help you, it’s not within their jurisdiction. The Federal Trade Commission can’t help you because it is not within their jurisdiction. And, your own lawyer is going to tell you to pay the fines because it is cheaper than trying to fight, “City Hall”:.