The bereaved, who know little about funeral laws, alternatives and prices are "particuarly vulnerable" to unfair and deceptive industry practices and need new federal proctections, a Federal Trade Commission official reported yesterday.

In a report to the commission, Jack E. Kahn, who presided over two years of hearings on funeral industry practices, recommended that the agency proceed with its 1975 proposal to issue federal regulations for the nation's 22,500 funeral establishments.

Kahn cited the vulnerability of consumers faced with making funeral arrangements for loved ones, "pervasive" consumer ignorance about funeral transactions, and the "execrable" condition of state regulation as reasons for his recommendation.

Following a preliminary investigation of the industry, the agency had said it had reason to believe that those purchasing funeral home and burial services have been exploited by undertakers through a variety of misrepresentations, improper sales techniques, and the failure to disclose essential information. Funeral industry revenues are estimated at more than $2 billion a year.

The rules would require mortuaries to furnish customers with a fact sheet about legal requirements for embalming, caskets and burial vaults: a casket price list an itemized list of prices for the services and merchandise offered for sale, disclosing the consumer's right to select only the items desired; and a memorandum itemizing the items selected and their prices before the final agreement is made.

In his report, Kahn said resolving questions of deceptions, exploitative practices and misrepresentations were difficult because most of the evidence was anecdotal rather than statistical.

"Nevertheless, I believe that substantial misrepresentations do occur and that consumers are disadvantaged economically, and in some cases, emotionally by these practices," he said.

Among his findings were:

Disparagement of a consumer's concern about prices occurs in a significant number of cases.

Price lists often are not made available for component parts of funerals so that consumers can choose which items they want. They generally have to pick from a variety of package prices which include all elements of the "traditional" funeral.

There is widespread misrepresentation that caskets are airtight and watertight and that embalming will prevent natural decomposition of human remains.

Embalming is sometimes performed without obtaining prior authorization.

Caskets are sometimes required for cremations, although this isn't a prevalent practice.

Kahn said his contact with funeral directors and industry representatives during the proceeding convinced him that "basically these are people of good will who are keenly concerned about the welfare of their customers." But, he said, their views were very different from the views of the consumers who participated.

Kahn also found a general lack of competitiveness in the market, especially as to alternative means of disposition and in the sale of pre-need goods and services, such as the services offered by memorial societies.

He attributed much of the problem it regulation of funeral services by states. "State regulation against unfair or deceptive funeral industry practices has been dominated by industry interests to the detriment of consumers," he found.

"If this market were free to operate competitively, if alternative means of disposition could be offered without harassment from funeral directors or their puppets, the regulatory boards, then it is possible that the freedom to advertise services and prices, would serve to correct some of the problems that presently exist," he told the commission.