Reflecting the conservative regulatory philosophy of the Reagan administration, two top officials at the Federal Trade Commission have urged the agency not to issue a highly controversial proposal to require undertakers to give customers more information about prices and services.
In detailed memos to the commission, the heads of the FTC's bureau of consumer protection and bureau of economics argued that the evidence collected in the commission's 10-year effort to correct abuses in the funeral industry do not justify an industrywide trade rule.
The officials--both Republicans appointed by James Miller III, Reagan's choice to head the FTC--also charged that the proposal could impose higher funeral costs on consumers without guaranteeing that any of the abuses with which the FTC was concerned would be corrected.
The memos were released yesterday, just two days before the commission is scheduled to take a final vote on the rule it approved tentatively a year ago. Commission officials say the vote on Wednesday may be very close.
The proposed rule, still supported by lower-level FTC staff members, would require funeral directors to provide comprehensive, itemized price lists to customers before any transaction is discussed. Additionally, undertakers would be required to dislose prices, when asked, over the telephone.
The rule, developed after the FTC heard hundreds of horror stories from consumers who said they were taken advantage of by funeral directors, would also bar undertakers from engaging in any unfair or deceptive practices, such as falsely telling customers that state laws require embalming or a casket for a person who is to be cremated.
The rule has been strongly opposed by the funeral industry and has evoked sharp criticism from congressional members who charge it is an example of FTC overregulation.
Robert Tollison, director of the bureau of economics, appeared to agree with this charge, arguing that the proposed rule could reduce the supply of some funeral services, the number of funeral homes and the quality of funeral service. As a result, Tollison called on the commission to draw a complete halt to its efforts to regulate the funeral industry.
Timothy J. Muris, head of the bureau of consumer protection, argued on the other hand that the industry may need some regulation. However, he said, the evidence collected by the commission over the past 10 years does not justify the present proposal because it contains no solid statistical evidence proving industrywide abuses. More time and new statistical data are needed before the commission acts, Muris said, urging the FTC to reopen the record for at least another six months before taking action.
The commission staff that worked on the rule long before Muris arrived at the FTC disagreed, saying there was sufficient evidence to justify issuing the rule now.
Even if FTC did approve the rule, the memos by Muris and Tollison could hurt it in the courts and Congress, both of which have the power to overturn the rule.
Supporters of the regulation fear that both branches of government could use the memos to support arguments of insufficient need.