Most of the 2 million people who spend almost $6.4 billion each year for funerals are induced to spend hundreds of dollars more than they have to because of improper practices in the funeral industry, according to a report issued today by the Federal Trade Commission.

The Staff report contends that the most serious problems facing funeral consumers - including the inability to obtain itemized price information in advance - "are not isolated occurrences confined to an unethical few," but are "widely used and even condoned by a large percentage of the nation's 20,000-plus funeral homes."

As a result of the study, the FTC staff is recommending a series of new regulations it claims will save consumers "from several hundred to more than a thousand dollars" on funeral costs.

The new regulations, which still must be approved by the FTC, would "require disclosure of prices and other relevant information, eliminating formal and informal restraints to competition, and prohibiting misrepresentations and other unfair merchandising practices."

The staff study found that the funeral consumer is in a "peculiarly vulnerable position and enters the transaction in an especially weak bargaining position."

Further, the staff noted that funeral directors have "manipulated consumers into buying higher-priced goods and services under the guise of grief counseling." Some directors, the study notes, even refuse to provide price and other relevant information to consumers.

Other funeral directors have "harassed and intimidated low-priced sellers, price advertisers and others who aggressively compete or attempt or offer new services," the report found.

Other abuses noted in earlier FTC reports, like embalming without permission, requiring a casket for cremation, or misrepresenting legal public health requirements, still "occur with disturbing frequency," according to the study.

The proposed FTC rules would prohibit such practices as unauthorized removal of remains, embalming without permission, refusal to release a body on request, requiring a casket for cremation and overcharging on cash advance items such as obituary notices and flowers.

Another section of the rules prohibits misrepresentations by funeral directors "of legal and other requirements and the preservative or protective value of embalming, caskets, and burial vaults."

Other practices that would be banned under the regulations included several specified merchandising techniques "which unfairly or deceptively interfere with the consumer's ability to freely select a funeral."

The report calls many of these alleged practices "variations of traditional bait-and-switch tactics, including misrepresenting the availability of merchandise, and disparaging . . . inexpensive items."

The rules would also require that price information be disclosed over the phone and itemized price lists for merchandise and services be made available.

The rules would also remove any restrictions against open advertising by funeral homes, allowing a more competitive atmosphere.