The Federal Trade Commission has cut back its highly publicized proposed regulations to clean up the funeral industry, causing some FTC staffers to complain that the commission is retreating from its statutory responsibilities.

A new team of staffers working on the funeral industry case since last June has decided, for example, to drop several proposals that would have forced significant disclosure requirements on the $6.4 billion funeral industry, and at the same time would have banned certain allegedly deceptive package pricing plans.

This action has angered at least some of the staff who worked on the five-year investigation that found "widespread consumer abuses," and produced the original proposal calling for tough new regulation of the industry last June. After making their proposal, most of that staff went on to work in other areas and a new team was assigned by Alfred Kramer, director of the Bureau of Consumer Protection.

In an internal memo recently sent from the old funeral staff to Kramer, and obtained by The Washington Post the recommendations for cutbacks by the new staff were called an "ill-advised and unsound retreat from effective exercise of the commission's statutory responsibilities."

FTC officials favoring the new proposals say there was a question "whether the cure itself wasn't becoming as offensive as the practice."

"We asked ourselves if we could enforce these rules, and in some cases the answer was no," one official said.

In one example the new staff contended a disclosure that the natural processes of decomposition cannot be prevented by embalming, caskets or vaults "may offend many people at a time of extreme vulnerability no matter how tastefully written, and may be perceived as an unwarranted government intrusion."

The old staff had noted that false claims by the industry that embalming and special, expensive caskets could preserve a loved one were a frequent ploy of funeral homes attempting to sell an expensive funeral package.

But FTC officials now say they have attempted to save the portions of the old proposal that made the most sense, in terms of creating an incentive for funeral directors "to start behaving differently."

"We want to see that the consumer gets as much information as possible in order to approach a funeral transaction like any other transaction; to make the market work and to remove the restraints on advertising -- even encourage advertising -- to get consumers sensitized," one FTC official said.

A consumer group, the Continental Association of Funeral and Memorial Societies Inc., has reacted strongly to the proposed changes, alleging that "consumers may end up in as bad a position as they were before the five-year-old investigation started, if the weakened rule is adopted."

Betty Clemmer, of the Continental Association, said "intense pressure from Congress, stirred by strong grass roots lobbying by the funeral industry," appears to be the source of the weakening -- a charge FTC officials deny.

Clemmer said the most damaging revisions in the proposed rules would result in these changes:

Funeral directors would now be allowed to sell package deals, which Clemmer called "the big loophole they are all looking for." Rather than allowing discounts, the package deals in the funeral industry are really designed to make consumers purchase services they don't need, she said.

Padding charges for cash advance items like flowers, clergy and obituary notices would still be allowed.

Funeral homes would not be required to keep simple alternative containers for cremation available.

Price cards would not have to be placed on each casket when shown.