The Federal Trade Commission, approved a highly controversial regulation yesterday that will require funeral directors to give customers greater choice in the types and costs of funerals.
Overriding its chairman, the commission decided by a 3-to-1 vote that an industry-wide price disclosure rule was needed to protect consumers in a particularly vulnerable moment of their lives from unscrupulous undertakers.
Under the rule, funeral directors would be required to provide a comprehensive, itemized price list of all their services. The price information would have to be disclosed over the telephone when requested.
The regulation also would bar funeral directors from engaging in any unfair or deceptive practices, such as telling customers that state laws require embalming or a casket even if a person is to be cremated. The funeral industry has fought against such regulation for a decade, and its congressional supporters are already moving to block the rule.
Commissioners said it was essential to provide an alternative to the package-priced funeral that the majority of undertakers offer. "The bottom line of this rule is that we are providing consumers with the most practical way to solve the problem of lack of choice," said Commissioner David A. Clanton.
Two Republicans and one Democrat outvoted FTC Chairman James C. Miller III, a Reagan appointee, who argued that there was insufficient evidence in the agency's record to justify such a rule.
Saying that he feared the rule would raise the costs of funerals without necessarily benefitting consumers, Miller wanted the FTC to reopen its 10-year-old investigation to gather more evidence to justify the rule.
But Commissioner Michael Pertschuk, a Democrat, countered, "If we wait for the perfect proof, we may well wait forever." Pertschuk was joined by Republicans Clanton and Patricia Bailey.
Before the meeting, some commission officials were unsure whether Clanton would reaffirm his support for the rule, which he had approved in a tentative vote last year. Had he voted against the rule yesterday, it would have been defeated by a tie vote.
Yesterday's action sets the stage for a bitter battle in Congress, which has the power to overturn the rule by a majority in both houses. The regulation cannot go into effect until Congress has 90 days to review it.
Earlier this week Rep. Martin A. Russo (D-Ill.) circulated a letter to his colleagues, saying the regulation was unnecessary because state and local officials adequately regulate the funeral industry. In a telephone interview yesterday, Russo said he would do everything he could to get Congress to block the rule.
Two years ago, Russo won House support for legislation that would have barred the FTC from issuing its funeral rule, only to have the legislation dropped in a House-Senate conference committee.
Russo undoubtedly will have the support of the funeral industry, which opposes the rule "100 percent," according to the Earl Biggerstaff, president of the National Funeral Directors Association.
Among other things, Biggerstaff said the rule might ultimately raise the cost of funerals because undertakers will have to compile detailed price lists. Voluntary guidelines set by the industry would have been far preferable, Biggerstaff added.
In any fight in Congress, the industry will face opposition from the American Association of Retired Persons, which strongly supports the regulation.
And some FTC officials privately expressed hopes that the decision yesterday to review the regulation in four years would help curb congressional criticism.
But Russo said yesterday that his arguments against the rule were certain to be bolstered by the objections Miller and his staff raised.
"I fear that in this case, the commission is showing signs of returning to its errant past of regulating first and asking the right questions later," Miller said. In particular, Miller complained that the evidence in the 10-year-old record was "woefully inadequate," especially because it did not demonstrate that the rule would correct any of the alleged abuses in the industry.
"The commission's action is deceptive because it raises expectations of lower prices for funerals and better service, when in fact we have little evidence to believe the rule would have these effects," Miller said.