Bottleneckers. William Mellor

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СКАЧАТЬ Association (NFDA), which was founded in 1882.¹⁹

      Even in those early years, there was a protective motivation focused on casket sales. Shortly after its formation, the NFDA adopted a resolution to keep prices as high as possible, stating: “We, as funeral directors, condemn the manufacture of covered caskets at a price less than fifteen dollars for an adult size.”²⁰ Throughout the late-nineteenth and early-twentieth centuries, the association successfully lobbied state legislators to pass laws licensing funeral directors and embalmers.²¹ In 1894, Virginia became the first state to pass a law regulating embalming. The next year, Alabama, Missouri, and Pennsylvania adopted similar laws; five years later so did twenty-four other states.²² Eventually, all fifty states and the District of Columbia would adopt licensing laws of some sort for funeral directors or embalmers, although Colorado abolished its law in 2009, converting its mandatory license into a voluntary state-certification program.

      Under voluntary certification, an occupational practitioner can complete certain requirements associated with education, training, and testing and thereby describe him or herself as a “certified funeral director,” or whatever the position may be. Those who do not complete the requirements and register with the state can still do the work of a funeral director, but they are not permitted to use the title of certified funeral director. Such an arrangement provides greater diversity of options for consumers. Some may value using the services of expensively certified funeral directors and be willing to pay the generally higher costs associated with doing so, while other consumers may see little value in credentials and instead desire the lower-cost services offered by noncertified providers.

      In jurisdictions other than Colorado, these options do not exist. Practitioners must have a government-issued license to work. By requiring practitioners to achieve a minimum amount of schooling (often one year), complete an apprenticeship, and pass a licensing examination, state laws created a bottleneck restricting competition within the occupation, insulating it from competition. Consequently, funeral directors grew emboldened to significantly inflate prices of goods and services and institute practices so venal as to capture the attention of the Federal Trade Commission (FTC).

      THE FUNERAL RULE TARGETS BOTTLENECKERS

      In 1972, the FTC began investigations²³ that in 1984 resulted in the adoption of a set of rules governing the funeral industry generally. In its investigations, the FTC found that funeral directors often pressured families to buy unnecessary merchandise, such as caskets for cremation, when no laws required them; inaccurately represented legal, cemetery, and crematory requirements; only discussed prices in person, so that they could apply high-pressure sales tactics; and performed services without permission.²⁴

      Because the casket represented the greatest opportunity for profit, funeral directors engaged in unscrupulous techniques—often learned as part of their required schooling²⁵—to persuade people to buy high-priced ones.²⁶ Lavishly decorated display rooms were organized to make the most expensive caskets easily seen. Inexpensive caskets—if they were displayed at all—were often stored out of sight or presented in an unappealing manner. Funeral directors manipulated mourners with comments such as: “This is the last act you can perform for your mother”; “He deserves something better than that”; and “Consider what the neighbors will think when they see the casket.”²⁷ Worst of all, funeral establishments made the purchase of a casket the precondition of providing body handling and other services that they alone could offer, a practice known as “bundling.” If a customer tried to purchase a casket elsewhere, funeral directors would refuse to provide these services.

      Known as the Funeral Rule, the regulations adopted by the FTC attempted to restrict such practices. The rule states that: (a) consumers have the right to choose only the funeral goods and services they want; (b) funeral homes must provide a general price list (GPL) of goods, services, and prices; and (c) funeral providers must state the right of consumer choice in writing on the GPL. The regulations further prohibit: (a) misrepresenting embalming as being legally required or necessary (it is not), (b) misrepresenting a casket as being required for direct cremation, (c) misrepresenting any funeral goods or services as having protective or preservative abilities (this is not the case), (d) charging for embalming without permission to perform the service, and (e) subjecting consumers to bundling arrangements.²⁸

      The economic advantage bundling and other practices provided to funeral directors was evident in their reaction to the rule. From its conception, the rule was met with strenuous resistance by funeral directors and their trade associations, state funeral boards (usually composed of funeral directors), and members of peripheral industries that served the funeral industry.²⁹ These groups inundated the FTC with written comments while the rule was being considered,³⁰ and upon its adoption, they challenged it in court on evidentiary, policy, procedural, statutory, and constitutional bases.³¹

      Funeral directors also vigorously lobbied members of Congress against any regulation by the FTC,³² finding a champion in Representative Marty Russo, who sponsored legislation prohibiting the FTC from implementing the rule.³³ The eventual result was the FTC Improvements Act of 1980,³⁴ which forced the commission, when regulating, to comply with elaborate rule-making procedures and submit them for public comment before final rules could be promulgated. The effect was to directly limit the FTC’s power over the industry. The delay tactics produced yet more opposition commentary by the funeral industry, but in 1984 the Funeral Industry Practices Rule, or Funeral Rule, was finally put into full effect.³⁵

      The response was predictable and swift—a separate marketplace for funeral goods sprang up in which independent casket retailers began offering caskets at prices much lower than those offered by funeral homes.³⁶ In typical bottlenecker fashion, however, funeral directors struck back by charging fees for “handling” caskets that were purchased through third-party vendors.³⁷ As one funeral director wrote in a trade magazine, “the selection room,” referring to the room where caskets are displayed for consumer purchase, is after all “the only room in the entire funeral home where we make our money” (emphasis in original).³⁸ The handling fees came to the attention of the FTC during a rule-making review, and the commission began a process to amend the rule to prohibit the practice. Again, the funeral directors organized to fight the amendment, but their efforts were rejected in the courts.³⁹

      In many—but not all—states, the Funeral Rule resulted in additional entrepreneurs offering more choices for consumers. Over the years, legislators in a dozen states specified in their laws that only licensed funeral directors could sell funeral merchandise, such as caskets. Bottleneckers’ fingerprints were often all over such laws. Georgia’s law, for example, came about after a cemetery owner began infringing on what the funeral directors considered their turf by selling caskets. Funeral directors responded by pressing for a law limiting the ability to sell to licensed funeral directors, and the legislature quietly obliged in 1992.⁴⁰ The legislation’s two sponsors—Senator Wayne Garner and Representative Jimmy Lord—happened to be funeral directors themselves. They successfully created the casket bottleneck, which went almost completely unnoticed.⁴¹

      When Lord first introduced the legislation, it was a minor bill that dealt only with funeral home apprentices. It breezed through the House on a vote of 106–2 and then moved to the Senate. It was assigned to the Governmental Operations Committee, an odd placement, except that the committee chair—Senator Culver Kidd—shared some of his Senate district constituents with Lord’s House district. The bill was allowed to lie dormant in committee for two months. Then, as one observant funeral-industry lobbyist noticed, the committee altered it in a way that he cryptically described as “a substitute [that] was presented to the committee.”⁴² Included in the substitute legislation was the casket restriction. The bill passed the committee, the Senate, and the House, all without dissent. Indeed, it is likely no one else in the legislature even realized a monopoly was being created. As the editorial page editor of the Atlanta СКАЧАТЬ