FTC Staff Comment to the Hon. Chuck Sides Concerning Oregon H.B. 3284 to Regulate Pre-Need Funeral Arrangements

: ..... 	A.
FEDERAL TRADE COMMISSION
Seattle RecionGl Office
2806 ~dcrGl Buildilli
91.5 Second Avenue
Seattl". w..ehinlllOn 98174
(200) 442·4656
April 	6, 	1987
Representative 	Chuck 	Sioes
Oregon 	State 	Legislature
Capitol 	Building
Salem, 	Oregon 	97310
Dear 	Representative 	Sides:
The 	Federal 	Trade 	Commission's Seattle 	Regional 'Office 	is'pleased,
to 	respond 	to 	your 	invitation 	to 	comment 	on 	House 	Bill 	3284,
which 	would 	modify 	existing 	law 	regulating 	the 	sale 	of
prearranged 	funeral 	plans 	in 	Oregon. 	In 	these 	comments, 	we
discuss 	three 	matters: 	1) 	certain 	aspects 	of 	the 	proposal 	to
certify 	persons 	selling 	prearranged 	funeral 	plans; 	2) 	the
requirement 	that 	money 	paid 	for 	pre-need 	plans 	be 	held 	in 	trust;
and 	3) 	the 	use 	of 	a 	performance 	bond 	in 	lieu 	of 	trusts.
This 	letter 	describes 	our 	concern 	that 	the 	certification
procedure 	might 	be 	mis~sed to 	restrict 	entry 	into 	the 	pre-need
sales 	business 	and 	supports 	elimination 	of 	the 	100% 	trust
requirement. 	Pre-need 	sellers 	should 	be 	allowed 	to 	choose 	among
trusts, 	performance 	bonds, 	and 	insurance 	arrangements. 	We
believe 	that 	changes 	in 	the 	law 	along 	these 	lines 	will 	allow 	the
pre-need 	sales 	business 	to 	operate 	more 	efficiently 	while 	still
providing 	consumers 	with 	effective 	protection.
The 	Federal 	Trade 	Commission 	seeks 	to 	promote 	competition 	among
members 	of 	the 	professions 	to 	the 	maximum 	extent 	compatible 	with
other 	legitimate 	state 	and 	federal 	goals. 	For 	several 	years 	we
have 	had 	a 	program 	addressing 	restrictions 	on 	the 	business
practices 	of 	professionals, 	including 	optometrists, 	dentists,
physicians, 	lawyers, 	funeral 	directors, 	and 	others. 	Our 	goal 	has
been 	to 	identify 	and 	seek 	removal 	of 	restrictions 	that 	impede
competition 	and 	increase 	costs 	without 	providing 	countervailing
benefits 	to 	oonsumers.
1 	These 	comments 	represent 	the 	views 	of 	the 	Seattle 	Regional
Office 	and 	of 	the 	Bureaus 	of 	Competition, 	Consumer 	Protection,
and 	Economics 	of 	the 	Federal 	Trade 	Commission, 	and 	not
necessarily 	those 	of 	the 	Commission. 	The 	Commission 	has,
however, 	voted 	to 	authorize 	submission 	of 	these 	comments.

3
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-. 	. ~
'Representative 	Chuck 	Sides
April 	6, 	1987
Page 	2
The 	Commi~sion has 	actively 	pursued 	this 	goal 	in 	the 	funeral
industry. 	The 	Commission's 	Trade 	Regulation 	Rule 	Concerning
Funeral 	Industry 	Practices 	("Funeral 	Rule"), 	16 	C.F.R. 	453,
became 	fully 	effective 	on 	April 	30, 	1984. 	The 	Rule 	was 	designed
to 	promote 	increased 	competition 	and 	consumer 	choice 	in 	the
funeral 	industry 	by 	facilitating 	informed 	purchase 	decisions.
Among 	other 	things, 	the 	Funeral 	Rule 	requires 	providers 	of
funeral 	goods 	and 	services 	to 	give 	prospective 	purchasers
detailed 	information 	about 	prices 	and 	the 	relevant 	legal
requirements. 	. .
.
As 	we 	understand 	it, 	current 	Oregon 	law 	permits 	the 	sale 	of
funeral 	goods 	and 	services 	and 	burial 	Plans 3 0n.a 	pre-need 	basis
if 	certain 	trust 	requirements 	are 	observed. 	At 	present, 	100' 	of
the 	payments 	made 	for 	most 	such 	goods 	and 	services, 	including
interest 	and 	earnings, 	mu!t 	be 	placed 	in 	trust 	until 	the
anticipated 	death 	occurs. 	House 	Bill 	3284 	would 	amend 	the 	Act
to 	require 	deposit 	into 	a 	trust 	fund 	of 	only 	50% 	of 	the 	sales
price 	attributable 	to 	funeral 	and 	cemetery 	merchandise, 	75% 	of
the 	sales 	price 	attributable 	to 	funeral 	and 	cemetery 	services, .
and 	35% 	of 	the 	sales 	price 	received 	for 	undeveloped 	interment,
entombment, 	or 	cremation 	spaces. 	As 	an 	alternative, 	House 	Bill
3284 	would 	allow 	sellers 	to 	ensure 	the 	availability 	of 	funds 	by
obtaining 	a 	performance 	bond 	equal 	to 	the 	total 	trust 	requirement
that 	would 	otherwise 	apply. 	The 	bill 	would 	also 	require 	sellers
of 	prearranged 	funeral 	plans 	to 	obtain 	a 	certificate 	before 	doing
business 	in 	Oregon.
A. 	General 	Comments
This 	is 	a 	particularly 	appropriate 	time 	to 	address 	the 	sale 	of
pre-need 	funeral 	plans. 	Sales 	of 	such 	arransements 	have 	been
increasing 	throughout 	the 	country. 	In 	1960, 	only 	about 	20,000
such 	plans 	were 	sold 	nationwide. 	In 	1985, 	by 	contrast, 	600,000
pre-need 	sales 	wer Smade. 	It 	is 	estimated 	that 	700,000 	plans 	.
were 	sold 	in 	1986, 	and 	that 	steady 	growth 	will 	continue 	in 	the
2 	Commission 	staff 	has 	previously 	commented 	favorably 	on
proposals 	to 	alter 	100% 	trusting 	requirements 	in 	letters 	of
February 	14, 	1986 	to 	the 	Kansas 	Legislature 	and 	of 	April 	7, 	1986
to 	the 	Michigan 	Legislature.
Ore. 	Rev. 	Stat. 	128.410 II ~.
4 	Only 	66\ 	of 	funds 	received 	for 	cemetery 	vaults 	and 	markers
must 	currently 	be 	placed. in 	trust.
5 	Rockwood, 	Batesville 	Responds 	to 	Questions 	About 	Forethoughts,
Mortuary 	Management, 	November 	1986, 	at 	25.

Representative 	Chuck 	Sides
April 	6, 	19B7
Page 	3
.~
future. 	Thus, 	a 	maJor 	shift 	in 	funeral 	purchasing 	behavior, 	from
"at-need" 	to 	"pre-need" 	arrangements, 	may 	be 	underway.
Pre-need 	sales 	of 	funeral 	goods 	and 	services 	may 	offer 	consumers
significant 	advantages. 	For 	example, 	pre-need 	arrangements
enable 	consumers 	to 	make 	buying 	decisions 	without 	the 	time 	or
emotional 	pressures 	associated 	with 	at-need 	purchases. 	They 	also
allow 	individuals 	to 	pre-select 	their 	own 	arrangements.
Although 	we 	are 	not 	aware 	of 	any 	systematic 	statistical 	evidence
on 	the 	extent 	of 	consumer 	problems 	with 	pre-need 	funeral
contracts, 	we 	have 	learned 	that 	ThanaCAP, 	a 	national 	dispute
resolution 	service 	for 	the 	funeral 	industry, 	classified 	14% 	of
the 	consumer 	complaints 	it 	recei 6ed 	in 	1986 	in 	the 	category,
"pre-need, 	insurance, 	or 	trust." 	An 	informal 	survey 	of 	consumer
and 	industry 	groups 	conducted 	by 	our 	Bureau 	of 	Economics 	suggests
that 	pre-need 	complaints 	can 	be 	classified 	roughly 	into 	four ...
categories: 	1) 	the 	buyer 	relocates 	and 	discovers 	that 	the 	pre-
need 	contract 	is 	not 	transferable: 	2) 	the 	buyer 	dies 	and 	his
survivors 	are 	unhappy 	with 	the 	terms 	of 	the 	contract; 	3) 	the':
seller 	goes 	out 	of 	business 	leaving 	purchasers 	uncompensated; 	and
4) 	the 	seller 	defrauds 	or 	deceives 	the 	buyer. 	The 	remedies
contained 	in 	the 	proposed 	bill 	might 	be 	appropriate 	to 	address
complaints 	of 	the 	last 	two 	types.
Oregon 	has 	a 	legitimate 	interest 	in 	protecting 	against 	the
fraudulent 	or 	deceptive 	practices 	of 	pre-need 	plan 	sellers.
Because 	many 	pre-I)eed 	purchasers 	pay 	a 	substantial 	sum of 	money
for 	goods 	or 	services 	that 	may 	not 	be 	provided 	for 	many 	years,
consumers 	may 	benefit 	if 	the 	state 	ensures 	that 	funds 	and
providers 	are 	available 	to 	deliver 	these 	goods 	and 	services 	at
the 	time 	they 	are 	required. 	However, 	the 	Legislature 	should 	be
aware 	that 	the 	regulations 	may 	also 	cause 	consumer 	injury 	if 	they
have 	the 	effect 	of 	inhibiting 	price 	competition, 	innovation, 	or
the 	availability 	of 	services. 	.
The 	appropriate 	way 	to 	achieve 	the 	optimal 	balance 	between
protecting 	pre-need 	purchasers 	on 	the 	one 	hand, 	and 	facilitating
competition 	and 	innovation 	on 	the 	other, 	is 	to 	identify 	the 	least
restrictive 	means 	of 	protecting 	consumers 	against 	fraud,
deceptive 	practices, 	and 	the 	provider's 	insolvency. 	Such 	a
balanced 	approach 	will 	assure 	that 	consumers 	receive 	adequate
protection 	while 	allowing 	maximum 	freedom 	for 	market 	forces.
In 	a 	relatively 	new 	and 	growing 	industry 	like 	pre-need 	funeral
6 	By 	itself, 	this 	number 	does 	not 	enable 	us 	to 	determine 	whether
there 	are 	significant 	consumer 	problems 	associated 	with 	pre-need
arrangements.

Representative 	Chuck 	Sides
April 	6, 	1987
Page 	4
sales, 	unnecessary 	regulation 	may 	have 	a 	disproportionately
adverse 	impact 	on 	innovation.? 	.... .. 	.
It 	is 	against 	this 	general 	background 	that 	we 	provide 	the
following 	comments 	on 	specific 	provisions 	of 	House 	Bill 	3284.
B. 	Certification 	Requirement
Section 	4 	of 	the 	bill 	would 	make 	it 	unlawful 	to 	sell 	prearranged
funeral 	plans 	without 	obtaining 	a 	valid 	certificate 	issued 	by 	the
State 	Mortuary 	and 	Cemetery 	Board. 	Before 	a 	certificate 	will 	be
issued, 	the 	applicant 	must 	file 	a 	statement 	of 	assets 	and
liabilities 	with 	the 	Board 	and 	report 	on 	any 	civil 	or 	criminal
proceedings 	involving 	the 	applicant 	in 	which 	fraud 	was 	charged.
The 	certificate 	may 	be 	revoked 	for 	anyone 	of 	several 	reasons,
including 	insolvency 	of 	the 	seller, 	misrepresentation, 	or 	failure
to 	provide 	pertinent 	data 	tO,the 	Board. 	,·A civil,penaltymay:be·.·
imposed 	in 	lieu 	of 	revoking 	the 	certificate.
We 	are 	concerned 	with 	the 	certification 	requirement 	for 	several
reasons. 	First, 	the 	bill 	1s 	unclear 	as 	to 	whether 	the 	Board 	may
exercise 	discretion 	to 	withhold 	certification 	or 	must 	issue 	the 	'
certificate 	automatically 	upon 	the 	filing 	of 	required
information. 	It 	may 	be 	appropriate 	to 	allow 	the 	Board 	to
withhold 	certification 	of 	an 	applicant 	who 	has 	been 	convicted 	of
fraud, 	but 	this 	authority 	should 	be 	confined 	to 	that 	or 	other
specified 	circumstances.
Second, 	we 	are 	concerned 	about 	Section' 5(1) (e), 	which 	requires
applicants 	to 	file 	"such 	information 	as 	the 	Board 	may 	require 	to
determine 	the 	qualification 	of 	the 	applicant." 	This 	provision
allows 	the 	Board 	to 	exercise 	unfettered 	discretion 	in 	levying
informational 	requirements 	on 	certificate 	applicants 	and
assessing 	their 	qualifications. 	Such 	a 	provision 	could 	be 	used
to 	obstruct 	entry 	into 	the 	business 	of 	pre-need 	sales, 	or 	.
otherwise 	raise 	the 	cost 	of 	entry 	to 	the 	point 	where 	competition
would 	be 	adversely 	affected. 	We 	suggest 	instead 	that 	the
Legislature 	specify 	the 	types 	of 	information 	that 	should 	be
filed. 	These 	could 	include 	items 	such 	as 	insolvencies, 	legal
actions 	filed 	against 	the 	applicant 	(along 	with 	the 	result), 	and
the 	names 	of 	states 	in which 	the 	applicant 	has 	been 	admitted 	to
sell 	pre-need 	plans.
7 	An 	example 	of 	such 	innovation 	is 	a 	plan 	that 	protects 	both 	the
seller 	and 	the 	buyer 	of 	pre-need 	funeral 	arrangements. 	The 	fact
that 	the 	mar ket 	has, 	on .1 ts 	own, 	produced 	a 	plan 	of 	th is 	type
suggests 	the 	need 	for 	the 	government 	to 	exercise 	caution 	that 	it
not 	overly 	regulate 	pre-need 	sales 	by 	imposition 	of 	trusting 	or
performance 	bond 	requirements.

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Representative 	Chuck 	Sides
April 	6, 	1987
Page 	5
'~
Third, 	the 	likelih~od of 	the 	potential 	problem 	noted 	above 	may 	be
increased 	where, 	as 	here, 	several 	members 	of 	the 	certifying 	Board
are 	potential 	competitors 	of 	pre-need 	sellers 	seeking
certification. 	For 	this 	reason, 	the 	Legislature 	might 	consider
removing 	the 	Board 	from 	the 	certification 	process 	and 	simply
require 	filing 	the 	necessary 	information 	with 	the 	Oregon
Secretary 	of 	State, 	or 	some 	other 	appropriate 	office.
Fourth, 	the 	bill 	appears 	to 	impose 	unnecessary 	constraints 	on
cemetery 	operators 	and 	certain 	associations. 	Section 	7(9) 	would
prevent 	cemetery 	operators 	from 	engaging 	in 	pre-need 	sales 	unless
they 	or 	their 	predecessors 	have 	been 	in 	continuous 	operation 	for
at 	least 	24 	months. 	No 	such 	requirement 	of 	continuous 	operation
is 	imposed 	on 	potential 	entrants 	that 	are 	not 	currently 	engaged
in 	the 	cemetery 	business. 	Section 	5(1) (c) 	requires 	that
certificate 	applications 	reveal 	fraud 	convictions 	against 	any·
member 	of 	an.applicant 	association ••. Thi6~·requirement·maybe .: ..
excessively 	burdensome 	to 	organizations 	such 	as 	senior 	citizens
groups 	or 	burial 	societies 	with 	large 	numbers 	of 	members.
Section 	7(8) 	should 	be 	deleted 	and 	consideration 	should·be 	given
to 	limiting 	Section 	5(1) (0) 	so 	that 	it 	will 	not 	apply 	to 	all 	the
members 	of 	large 	organizations.
c. 	Trust 	Requirements
Several 	states 	have 	imposed 	trust 	requirements 	to 	protects
pre-need 	consumers' 	investments 	from 	fraud 	and 	deception.
However, 	a 	trust 	requirement 	-- 	particularly 	a 	100% 	trust
requirement 	-- 	can 	have 	unintended 	anticompetitive 	consequences
that 	injure 	consumers.
From 	our 	experience 	with 	the 	pre-need 	sales 	industry, 	it 	appears
that 	the 	current 	100% 	trust 	requirement 	in 	Oregon 	may 	restrict
competition 	in 	the 	sale 	of 	pre-need 	goods 	and 	8ervic~s without
providing 	countervailing 	consumer 	benefits. 	Under'lOO~ trust
fund 	laws, 	the 	seller's 	recovery 	of 	front-end 	and 	administrative
expenses 	is 	made 	less 	certain 	and 	more 	costly. 	Instead 	of
covering 	these 	expenses 	with 	funda 	paid 	by 	consumers, 	sellers
must 	use 	their 	own 	capital 	or 	third-party 	financing 	for 	a
lengthy, 	indefinite 	period 	of 	time. 	These 	added 	costs 	and 	the
uncertainty 	of 	such 	arrangements 	may discourage 	competitors 	from
8 	All 	consumers 	who 	make 	pre-need 	f~neral purchases 	in 	their
homes 	receive 	some 	protection 	under 	the 	Federal 	Trade
Commission's 	Trade 	Regulation 	Rule 	Concerning 	Cooling-Off 	Period
for 	Door-to-Door 	Sales, 	16 	C.F.R. 	429 •. 	Among 	other 	things, 	that
Rule 	requires 	sellers 	to 	give 	consumers 	three 	days 	in 	which 	to
rescind 	home 	SOlicitation 	sales.

,_.....t'.,.,.... '''''''''1:. '_WI 11'1; ;:'I:.HIL 	,We 44, 4w33 6602376 	P.06
Representative 	Chuck 	Sides
April 	6, 	1987
Page 	6
making 	pre-need 	sales. 9 	~ewer 	sellers 	and 	the 	reSUlting 	reduced
competition 	can 	injure 	consumers 	by 	depriving 	them 	of 	the ·lowest
pr ices 	for 	the 	goods 	and 	serv ices 	they 	wish ·to 	purchase 	and
limiting 	the 	array 	of 	alternatives 	and 	pricing 	options 	that 	would
otherwise 	be 	available.
The 	bill 	attempts 	to 	address 	these 	problems 	by 	reducing 	the
amount 	that 	must 	be 	plac~d 	in 	trust. 	Nonetheless 	a 	trusting
requirement 	that 	is 	less 	t~an 100% 	must 	still 	be 	approached 	with
care. 	If 	the 	amount 	of 	money 	exempt 	from 	the 	trust 	requirement
is 	less 	than 	the 	seller's 	front-end 	and 	administrative 	outlays,
then 	recovery 	of 	a 	portion 	of 	the 	outlays 	is 	made 	less 	certain
and 	more 	costly. 	This 	will 	raise 	the 	price 	that 	sellers 	need 	to
charge 	consumers 	in 	order 	to 	earn 	a 	competitive 	return. 	If 	this
increase 	in 	price 	is 	not 	offset 	by 	an 	added 	benefit 	to consumers
(~. ., . a 	reduction 	in' the 	risk 	of 	non-performance) ," 	then ~...-~-- "..
consumers 	will 	be 	worse 	off 	under 	the 	trust 	requirement •.
We 	believe 	that 	by 	lowering 	the 	percentag~ of 	t~e ~ale't~at'muit
be 	placed 	in 	trust, 	House 	Bill 	3284 	will 	encourage 	more 	sellers
to 	offer 	pre-need 	goods 	and 	services 	and 	thus 	facilitate
competition 	in 	this 	area. 	The 	optimum 	level 	to 	be 	placed 	irt 	the'
trust 	fund 	should 	take 	into 	account 	the 	actual 	costs 	incurred 	for
overhead, 	marketing, 	administrative 	expenses, 	and 	the 	like.
D. 	Performance 	Bonds
Section 	14 	of 	the 	bill 	would 	allow 	a 	pre-need 	seller, 	in 	lieu 	of
the 	trust 	requirement, 	to 	purchase 	a 	performance 	bond 	in 	an
amount 	equal 	to 	the 	trust 	requirements 	that 	would 	otherwise
apply. 	We 	think 	this 	alternative 	has 	much 	to 	recommend 	it. 	It
provides 	an 	effective 	means 	of 	protecting 	the 	consumers 	from
seller 	default 	due 	to 	fraud 	or 	insolvency, 	but 	does 	not 	pose 	the
same 	anticompetitive 	risks 	as 	trust 	fund 	requirements.
In 	analogous 	"future 	services" 	sales, 	where 	delivery 	is 	deferred
or 	occurs 	over 	an 	extended 	time, 	performance 	bonds 	have 	been 	an
effective 	means 	of 	protecting 	the 	consumer's 	investment. 	In
three 	recent 	Commission 	cases, 	for 	example, 	health 	spa 	businesses
were 	charged 	with, 	among 	other 	things, 	failing 	to 	fulfill
contracts 	with 	consumers 	and 	retaining 	membership 	fees 	without
9 	The 	Association 	of 	Funeral 	Service 	Professionals, 	Inc., 	has
informed 	us 	that 	since 	1981, 	When 	the 	100' 	trusting 	requirement
was 	first 	passed, 	about$l5 	million 	has 	been 	paid 	into 	trust •. By
contrast, 	if 	House 	Pill 	3284 	passes, 	the 	two 	largest 	sellers 	of
pre-need 	plans 	expect 	to 	be 	able 	to 	sell 	plans 	in 	Oregon 	jointly
costing 	about 	$12 	million 	each 	year.
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• 	--- "- 	---' '- 	._-- _1,.,j~_....,J.ll,..I 	1.1(".1-..
Representative 	Chuck 	Sides
April 	6, 	1987
Page 	7
'v
offering 	or 	making"refunds. IO 	The 	judgments 	in 	thoso 	cases
prohibit 	the 	spa 	operators 	from 	accepting 	any 	payment 	for 	a
membership 	in 	advance 	of 	providing 	the 	promised 'services unless
performance 	bonds 	have 	first 	been 	obtained. 	The 	judgments
specify 	that 	the 	bond 	amount 	must 	be 	for 	at 	least 	$50,000 	or
enough 	to 	provide 	refunds 	to 	all 	health 	spa 	members 	in 	the 	event
that 	a 	spa 	fails 	to 	open, 	or 	if 	it 	closes 	before 	all 	the 	services
have 	been 	provided.
A performance 	bond 	may 	be 	written 	to 	ensure 	that 	the 	goods 	and
services 	will 	be 	available 	if 	the 	seller 	cannot 	provide 	them, 	so
that 	the 	consumer 	is 	protected 	from 	seller 	default 	whether 	~aused
by 	fraud 	or 	by 	insolvency. 	In 	addition, 	because 	sureties 	compete
among 	themselves 	for 	the 	performance 	bond 	busin~ss,the price of
these 	bonds 	and 	the 	requirements 	on 	seller~~will be 	set 	in 	the
most 	efficient 	manner 	by 	the 	market. 	Sureties 	will 	be 	able 	to·
determine 	requirements 	Individually for 	each 	5~ller, and.thus~
provide 	adequate 	protection 	at 	the 	lowest 	cost.
Although 	performance 	bonds 	appear 	to 	be 	less 	costly 	than 	trust
requiremi~ts, there 	may 	be 	some 	instances 	in 	which 	the 	opposite
is 	true. 	We 	therefore 	agree 	that 	pre-need 	sellers 	should 	be
permitted 	to 	choose 	between 	trusting 	and 	bonding. 	We 	recommend
that 	the 	Legislature 	also 	consider 	permitting 	selli~s to 	protect
pre-need 	consumers 	through 	insurance 	arrangements. 	If 	each
pre-need 	seller 	may 	choose 	the 	lowest-cost 	alternative 	available
10 	FTC 	v. 	Lady 	Venus 	Centers, 	Inc., 	No. 	3-84-0158 	(M.D. 	Tenn.
Feb. 	16, 	1984); 	FTC 	v. 	Tyler-Radcliffe 	Co., 	Inc., 	No. 	3-84-0159
(M.D. 	Tenn. 	Feb. 	16 	1984); 	FTC 	v. 	Thor 	Enterprises, 	Inc., 	No. 	84-
2121-MA 	(w.o. 	Tenn. 	Feb. 	16, 	1984).
11 	One 	partiCUlar 	seller 	may 	be 	a 	better 	risk 	than 	a second 	one,
for 	example, 	because 	of 	a 	large 	fixed-asset 	base. 	If 	the 	lower
risk 	seller 	is 	charged 	a 	lower 	fee 	for 	a 	performance 	bond, 	the
seller 	can 	pass 	that 	savfngs 	along 	to 	consumers. 	In 	addition,
sureties 	may 	put 	fewer 	restrictions 	(~., 	lower 	escrow 	deposit
requirements) 	on 	the 	lower 	risk 	sellers. 	This 	can 	only 	be 	done
if 	sellers 	are 	dealt 	with 	individually.
12 	For 	example, 	the 	American 	Association 	of 	Retired 	Persons'
(AARP) 	Commentary 	on 	Model 	Law 	for 	Prepaid 	Funeral 	Arrangements
(p. 	29) 	suggests 	that 	performance 	bonds 	are 	"difficult 	and
expensive 	to 	obtain."
13 	The 	AARP 	Commentary .suggests 	a 	state-sponsored 	insurance 	fund
as 	an 	alternative 	to 	trusting 	and 	bonding. 	As 	noted 	above 	(see
note 	7) 	private 	insurance 	arrangements 	are 	already 	becoming ---
available.

. .
Representative Chuck 	Sides
April 6, 	1967
Page 	8
to 	it, 	the 	Legislature will 	help assure 	that 	consumers pay 	the
lowest 	possible 	price 	for 	protection. 	.
In sum, 	we 	feel 	that permitting 	all 	pre-need 	sellers 	to obtain
performance 	bonds 	or 	appropriate 	insurance 	in 	lieu of a 	trust
fund 	arrangement 	is 	a 	viable, 	less 	costly, 	and 	procompetitive
alternative.
E. 	Conclusion 	,. ,
We 	have 	focused 	our 	comments on 	the 	portions 	of 	House 	Bill 	3284
that 	appear 	to 	have 	particular 	competitive 	impact. 	We express 	no
opinion on 	the 	remaining 	provisions 	of 	the 	bill. 	We hope 	that
our 	remarks 	concerning 	the 	competitive 	and consumer 	protection
aspects 	of 	the 	bill will 	assist 	you 	in your 	deliberations. 	We
appreciate 	having 	had 	the opportunity 	to present our 	views. 	If
you 	have 	any 	questions, 	please 	call Dennis McFeely ..!n. _this .. ~~:;.~ .." __ ~ __ ..;:;;
'.:''':~- office .·c O'~_~~~': . - ••. : 	. :::.;.'~:-:' -~:.~' ;-:- - 	.' 	_: ~:..~.:::'~~:~--~~---' -'"-:-.' :.:. "--:~'. '..' 	.. ~
,.,..;.	
.- 	"""'...--	
.~~, c_..........--	
-~:"~'. ~- .~..--~
~rl'}',~/'
George J. 	Zweibel
Regional Director
Seattle 	Regional Office
Sincerely, ..-..:~ . ".':~ _ ...:_.'i~ -- __ ..... 	- .....
-.~"" ".
TOTAL P.02
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