Class Action Claims Florida Residents Duped by Funeral Services Cos. into ‘Bait and Switch’ Scheme for Prepaid Cremation Costs [UPDATE]

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A stable of funeral, cremation and cemetery services providers owned by Service Corporation International has been hit with a proposed class action centered on an alleged “bait and switch” scheme concerning Florida residents’ statutorily protected “preneed” payments for cremation. 

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Filed in Florida’s Southern District, the suit explains that the state, recognizing the need to protect senior citizens from fraud, has in place protections concerning “preneed” payments made for future cremation services while an individual is still alive. Florida law requires companies such as the defendants—who include SCI Direct, Inc.; SCI Funeral Services of Florida, LLC; S.E. Combined Services of Florida, LLC; NCS Marketing Services, LLC; and Neptune Society Management Corporation—to place money paid in advance for cremation services, ordinarily through “preneed contracts,” into a state-supervised trust, the suit says.

While preneed contracts ostensibly allow a consumer to buy services and merchandise—urns, flowers, memorial guest books—in advance and plan their own cremation while sparing their loved ones expense and stress, the agreements come with the inherent risk that the company offering preneed services may not exist and be able to provide what’s already been paid for years or sometimes decades later, the lawsuit says. On the flip side, according to the case, a consumer who signs a preneed contract may leave an area and move to another part of the country or even decide they no longer wish to be cremated.

According to the lawsuit, the statutory provision governing Service Corporation International’s contracts requires the company to deposit into a state-watched trust a minimum of 70 percent of the purchase price for preneed cremation services, 100 percent of the money collected for fees meant to be paid to third parties in the future, and either more than 30 percent of a related merchandise sale or 100 percent of the wholesale cost of such merchandise. Further, Florida law entitles a consumer to cancel their preneed contract at any time and receive a 100-percent refund of the purchase price of preneed cremation services, undelivered merchandise and fees collected for future third-party payments, the case says. 

The plaintiff claims the defendants have unlawfully induced consumers through bait-and-switch tactics into entering preneed cremation agreements for which the majority of the money paid in advance is neither placed into a state-mandated trust nor deemed refundable.

At the heart of the companies’ alleged scheme is Service Corporation International’s “Standard Neptune Plan,” a preneed package advertised to customers as a “bundle discount” on a set of cremation services and merchandise that’s positioned as more affordable than the general a la carte selection of the same services. As the case tells it, “virtually all” of Service Corporation International’s customers are lured into buying the Standard Neptune Plan with a promise that they’ll be charged “the same amount or a slightly higher amount” than they would for just cremation services and receive the merchandise for free or a small price increase.

In truth, the lawsuit alleges, the merchandise offered through the Standard Neptune Plan comes with “high and hidden costs” in that a customer has significantly less money placed into a monitored trust while setting themselves up to receive a substantially lower refund should they cancel their preneed contract with Service Corporation International.

When a customer chooses the Standard Neptune Plan, the lawsuit alleges, Service Corporation International requires the consumer to sign two separate contracts—an agreement for services and another agreement for the purchase of merchandise. Although the wholesale cost of, for instance, an urn and flowers may be around $25, Service Corporation International “arbitrarily apportions the majority of the payments made under the Standard Neptune Plan ($1,000 or more) to the merchandise,” the complaint claims.

The plaintiff alleges that the defendants’ “bookkeeping sleight-of-hand” with regard to preneed merchandise results in Service Corporation International placing into the state-mandated trust “barely 50%” of the amount it’s required to by law for the sale of cremation services alone, sans merchandise.

“Hence, [Service Corporation International] immediately increases its cash flow and bottom line,” the suit alleges. 

According to the complaint, consumers, in particular those over 60 years old, subject to Service Corporation International’s allegedly deceptive conduct see the refund amounts to which they’re entitled, as well as the amounts they can transfer to another funeral services provider and money placed in trust to protect against a potential future default of the company, cut by nearly half.

The lawsuit goes on to allege the actual fair market value of cremation merchandise sold to proposed class members is in and of itself a deceptive and unfair trade practice under Florida law given preneed customers are never provided with a sample of the applicable merchandise nor an opportunity to examine the goods prior to purchase. Service Corporation International customers consequently do not know that the retail fair market value of the merchandise, described in “grossly misleading” terms at best, is “close to zero,” the case claims. 

The suit lastly alleges that Service Corporation International’s practice of selling a so-called “Transportation and Relocation Protection Plan” is unlawful and deceptive in that the company offers such while concealing its own financial interests. While claiming that it offers the plan as a third-party seller for Medical Air Services Association of Florida, Inc., Service Corporation International fraudulently “creates the impression” that the cost of the plan is a pass-through fee despite receiving a kickback commission that goes undisclosed to consumers, the plaintiff alleges.

Further still, Service Corporation International fails to deposit 70 percent of the purchase price for its Transportation Relocation Protection Plan within a preneed trust and limits the timeframe in which a consumer can receive a refund to only the first 30 days after the initial sale, the case claims.

The suit alleges violations of Florida’s Deceptive and Unfair Trade Practices Act.