Posted on: Thursday, December 30, 2004

EDITORIAL
Tighten protections under funeral plans

It's always disheartening to hear about lax state laws that compound the hardships that hit the elderly.

And that appears to be the problem with the state's funeral service industry, according to a recent article by Advertiser business reporter Andrew Gomes.

At issue is the business practices of RightStar, the state's largest funeral service company, which took in $2.8 million in 2002 by canceling prepaid contracts and keeping the money already paid.

In the case of the late Norma Courtney, the company canceled her $5,000 plan — after she suffered a series of strokes and stopped making the monthly $50 payments — and kept the $1,800 she had already paid. Instead of being buried in a plot at Valley of the Temples Memorial Park as she had planned, her ashes are kept in a plastic box in her stepdaughter's living room.

Unfortunately, neither Courtney nor her family received a warning that the plan would be canceled unless a payment was made.

Surprisingly, funeral providers are not required to notify customers of cancellations if customers breach a contract, according to the state Department of Commerce and Consumer Affairs, which regulates the funeral industry.

Moreover, under Hawai'i law, a funeral service company can keep 30 percent of what you've already paid if you cancel your funeral plan, and keep all the money if you default on your plan.

It's what Joshua Slocum, executive director of the Vermont-based Funeral Consumers Alliance, calls "legalized robbery."

In a lawsuit, the state is questioning the appropriateness of RightStar's withdrawals of customer payments because of canceled contracts, among other causes, and is proposing state oversight of company operations, though it does not allege any wrongdoing.

The state Legislature should look closely at Hawai'i's prepaid funeral industry and work to provide necessary protection for this vulnerable segment of consumers.