This story is part of a Prospect series called Rollups, looking at obscure markets that have been rolled up by under-the-radar monopolies. If you know of a rollup like this, contact us at rollups(at)prospect.org.
John Wood planned ahead. As the Maryland native neared retirement, in 2002 he took out burial rights for both himself and his wife in nearby Fort Lincoln Cemetery in Brentwood. The agreement he signed with the funeral home listed up-front costs at $500, and marginal charges later at $50 for reserving the spot at the cemetery.
Now, 20 years later, Wood is well into retirement and thinking about the future. He heard from friends about some suspicious practices taking place at their funeral homes, such as opening and closing fees being added to their relatives’ final charges for the funeral proceedings. He decided to pay a visit to Fort Lincoln this past summer, just to make sure. Not only did he learn that new costs had been added, but the tab was so big that it would put him in a financial hole deep enough to drain his remaining savings or push him into debt that would be passed off to his children.
It turned out that, unbeknownst to Wood, the previous owner of Fort Lincoln, Stewart Enterprises, had sold the cemetery and conjoined funeral home to a company called Dignity in 2013. Dignity is owned by Service Corporation International, the largest monopolistic actor that’s wrapped its tentacles around death care nationwide. After the purchase, SCI began jacking up the final prices for all its burial right holders, adding sky-high opening and closing fees.
When he visited the Fort Lincoln home, the salesman told him the package would be either $12,490 with a memorial stone or $8,545 without. “When you’re a layman, you don’t know how these things work but something didn’t seem right,” Wood said.
More from Luke Goldstein
The multibillion-dollar funeral industry—a universal service that everyone has to deal with at some point—has costs that have risen 4.7 percent, a rate well above last year’s overall inflation rate of 3.4 percent. Death care is one corner of the economy that, despite promising indicators overall, is still afflicted by high markups driving inflation. In fact, a recent study from Groundwork Collaborative found that 53 percent of consumer price increases from the second and third quarters of 2023 were attributable to markups.
One of the reasons funeral homes in particular get away with price-gouging is that the industry doesn’t operate like other goods where consumers can just wait until market fluctuations bring costs down. Hospitals or local coroners give families short deadlines for moving their loved ones’ bodies to a funeral home.
The other reason that those costs have gotten even more steep is because of the ongoing consolidation of funeral homes and cemeteries in recent years by corporate chains and private equity firms.
This rollup is taking a toll on consumer expenses, according to the Funeral Consumers Alliance, a national network assisting families in mourning to navigate the funeral home market. Markups, as well as other predatory practices such as charges added onto the final tab, have run rampant despite long-standing regulations intended to constrain those practices.
The multibillion-dollar funeral industry has costs that have risen 4.7 percent, a rate well above last year’s overall inflation rate of 3.4 percent.
Far from a niche market, funeral services are a major cost that eats into people’s retirement savings and family budgets. There have been numerous periods in recent history where death care has been the third- or fourth-largest single investment families make over the course of their lives, next to a home mortgage and a car. That’s consistently been the case for Americans who didn’t pay for four-year college degrees and avoided having a medical disaster without insurance at some point in their lives.
SCI holds about 16 percent of national market share and earns 22.4 percent of all funeral profits in the United States, but in practice that doesn’t fully capture its vise grip over the sector. In many regional areas, there may appear to be a menu of options including mom-and-pop funeral homes to hunt for the best prices. But often, the appearance of choice is illusory, because hidden in the fine print it turns out they’re all run by the same publicly traded goliaths, more often than not owned by SCI.
Wood wouldn’t be able to pay for those costs with his retirement savings and didn’t understand how he wasn’t notified of the new pricing list at the time of the funeral home’s ownership change.
He decided to first reach out to the Funeral Consumers Alliance for help and explain what happened. The Alliance immediately identified what Wood hadn’t been aware of: The funeral home had likely broken federal law.
Since 1984, the Federal Trade Commission has enforced a law called the Funeral Rule, which forces homes to provide consumers with all-in general pricing information up front, in person or over the phone. However, funeral homes today often manage to circumvent that rule because it doesn’t cover general pricing on the internet, the main venue where consumers now search for funeral services.
In Wood’s case though, Fort Lincoln had not provided him with a physical copy of the general pricing list, which would be illegal whether or not Wood had explicitly asked for one or not.
On Wood’s behalf, the Funeral Consumers Alliance informed the funeral home that it was likely in violation of the Funeral Rule, which it used as leverage to negotiate down Wood’s funeral costs to what the price would have been when SCI initially bought Fort Lincoln Cemetery without informing Wood.
It came out to $6,000, a 20 percent discount, which Wood and his wife are now paying off each month with their retirement savings.
Wood’s recent experience with the funeral home is one example why he thinks many of his neighbors hold bleak views about the state of the economy.
“It feels like you’re getting taken for a ride every which way and you don’t even know why most of the time,” Wood said.
The Funeral Consumers Alliance has dealt with many similar cases in recent years. As one of their representatives, Joyce Mitchell, explained, her work as of late is mainly dedicated to forcing homes to comply with the existing FTC rule.
As Wood’s case shows, the localized market power held by SCI allows the company to jack up rates and add on additional fees, mainly opening and closing charges, for their captive consumers with few legitimate alternatives to turn to.
In large part, Big Funeral raises costs by resorting to a range of predatory practices that circumvent existing federal law.
When SCI comes into town, buying up independent homes, prices have been shown to rise. In a 2017 study by the Consumer Federation of America, funeral services offered by SCI averaged 47 to 72 percent higher than market rate.
Those kinds of eye-watering markups are what got private equity firms to enter the death care industry in the 2010s. During the pandemic years, as the death toll mounted, PE firms went on a spending spree across the country, buying out independent stores and local chains. According to a Kaiser Family Foundation report, private equity combined with other corporate-run chains now owns about a fifth of all funeral homes. Once they accrue enough influence in local markets, PE managers then hunt for ever-higher returns leading to price hikes, based on local reporting data gathered by the Funeral Consumers Alliance.
The price hikes accelerated during the inflationary period after 2021. Total Revenues for SCI rose by $24 million this past year, based on earnings calls, from $977 million in 2022 to over a billion dollars this past year.
In large part, Big Funeral raises costs by resorting to a range of predatory practices that circumvent existing federal law, as evinced by Wood’s recent ordeal with Fort Lincoln. They withhold information up front about all-in pricing and manage to stick on additional costs at the end, such as opening and closing fees.
One fix that consumer advocacy groups are pushing for would be for the FTC to extend the Funeral Rule for online pricing, which is how most people look for funeral services locations these days.
In 2022, the FTC issued a notice of advanced rulemaking seeking public comment on updating the Funeral Rule and recently held numerous meetings with impacted parties to discuss the pricing transparency reforms. Another potential solution is to enforce structural separation between cemeteries and funeral services ownership, which are restricted by a number of state laws across the country.
So far though, the Biden administration has yet to curb these predatory practices in death care despite other actions it’s taken to kill junk fees across numerous sectors.
