Business ProfileforService Corporation International

OAKLAND — California Attorney General Rob Bonta, along with the District Attorneys of Alameda and Marin counties, and city and county of San Francisco, announced a settlement with Service Corporation International (SCI), the nation’s largest funeral service provider, which does business in California as the Neptune Society and the Trident Society. The settlement, which is subject to court approval, resolves the People’s enforcement action alleging that Texas-based SCI violated the Unfair Competition Law (UCL) and False Advertising Law (FAL) by engaging in false advertising and unlawful and deceptive acts in its marketing and sale of pre-need cremation packages. The proposed settlement, in the form of a stipulated judgment, provides full restitution to consumers, comprehensive injunctive relief, and $23 million in civil penalties.

“California's robust consumer protection laws protect all Californians from unlawful, unfair, and fraudulent business and marketing practices,” said Attorney General Rob Bonta. “Whether in higher education, home insurance, or the funeral service industry, deceptive business practices will not be tolerated. When consumers purchase pre-need funeral services, they expect — and the law requires — their funds to be safe and protected until those services are utilized."

“Neptune Society’s and Trident Society’s pervasive price manipulation and deceptive marketing affected all their consumer negotiations and contracts for pre-need services, demonstrating how their unlawful business practices were a result of decisions made at the highest levels of the companies,” said Alameda County District Attorney Pamela Price. “Thanks to the collaborative hard work of fellow District Attorney Offices and the Department of Justice, defrauded consumers will be made whole, and the companies will be required to pay $23 million in civil penalties and, more importantly, comply with the law requiring them to place pre-need funds in trust.”   

“Today’s settlement brings long overdue relief to the many concerned California consumers who purchased pre-need cremation products and services from the Neptune Society companies,” said Marin County Deputy District Attorney Andres Perez. “Our action further sends a clear message to the funeral industry that California laws that protect customers of these products will be strictly enforced.” 

“The pre-need cremation industry has historically been prone to abuse, which is why California law provides robust protection to consumers, many of whom are elderly,” said San Francisco District Attorney Brooke Jenkins. “I am proud that my office initiated the investigation into the unlawful practices alleged here and am pleased to have worked in partnership with the Attorney General and the other district attorneys on resolving them. This multi-million-dollar settlement should send an unmistakable message to businesses that offer cremation or funeral services: Consumer protection statutes must be strictly followed. When they are not, we will not hesitate to take action.” 

Pre-need cremation packages are a way for people to pre-pay for their cremation services while they are still alive. California law requires that all money paid for pre-need funeral arrangements be placed in trust until either the beneficiary dies and services are provided, or the consumer cancels the contract, at which point the consumer is entitled to a full refund. 

The lawsuit alleges that SCI deceptively marketed its products in a variety of ways, including by misleading consumers about its trusting practices, refund policy, and veterans’ burial benefits and cremation. Among other things, SCI routinely informed customers that they had 30 days to cancel their plans and receive a full refund, which is deceptive because pre-need customers are entitled to cancel and receive a full refund at any time before services are provided.

Sold through its Neptune and Trident locations in California, SCI’s highest-selling pre-need cremation package is one that the company marketed as the “Standard Plan.” The Standard Plan includes both cremation services and merchandise but was marketed and sold to customers as a single plan with a single price. Importantly, the Standard Plan was strategically priced to be cheaper than (or comparably priced to) stand-alone cremation services in order to induce consumers into purchasing the Standard Plan. However, when it came time to sign, SCI presented consumers with two contracts, one for heavily marked up merchandise, and one for deeply discounted cremation services. SCI then placed into trust only the discounted funds it allocated to the cremation services, keeping out of trust the funds it allocated to merchandise. Through this practice, SCI withheld from trust more than half of the total price of the Standard Plan. 

Further, when a Standard Plan purchaser requested a refund, SCI only refunded the portion it had allocated to cremation services and not any of the money allocated to merchandise. In other words, SCI typically refunded less than half of a consumer’s money. The complaint alleges that these practices violate California law, which requires funeral service providers to provide a full refund of the amount paid for the entire pre-need cremation package at any time before services are rendered.  This hurt consumers and their families, and allowed the company to artificially inflate its profitability.

Under today’s settlement, SCI will pay a $23 million civil penalty, pay full consumer restitution to the consumers who cancelled their plans but did not get a full refund, and be subject to strong injunctive terms which provide meaningful protections for California consumers. Among other things, SCI and its California locations Neptune Society and Trident Society must:

• Cease selling the Standard Plan or any similar package unless all money paid for the plan or package, as well as money paid for any collateral agreements, is placed into trust.
• Provide clear written disclosures informing consumers of their rights under California law and that consumers are not required to purchase additional products or services in order to purchase pre-need cremation services.
• Provide a full refund upon request to any consumer who cancels a pre-need funeral agreement.
• Comply with California law when advertising events or presentations regarding veterans’ benefits.

Information for Consumers Considering the Purchase of Funeral or Cemetery Arrangements:

Consumers have choices when making funeral or cemetery arrangements. While it is helpful to let your loved ones know your desires regarding burial or cremation, you are not required to prepay for funeral or cemetery services, or to buy a pre-need plan like the Standard Plan from a funeral provider. Providers must be licensed by the state, and both state and federal law provide important protections to consumers shopping for funeral and cemetery arrangements, including pre-need funeral arrangements. For example, providers are required to provide consumers with a General Price List so that they can shop around and make informed decisions, and they must provide consumers with an itemized statement of their choices upon agreeing to a contract. Pre-need plans must also come with a cancellation and refund option. For more information, please consult the Cemetery and Funeral Bureau’s guide for consumers considering the purchase of funeral or cemetery arrangements, the guide can be found here. 

Attorney General Bonta is committed to protecting California consumers and their rights across marketplaces:

• In April, Attorney General Bonta filed an amicus brief in Rosenberg-Wohl v. State Farm Fire and Casualty Co., in an effort to protect consumers’ right to challenge abusive business practices by insurance companies under the UCL.
• Also in April, Attorney General Bonta submitted a comment letter supporting the Consumer Financial Protection Bureau’s proposed rule which would close a regulatory loophole that enables banks to extract billions of dollars from consumers by charging overdraft fees without adequately disclosing basic credit terms.
• In February, Attorney General Bonta sent a letter small banks and credit unions warning that overdraft and returned deposited item fees may violate California’s Unfair Competition Law and the federal Consumer Financial Protection Act, and urged small financial institutions to eliminate these fees. 
• In February, Attorney General Bonta announced a settlement with two separate local Bakersfield landlords and their property management company, for multiple violations of the Tenant Protection Act, including unlawful rent increases, unlawful evictions, and failure to return security deposits on time.

A copy of the complaint and stipulated judgment can be found here and here, respectively.