Is SCI's Marketing Plan
Set to Gouge the Poor?
In press articles that appeared in Phoenix, Arizona and Louisville, Kentucky papers on October 19, 1999, SCI launched a new marketing plan—"Dignity" funeral packages. These plans run from about $2,000 to over $9,000 and can be financed at the rate of 12.9% to 21%, or so the article implied. The following was posted on our web site a day or two later:
Finance charges on a lay-away plan before they lay you away?
And while they're collecting additional interest on YOUR money in THEIR bank?
The working poor will be hit the hardest by this tactic. Socialworkers, Agencies on Aging, Community Action groups, TAKE NOTICE! As for the "lock in prices now" ploy that many preneed salespeople use? Prices may go DOWN in the future. We're seeing a lot more discount or affordable funeral operations opening up these days.
Until it's necessary to set aside assets for Medicaid eligibility, it is FAR safer to keep your money in your own bank. It always pays to plan ahead, but it rarely pays to pay ahead. Be sure to take advantage of our local nonprofit consumer groups to find the best deal around and one without any finance charges. Or call the FAMSA~FCA office to see if we know of low-cost providers in your area: 800-765-0107.
The following letter was e-mailed to the FAMSA~FCA office the day after the above message was posted:
SCI Management Corporation
October 21, 1999
Ms. Lisa Carlson
Funeral and Memorial Societies of America/Funeral Consumers Alliance
P.O. Box 10
Hinesburg, VT 05461
Re: Defamatory Statements
Dear Ms. Carlson:
On Wednesday, October 20, 1999, you posted a page on your organization's web site with the headline "Is SCI's Marketing Plan Set to Gouge the Poor?" You then proceeded to criticize the company for charging finance charges on prearranged funerals sold by its affiliates. In addition, at 10:29 a.m. on the same date, you posted a message on a message board hosted by YAHOO! expressing the same sentiment and claiming the "it makes [you] sick to [your] stomach" that SCI allegedly charges 12.9% to 21% finance charges on prearrangements. Unfortunately, your anti-industry bias has seriously diminished your objectivity and any credibility you might have been able to claim with respect to this matter.
Had you bothered to do even the slightest amount of research, such as calling any affiliate of SCI in Phoenix or Louisville, or contacting anyone in the company's home offices in Houston, you would have learned that the finance rates to which you make reference apply only to at need arrangements. The entire premise of your attack is incorrect. To provide more options for its consumers, SCI made arrangements with a third-party lender, which is the only company that receives payment for the loan, to provide financing for families to purchase funeral goods and services in honor of their loved ones in connection with at need funeral arrangements. Notwithstanding your pronouncements that consumers have no desire for such remembrances, many families want to pay tribute and homage to their departed loved ones in ways that do not conform to your minimalist approach.
It is apparent that your obsession with attacking SCI and its affiliates, as well as other organizations within this industry, has completely overcome any pretense of honesty or accuracy. Many of the consumers that you claim to represent find great value and comfort in the services provided by Service Corporation International and its affiliates and are pleased to know that the company can assist them both professionally and financially in achieving their goals of remembering their loved ones. You certainly have the right to hold and express your own opinions, however misguided they might be, but you do not have the right to publish lies about SCI's efforts to be more responsive to the families that it serves.
In the past you have made other defamatory statements about SCI and its affiliates that were not challenged. These statements, however, are simply too inaccurate, offensive, and unfair to be ignored. We believe that your libelous falsehood that the company gouges the poor is defamatory per se and constitutes grounds for a successful lawsuit against you and your organization. However, if this happened to be an honest mistake arising from lack of information, SCI and its affiliates would consider this matter concluded in return for full retractions and apologies posted on your website and on the YAHOO! message board in question by 5:00 p.m. C.D.T. on October 22, 1999.Sincerely,
J. Christopher Couch
In response: October 22, 1999
J. Christopher Couch
SCI Management Corporation
P.O. Box 130548
Houston, TX 77219-0548
Dear Mr. Couch:
I am delighted to learn that SCI is not levying any finance charges on its new preneed funeral packages, only at need services. I'm sure you'll be pleased to find enclosed copies of my letters- to-the-editor of the respective papers where I had also made accusations about what I thought were SCI's outrageous finance charges. I am happy to let others know there will be no finance charges at all on preneed with SCI, if SCI is the funeral home of choice. I will certainly post an equivalent message on our FAMSA~Funeral Consumers Alliance web site and will make a similar disclaimer on the Yahoo stockholders bulletin board, starting with a copy of your letter to me, of course, followed by a copy of this.
While I know that you can't control what the pesky media report, I trust you do realize that I was responding to news articles that appeared to parrot SCI press material. In the Louisville paper, the term "preneed" never appeared, but your spokesperson, Rybarski, is cited in reference to funeral "planning." That is preneed, is it not? And these plans are "transferable between SCI's 1,300 North American homes [and] can be financed at rates from 12.9 percent to 21 percent." One doesn't usually "transfer" a body once it's buried at need. How did the paper get the idea it might be?
Because it is often hard to collect the bill once a body has been buried, many funeral homes are reluctant to finance funeral charges (though small-town funeral homes have done so for years). This is, indeed, a revelation if SCI is launching at need financing for the needy in two major cities. That being the case, those reading your press materials obviously missed the point. Perhaps you should re-contact the papers, as well, to straighten them out.
I think all Americans are accustomed to paying interest on money they borrow to purchase items and services they use now—a home, a car, a meal at a restaurant or a pair of shoes paid for by credit card. So the idea of financing at need arrangements will be appreciated by many. But the idea of paying a finance charge on services and merchandise that will be used sometime in the future without even knowing when does defy economic logic, does it not?
I know I'll need another car in a few years (just like people know they re going to die). The 1993 Geo I drive was "used" when I bought it, but I certainly am not going to go to a car dealer and say, "Gee, I'll need a car within the next few years—maybe one year, maybe five—would you do me the favor of letting me pay you for a new car now . . . and by the way, I'd be glad to add a little extra in finance charges if you'll lock in the price . . . at least for most of what I've ordered." I trust this makes the point about how usurious any finance charges appear to be for prepaid funerals.
So, if you can assure me in writing that there will be no finance charges—at any rate, 21% or otherwise—for prepaid SCI funeral arrangements—in Louisville, Phoenix, or anywhere else—I'll be happy to post a retraction on our web site, on the Yahoo stockholders' bulletin board, and anywhere else you request.
cc: FAMSA legal committee
Mr. Couch responded later that day:
"This letter will confirm that there are no finance charges imposed on Dignity Memorial Plan prearranged funeral agreements."
I guess I was wrong about that part and, per my agreement with SCI, do hereby apologize if I misled the public in any way in earlier statements.
However, I do not rest easy. The laws are very different for financial transactions with a funeral home and financial transactions with a cemetery even though a consumer thinks of a "funeral" as involving both. I would caution consumers who might be purchasing such a plan to see if the entire purchase is written on a "Dignity" funeral home contract. Or is the casket (and any other merchandise such as a vault or cremation urn) written up on a cemetery contract not labeled "Dignity," with a finance charge added? Is the family also considering cemetery space and services for which there will be a finance charge?
SCI owns its own funeral insurance company. Consumers may be offered payment terms for purchasing this insurance to pay for the "Dignity" plan. It may or may not be a good idea. If you can't afford to pay for the whole thing at once and are making monthly payments, what happens if you can't keep up the payments? Will you get anything back? How much compared to what you paid? Are you being pressured to purchase more insurance than the funeral contract calls for? Are the casket and other items included? Do all the figures on the paperwork match?
It always pays to plan ahead. It rarely pays to pay ahead. People change their minds for any number of reasons—moving, divorce, remarriage, death while traveling, changing from body burial to cremation, or coming upon hard times and deciding to spend less. Maybe even deciding to use a different funeral home. Buyer beware.