Funeral service provider agrees to $23M to Bay Area counties for deceptive marketing
The nation's largest funeral company has agreed to pay $23 million to settle charges that it used deceptive marketing practices related to its prepaid cremation services in California.
Service Corporation International denied wrongdoing but agreed to stop the deceptive practices and pay restitution to victims to resolve the civil complaint brought by the state and three counties, Attorney General Rob Bonta announced Wednesday.
Prepaid services allow a person to pay for their cremation while they are still alive. The money is to be held in trust, with a full refund available at any time before use.
Texas-based SCI, which operates in California as the Neptune Society and the Trident Society, was accused of violating the state's unfair competition law and false advertising law by misrepresenting its prepaid cremation services in several ways, Bonta said in a press release.
"When consumers purchase preneed funeral services, they expect -- and the law requires -- their funds to be safe and protected until those services are utilized," he said.
The penalty includes $5.75 million each to the state of California and the counties of Marin, San Francisco, and Alameda, whose district attorneys joined in the civil complaint.
Alameda County District Attorney Pamela Price said the settlement would compel the company to follow the law and would bring relief to victims.
"Neptune Society's and Trident Society's pervasive price manipulation and deceptive marketing affected all their consumer negotiations and contracts for preneed services, demonstrating how their unlawful business practices were a result of decisions made at the highest levels of the companies," Price said.
SCI has faced numerous lawsuits and penalties in multiple states and at the federal level, including others that alleged false advertising. The company did not respond to a request for comment.
The company was accused of deceiving customers by using various tactics, such as including a disclaimer advertising its prepaid services as refundable for up to 30 days, when state law places no time limit on refunds.
The company also packaged merchandise and cremation services together in a single "Standard Plan" but placed only a fraction of payments into trust.
By claiming the price included non-refundable merchandise, the company tried to shortchange customers who later requested a refund, according to the attorney general's office.
The company agreed to stop selling its Standard Plan unless it placed the entire amount in trust. It also agreed to provide written notice to customers of their rights under state law, including their right to not pay for extra products or services to purchase preneed cremation services.
SCI will also pay full restitution to anyone who did not receive a full refund after requesting one.
San Francisco District Attorney Brooke Jenkins said the settlement should deter other companies from using similar tactics and noted that the preneed cremation industry has long been a source of complaints by consumers, many of them elderly.