FTC Staff Comment Before the Illinois Department of Registration and Education Concerning Restrictions on Pre-Need Solicitation of Services and Advertising for Funerals

COMMISSION
APPROVED ...........;
SUite 1~37
5.'5 East :\lonrOt' Street
Chicago, lI1inois 60603
Area Code 312 3.')3-~~23
FEDERAL TRADE CO~I~lISSIO:\
Chicago Regional Office
May 	9, 	1986
l;
;-.- ) '-
- :.	
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Department 	of 	Registration 	and 	Education
Attention: 	Kathy 	Campbell 	Lynch
320 West Washington, 	3rd 	Floor
Springfield, 	IL 	62786
Dear 	Ms. 	Lynch:
The 	Federal Trade 	Commission's 	Chicago 	Regional 	OfficI 	and
Bureaus 	of 	Competition, 	Consumer 	Protection, 	and 	Economics 	are
pleased 	to 	have 	the 	opportunity 	to 	comment 	on 	the 	proposed
amendments 	to 	the 	Rules 	for 	the 	administration 	of 	the 	Illinois
Funeral 	Directors 	and 	Embalmers 	Licensing 	Act 	("Illinois
Rul es"). 	In 	these 	cornmen ts, 	we 	discuss: 	(1) 	restrictions 	on
pre-tieed 	solicitation 	of 	funeral 	services, 	and 	(2) 	restrictions
in 	cu'rrent 	Illinois 	Rules 	that 	may 	inhibit .truthful 	and 	non""
deceptive 	advertising.
The 	Federal Trade 	Commission 	("Commission") 	seeks 	to 	promote
competition 	among 	members 	of 	licensed 	professions 	to 	the 	maximum
extent 	compatible 	with 	other 	legitimate 	state 	and 	federal
goals. 	For 	several 	years, 	the 	Commission 	has 	been 	investigating
the 	effects 	of 	restrictions 	on 	the 	business 	practices 	of
professionals, 	including 	optometrists, 	dentists, 	lawyers, 	funeral
directors, 	physicians, 	and 	others. 	Our 	goal 	in 	these
investigations 	is 	to 	identify 	and 	seek 	the 	removal 	of 	those
restrictions 	that 	impede 	competition, 	increase 	costs, 	and 	harm
consumers, 	but 	do 	not 	provide 	countervailing 	benefits.
The 	Commission 	has 	pursued 	this 	goal 	actively 	in 	the 	funeral
industry. 	As 	you 	may 	be 	aware, 	after 	extensive 	rulemaking
proceedings, 	the 	Commission 	adopted 	the 	Trade 	Regulation 	Rule
Concerning 	Funeral 	Industry 	Practices 	("Funeral 	Rule"), 	16 	CoF.R.
1 	These 	comments 	do 	not 	necessarily 	represent 	the 	views 	of 	the
Commission 	or 	any 	individual 	Commissioner, 	although 	the
Commission 	has 	authorized 	their 	submission.

Kathy 	Campbell 	Lynch
May 	9, 	1986 - 	2 	-
Part 	453, 	which 	became 	effective 	in 	full 	on 	April 	30, 	1984. 	The
purpose 	of 	the Funeral 	Rule 	is 	to 	promote 	increased 	competition
and 	consumer 	choice 	in 	the 	funeral 	industry 	by 	facilitating
informed 	purchasing 	decisions 	by 	consumers. 	Among 	other 	things,
the 	Funeral 	Rule 	requires 	the 	disclosure 	of 	detailed 	information
about 	prices 	and 	legal 	requirements 	to 	purchasers 	of 	funeral
goods 	and 	services.
As 	we-understand 	it, 	the 	Illinois 	Funeral 	Directors 	and
Embalmers 	Licensing 	and 	Disciplinary 	Board 	("Board") 	has 	proposed
amendments 	to 	the 	Illinois 	Rules 	that 	would 	prohibit 	telephone
solicitation, 	as 	well 	as 	all 	forms 	of 	solicitation 	by 	persons
other 	than 	licensed 	funeral 	directors. 	By 	letter 	dated 	May 	31,
1985, 	to 	State Senator 	Judy 	Baar 	Topinka, 	the 	Commission 	staff
commented 	on 	Illinois 	Senate 	Bill 	293, 	which 	would 	have 	imposed
these 	same 	restrictions. 	(The 	bill 	would 	have 	also 	prohibited
all 	door-to-door 	solicitation 	and 	prohibited 	the 	ownership 	of
funeral 	establishments 	by 	unlicensed 	persons.) 	Senate Bill 	293
was 	defeated. 	Commission 	staff 	also 	commented 	on 	these 	issues 	to
the 	Illinois 	Department 	of 	Registration 	and 	Education
("Department") 	by 	letter 	dated 	November 	6, 	1985, 	and 	at 	a
roundtable 	discussion 	convened 	by 	your 	office 	on 	that 	date. 2
We 	believe 	that 	the 	following 	comments, 	in 	which 	we 	discuss
the 	restrictions 	contained 	in 	the 	Board's 	proposed 	amendments 	as
well 	as 	several 	other 	existing 	Illinois 	Rules 	containing 	-
restrictions 	which 	appear 	to 	be 	anticompetitive,. 	will 	be 	of 	some
assistance 	to 	you 	in 	evaluating 	the 	Rules' 	possible 	effects 	on
competition 	and 	consumers.
I. 	Restrictions 	on 	Pre-need 	Solicitation 	of 	Funeral 	Services
The 	Board's 	proposed 	Rule 	250.205(g) 	would 	prohibit 	all
forms 	of 	funeral 	service 	solicitation 	by 	persons 	other 	than
licensed 	funeral 	directors, 	and 	the 	Board's 	proposed 	amendment 	to
Rule 	250.205(e) 	would 	prohibit 	all 	telephone 	solicitation 	by
sellers 	of 	funeral 	services. 	Rule 	250.205(e) 	currently 	prohibits
2 	Commission 	staff 	has 	also 	recently 	commented 	concerning 	the
possible 	anticompetitive 	effects 	of 	proposed 	funeral
industry 	legislation 	in 	Michigan, 	Kansas, 	and 	Alabama.
Letter 	of 	April 	7, 	1986, 	to Senator 	Kirby Holmes 	of
Michigan; 	letter 	of 	February 	14, 	1986, 	to 	Representative
Ginger 	Barr 	of 	Kansas; 	and 	letter 	of 	January 	16, 	1986, 	to
Senator 	John 	E. 	Amari 	of 	Alabama. 	Copies 	of 	these 	comments
are 	available 	upon 	request.

., ........ u.r 	\".alllpOe.L.L 	Lynch
May 	9, 	1986 - 	3 	-
all 	uninvited 	solicitation 	at 	a 	residence 	or 	health 	care
institution. 	We 	believe 	that 	the 	following 	discussion 	will
provide 	the 	Department 	and 	the 	Board 	with 	a 	framework 	in 	which 	to
consider 	the 	competitive 	and 	consumer 	protection 	aspects 	of
imposing 	certain 	types 	of 	limitations 	on 	the 	solicitation 	of
funeral 	services.
Effective 	communication 	of 	truthful 	information 	by 	sellers
or 	their 	representatives 	to 	potential 	clients 	is 	critical 	to 	the
functioning 	of 	competitive 	markets. 	Restrictions 	on 	solicitation
may 	reduce 	significantly 	the 	truthful 	information 	that 	is 	avail-
able 	to 	consumers 	making 	purchasing 	decisions. 	Such 	restrictions
on 	the 	flow 	of 	truthful 	information may make 	it 	more 	difficult
for 	consumers 	to 	learn 	about 	the 	various 	prices, 	levels, 	and
types 	of 	services 	that 	are 	available, 	as 	well 	as 	which 	firms 	are
stressing 	the 	price 	factor. 	When 	consumers 	are 	unable 	to 	compare
prices 	and 	other 	options, 	competitors 	are 	insulated 	from
competition. 	As 	a 	result, 	competitors' 	incentives 	to 	keep 	prices
down 	and 	to 	offer 	alternatives 	(in 	both 	the 	amount 	and 	quality 	of
services) 	desired 	by 	consumers 	are 	reduced. 	Restrictions 	on
solicitation may 	also 	prevent 	competitors, 	especially 	new market
entrants 	or 	those 	offering 	innovative 	services, 	from 	obtaining
cli en ts.
This 	is 	not 	to 	say 	that 	all 	forms 	or 	methods 	of 	solicitation
are 	alway"s 	procompetitive. 	In 	certain 	circumstances, 	a
particular 	form 	or 	method 	of 	uninvited, 	in-person 	solicitation 	_
may 	be 	so 	susceptible 	to 	coercion, 	harassment, "'or 	similar 	abuses
that 	its 	prohibition 	is 	justified. 	In 	its 	decision 	in AIII~rican
Medical 	Association,3 	the 	Federal Trade 'Commission 	held-that 	an
AMA 	code 	of 	ethics 	provision 	prohibiting 	virtually 	all
advertising 	and 	solicitation 	by 	physicians 	violated 	Section 	5 	of
the 	Federal 	Trade 	Commission Act. 	The 	Commission 	found 	that 	the
"AMA's 	broad 	proscription 	of 	advertising 	and 	solicitation 	[had]g
by 	its 	very 	essence~ significant 	adverse 	effects 	on 	competition
among 	AMA 	members." 	The 	Commission 	did 	provide 	in 	its 	order,
3
4
American 	Medical 	Ass'n, 	94 	F.T.C. 	701 	(1979), 	aff'd, 	638
F.2d 	443 	(2d 	Cir. 	1980), 	aff'd 	memo 	by 	an 	egually 	divided
Court, 	455 	U.S. 	676 	(1982).
94 	P.T.C. 	at 	1005.

n<;>'-UY 	..... ampoell 	Lynch
May 	9, 	1986 - 	4 	-
however, 	that 	"in 	view 	of 	the 	potential 	overreaching 	that 	may
occur 	in 	the 	absence 	of 	professional 	regulation," 	the AMA 	could
proscribe 	"uninvited 	in-person 	solicitation 	of 	actual 	or
potential 	patients, 	who, 	because 	of 	their 	particular
circumstances~ are 	vulnerable 	to 	undue 	influence."S
In 	the 	funeral 	industry, 	restrictions 	on 	at-need 6
solicitation may 	be 	justified 	because 	of 	the 	substantial 	risk 	of
coercion, 	harassment, 	or 	similar 	abuses 	in 	such 	instances. 	Pre-
need 	solicitation 	and 	the 	competitive 	process 	it 	encourages, 	on
the 	other 	hand, 	may 	be 	especially 	important 	in 	the 	funeral
industry 	because 	many 	consumers 	are 	not 	aware 	of 	the 	wide 	range
of 	options 	available 	from 	pre-need 	sellers. 	Pre-need 	arrange-
ments 	enable 	consumers 	to 	make 	choices 	without 	the 	time 	or
emotional 	pressures 	associated 	with 	at-need 	purchases.
It 	is 	possible 	that, 	in 	some 	circumstances, 	even 	pre-ne~d
solicitation may 	be 	susceptible 	to 	coercion, 	harassment, 	or
similar 	abuses. 	This 	possibility does 	not, 	however, 	justify
restrictions 	on 	pre-need 	solicitation 	that 	are 	more 	restrictive
of 	legitimate 	forms 	of 	solicitation 	than 	reasonably 	necessary 	to
prevent 	any 	such 	abuses 	that 	could 	be 	shown 	to 	exist.
Restrictions 	that 	permit 	only 	licensed 	funeral 	directors 	to
engage 	in 	pre-need 	solicitation may 	limit 	unnecessarily 	the
ability 	of 	legitimate 	businesses 	to 	disseminate 	information 	that
is 	beneficial 	to 	consumers 	and 	for 	which 	the 	professional
expertise 	of 	a 	funeral 	director 	is 	not 	required~ 	Similarly,
restrictions 	that 	prohibit 	all 	telephone 	solicitation, 	as
proposed, 	and 	all 	uninvited 	door-to-door 	solicitation, 	as 	in 	the
present 	Illinois 	Rules, 	may restrict 	unnecessarily 	the 	dissemina-
tion 	of 	truthful 	information 	about 	-- 	and 	consequently 	the 	s~les
of 	-- 	pre-need 	funerals 	to 	willing 	and 	competent 	purchasers.
Telephone 	solicitation 	is 	a 	well 	established 	business
practice 	that 	is 	widely 	used 	to 	sell 	goods 	and 	services 	in many
markets. 	In 	the 	funeral 	industry, 	it 	may 	be 	an 	efficient, 	cost
effective 	method 	by 	which 	pre-need 	sellers may 	impart 	to
consumers 	truthful 	and 	valuable 	information 	about 	the 	broad 	range
of 	pre-need 	purchasing 	options 	that 	are 	available. 	It 	may 	also
be 	a 	useful 	means 	for 	pre-need 	sellers 	to 	schedule 	sales
consultations 	with 	interested 	consumers 	at 	the 	consumers'
5
6
7
Id. 	at 	1029-30 	(emphasis 	added).
"At-need" 	means 	after 	a 	death 	has 	occurred 	or 	where 	death 	is
imminent. 	"Pre-need" 	means 	in 	advance 	of 	death.
As 	discussed 	above, 	the 	Illinois 	Senate 	has 	already 	defeated
a 	proposal 	to 	impose 	these 	prohibitions.

Ka,thy 	Campbell 	Lynch
May 	9, 	1986 - 	5 	-
convenience. 	Because 	this 	method 	of 	solicitation 	does 	not
involve 	direct, 	face-to-face 	contact 	between 	the 	seller 	and 	the
potential 	buyer, 	it 	would 	appear 	to 	pose 	minimal 	risks 	of
coercion, 	harassment, 	or 	similar 	abuses. 	Hence, 	a 	total
prohibition 	on 	this 	mode 	of 	solicitation 	for 	pre-need 	sales 	does
not 	appear 	to 	be 	warranted.
Door-to-door 	solicitation, 	although 	possibly 	more
susceptible 	to 	seller 	abuses, 	is 	also 	a 	widely 	used 	method 	of
disseminating 	truthful 	information 	about 	goods 	and 	services 	that
should 	not 	be 	restricted 	unnecessarily. 	In 	determining 	whether 	a
total 	prohibition 	on 	such 	solicitation 	as 	in 	the 	present 	Illinois
Rules 	is 	justified, 	it 	is 	necessary 	to 	weigh 	the 	benefits 	of
increasing 	the 	total 	amount 	of 	truthful 	information 	about 	pre-
need 	options 	available 	to 	consumers 	against 	the 	potential 	risk
~hat 	the 	~ncidents of 	coercion, 	harassment, 	or 	similar 	abuses 	may
lncrease. 	1
For 	example, 	in 	the 	context 	of 	door-to-door 	solicitation 	in
health 	care 	institutions, 	as 	opposed 	to 	personal 	residences,
there 	is 	arguably 	a 	greater 	potential 	for 	the 	occurrence 	of
seller 	abuses 	because 	many 	residents 	of 	health 	care 	institutions
may 	be 	peculiarly 	vulnerable 	to 	such 	abuses. 	However, 	health
care 	institutions 	probably 	vary 	greatly 	with 	respect 	to 	the
percentage 	of 	resident 	individuals 	whose 	physical, 	emotional, 	or
mental 	scates 	are 	such 	as 	to 	render 	such 	individuals 	especially
vulnerable 	to 	seller 	abuses. 	Rather 	than 	imposing 	a 	total
prohibition 	on 	all 	door-to-door 	solicitation 	at 	health 	ca.re
institutions, 	the 	Board 	and 	the 	Department 	may 	wish 	to 	consider
whether 	potential 	consumers 	residing 	in 	such 	institutions 	are
afforded 	adequate 	protection 	by 	virtue 	of 	the 	rules 	or 	policies
of 	such 	institutions 	or 	by 	virtue 	of 	the 	discretionary 	authority
vested 	in 	the 	individual 	administrators. 	Such 	institutions 	and
administrators 	presumably 	have 	a 	strong 	interest 	in 	promoting 	the
8 	All 	consumers 	who 	purchase 	pre-need 	funerals 	at 	a 	place
other 	than 	the 	place 	of 	business 	of 	the 	seller 	are 	protected
by 	the 	Federal 	Trade 	Commission's Trade 	Regulation 	Rule
Concerning 	Cooling-Off 	Peri cd 	for 	Door-to-Door 	Sales, 	16
C.F.R. 	Part 	429. 	The 	Rule 	requires 	that 	the 	seller 	give 	the
consumer 	a 	notice 	of 	the 	consumer's 	right ,to 	resci nd 	the
door-to-door 	sale 	within 	three 	days. 	The 	Funeral 	Rule's
protections 	are 	also 	applicable 	to 	pre-need 	purchasers. 	In
addition, 	because 	at 	least 	partial 	payment 	for 	pre-need
arrangements 	is 	typically 	made 	well 	in 	advance 	of 	death,
some 	states 	have 	adopted 	regulatory 	measures 	(~., 	trust
requirements) 	designed 	to 	protect 	consumers 	from 	fraud 	and
other 	abuses. 	In 	these 	comments, 	we 	do 	not 	address 	what
additional 	consumer 	protection 	measures, 	if 	any, 	may 	be
appropriate 	in 	the 	area 	of 	pre-need 	sales.

J. 	-_ ... r' ..... "' ...... .l.Jyncn
May 	9, 	1986 - 	6 	-
welfare 	of 	their 	residents 	in 	relation 	to 	the 	commercial
interests 	of 	funeral 	directors. 	An 	additional 	factor 	that 	may 	be
weighed 	is 	that 	many 	individuals 	residing 	in 	health 	care
institutions 	may 	constitute 	a 	segment 	of 	the 	population 	that 	has
a 	particular 	interest 	in 	exploring 	the 	possibility of 	making 	pre-
need 	arrangements.
In 	considering 	the 	need 	to 	impose 	blanket 	prohibitions 	on
telephone 	and 	door-to-door 	solicitation, 	the 	Department 	and 	the
Board 	may 	also 	wish 	to 	consider 	that 	a 	current 	regulation,
Illinois 	Rule 	250.205(f), 	already 	affords 	substantial 	protections
to 	consumers 	by 	specifically 	prohibiting 	solicitation 	where
1) 	the 	licensee, 	or 	his 	representative, 	reasonably 	should 	know
that 	the 	physical, 	emotional, 	or 	mental 	state 	of 	the 	person
solicited 	is 	such 	that 	the 	person 	could 	not 	exercise 	reasonable
judgment; 	2) 	the 	person 	solicited 	has 	made 	known 	a 	desire 	not 	to
receive 	the 	communication; 	or 	3) 	the 	solicitation 	involves
coercion, 	duress, 	or 	harassment.
Accordingly, 	we 	urge 	the 	Department 	and 	the 	Board 	to
consider 	whether 	the 	proposed 	prohibitions 	on 	telephone
solicitation 	and 	solicitation 	by 	persons 	other 	than 	licensed
funeral 	directors, 	as 	well 	as 	the 	current 	prohibition 	on 	all
uninvited 	door-to-door 	solicitation, 	may 	be 	overly 	restrictive 	of
competition 	in 	the 	market 	for 	pre-need 	services 	without
necessarily 	providing 	countervailing 	consumer 	benefits.
II. 	Other 	Restrictions 	That 	May 	Inhibit 	Truthful 	and
Non-Deceptive 	Advertising
As 	a 	part 	of 	its 	efforts 	to 	foster 	competition 	among
licensed 	professionals, 	the 	Commission 	has 	examined 	the 	effects
of 	public 	and 	private 	restrictions 	that 	limit 	the 	ability 	of

Kathy 	Campbell 	Lynch
May 	9, 	1986 - 	7 	-
professionals 	to 	engage 	in 	nondeceptive 	advertising. 9 	In 	this
regard, 	several 	studies 	have 	found 	that 	prices 	for 	professional
goods 	and 	services 	are 	lower 	whIOe 	advertising 	exists 	than 	where
it 	is 	restricted 	or 	prohibited. 	Studies 	also 	suggest 	that
higher 	prices 	occur 	at 	all 	quality 	levels 	where 	advertising 	is
restricted, 	and 	that 	these 	restrictions 	do 	not 	increase 	the
9
10
See, 	e.g., 	American 	Medical 	Ass'n, 	supra 	n.3. 	The 	thrust 	of
the AMA 	decision 	-- 	"that 	broad 	bans 	on 	advertising 	and
soliciting 	are 	inconsistent 	w~th 	the 	nation's 	public 	policy"
(94 	F.T.C. 	at 	1011) 	-- 	is 	consistent 	with 	the 	reasoning 	of
recent 	Supreme 	Court 	decisions 	involving 	professional
regulations. 	See, 	e.g., 	Zauderer 	v. 	Office 	of 	Disciplinary
Counsel 	of 	the 	Supreme 	Court 	of 	Ohio, 	105 	S. 	Ct. 	2265 	(~985)
(holding 	in 	part 	that 	an 	attorney may 	not 	be 	disciplined 	for
soliciting 	legal 	business 	through 	printed 	advertising
containing 	truthful 	and 	nondeceptive 	legal 	advice 	and 	other
information 	regarding 	the 	legal 	rights 	of 	potential 	clients
or 	for 	using 	nondeceptive 	illustrations 	or 	pictures); 	Bates
v. 	State 	Bar 	of 	Arizona, 	433 	U.S. 	350 	(1977) 	(holding 	state
supreme 	court 	prohibition 	on 	advertising 	by 	attorneys
invalid 	under 	the 	First 	Amendment 	and 	according 	great
impbrtance 	to 	the 	role 	of 	advertising 	in 	the 	efficient
functioning 	of 	the 	market 	for 	professional 	services);
Virginia 	State 	Board 	of 	Pharmacy 	v. 	Virginia Citizens
Council, 	425 	U.S. 	748 	(1976) 	(holding 	Virginia 	prohibition
on 	advertising 	by 	pharmacists 	invalid 	under 	the 	First
Amendment). 	See 	also 	recent 	consent 	orders 	issued 	by 	the
Commission 	in 	Rhode 	Island 	Board 	of Accountancy, 	Trade 	Cas.
(CCH) 	~I 22,308 	(Dkt. 	9181) 	(prohibiting 	Board 	restrictions
on 	truthful, 	non-deceptive 	advertising, 	solicitation, 	or
encroachment); 	Wyoming 	State 	Board 	of 	Registration 	in
Podiatry, 	Trade 	Cas. 	(CCH) 	~I 22,303 	(Dkt. 	C-3l76)
(prohibiting 	Board 	restrictions 	on 	truthful, 	non-deceptive
advertising); 	Montana 	Board 	of 	Optometrists, 	Trade 	Cas.
(CCH) 	~I 22,259 	(Dkt. 	C-3l6l) 	(prohibiting 	Board 	restrictions
on 	truthful, 	non-deceptive 	advertising 	of 	free 	examinations,
payment 	terms, 	or 	"professional 	superiority"); 	Louisiana
State Board 	of 	Dentistry, 	Trade 	Cas. 	(CCH) 	~I 22,257 	(Dkt.
9188) 	(prohibiting 	Board 	restrictions on 	the 	advertising 	or
offering 	of 	discount 	prices).
Cleveland 	Regional 	Office 	and 	Bureau 	of 	Economics, 	Federal
Trade Commission Staff 	Report 	on 	Improving 	Consumer Access
to Legal 	Services: 	The 	Case 	for 	Removing 	Restrictions 	on
Truthful Advertising 	(1984); 	Bureau 	of 	Economics, 	Federal
Trade 	Commission, 	Effects 	of 	Restrictions 	on 	Advertising 	and
Commercial 	Practice 	in 	the 	Professions: 	The 	Case 	of
Optometry 	(1980); 	Benham 	and 	Benham, 	Requlating 	Through 	the
Professions: 	A Perspective 	on 	Information 	Control, 	18 	J.
Law 	& Econ. 	421 	(1975); 	Benham, 	The 	Effects 	of Advertisinq
on 	the 	Price 	of 	Eyeglasses, 	15 	J. 	Law 	& Econ. 	337 	(1972).

Kathy 	Campbell 	Lynch
May 	9, 	1986 - 	8 	-
quality 	of 	services 	available 	in 	the 	marketplace. ll 	Therefore,
to 	the 	extent 	that 	nondeceptive 	advertising 	is 	restricted, 	higher
prices 	and 	a 	decrease 	in 	consumer 	welfare 	may 	result. 	For 	this
reason, 	we 	believe 	that 	only 	false 	or 	deceptive 	advertising
should 	be 	prohibited. 	Any 	other 	standard 	is 	unnecessary 	to
protect 	consumers, 	is 	likely 	to 	suppress 	the 	dissemination 	of
potentially 	useful 	information, 	and 	may 	contribute 	to 	an 	increase
in 	prices. _
Because 	several 	of 	the 	Illinois 	Rules 	concerning 	advertising
appear 	to 	go 	well 	beyond 	the 	false 	or 	deceptive 	standard, 	we 	also
take 	this 	opportunity 	to 	express 	o~r 	concerns 	regarding 	those
Rules.
A • 	tiD i gn i f i ed" 	Adve r tis i ng
Illinois 	Rule 	250.205(a) 	requires, 	among 	other 	things, 	that
advertising 	by 	funeral 	directors 	be 	"direct, 	dignified, 	and
readily 	comprehensive." 	We 	believe 	that 	this 	provision 	should 	be
eliminated, 	because 	it 	is 	vague, 	subjective, 	and 	not 	reasonably
related 	to 	the 	prevention 	of 	false 	or 	deceptive 	advertising. 	The
United 	States 	Supreme 	Court 	recently 	dealt 	with 	a 	similar 	rule
regarding 	advertising 	by 	attorneys 	in Ohio:
[A]lthough 	the 	State 	undoubtedly 	has 	a 	substantial
interest 	in 	ensuring 	that 	its 	attorneys 	behave
with 	dignity 	and 	decorum 	in 	the 	courtroom, 	we 	are
unsure 	that 	the 	State's 	desire 	that 	attorneys
maintain 	their 	dignity 	in 	their 	communications
with 	the 	public 	is 	an 	interest 	substantial 	enough
to 	justify 	abridgement 	of 	their 	First Amendment
rights. 	Even 	if 	it 	were 	the 	case, 	we 	are
unpersuaded 	that 	undignified 	behavior 	would 	tend
to 	recur 	so 	often 	as 	to 	warrant 	a 	prophylactic
rule 	•••• 	[T]he 	mere 	possibility 	that 	some
members 	of 	the 	population 	might 	find 	advertising
embarrassing 	or 	offensive 	cannot 	justify
suppressing 	it. 	The 	same 	must 	be 	true 	fot
advertising 	that 	some 	members 	of 	the 	bar 	might
find 	beneath 	their 	dignity.l?
11
12
Bureau 	of 	Economics, 	Federal 	Trade 	Commission, 	Effects 	of
Restrictions 	on Advertising 	and 	Commercial 	Practice 	in 	the
Professions: 	The 	Case 	of 	Optometry 	(1980); 	Muris 	and
McChesney, 	Advertising 	and 	the 	Price 	and 	Quality 	of 	Legal
Services: 	The 	Case 	for 	Legal 	Clinics, 	1979 	Am. 	B. 	Found.
Research 	J. 	179 	(1979). 	See 	also Cady, 	Restricted
Advertising 	and 	Competition: 	The 	Case 	of 	Retail 	Drugs
(1976); 	McChesney 	and 	Muris, 	The 	Effects 	of 	Advertising 	on
the 	Quality 	of 	Legal 	Services, 	65 	A.B.A.J. 	1503 	(1979).
Zauderer, 	supra 	n. 	9, 	105 	S. 	Ct. 	at 	2280.

Kathy 	Campbell 	Lynch
May 	9, 	1986 - 	9 	-
We 	believe 	that 	the 	Supreme 	Court's 	comments 	concerning
attorney 	advertising 	apply 	with 	equal 	force 	to- advertising 	by
funeral 	directors. 	Consequently, 	such 	blanket 	prohibitions 	may
restrict 	unnecessarily 	the 	flow 	of 	truthful, 	non-deceptive
information 	to 	the 	detriment 	of 	consumers.
We 	are_ not 	aware 	of 	any 	consumer 	injury 	that 	has 	resulted
from 	"undignified" 	advertising 	by 	funeral 	directors 	in 	Illinois
or 	elsewhere; 	nor 	is 	it 	clear 	to 	us 	how 	such 	injury 	could
occur. 	Even 	if 	a 	funeral 	director 	chose 	to 	advertise 	in 	an
"undignified" 	manner, 	the 	advertisi,ng 	might 	still 	provide
beneficial 	information 	to 	consumers 	in 	two 	ways. 	Some 	consumers
could 	find 	the 	advertising 	useful 	and 	informative. 	Other
consumers 	could 	choose 	not 	to 	select 	a 	funeral 	director 	if 	they
found 	his 	advertising 	to 	be 	"undignified." 	If 	many 	or 	most 	-',
consumers 	reacted 	adversely 	to 	"undignified" 	advertising, 	this
would 	create 	powerful 	incentives 	for 	funeral 	directors 	to 	avoid
such 	an 	advertising 	approach. 	Further, 	if 	consumers 	do 	not 	find
a 	given 	funeral 	director's 	advertising 	"undignified," 	it 	would
not 	appear 	relevant 	as 	a 	policy 	matter 	whether 	other 	(perhaps
competing) 	funeral 	directors 	or 	others 	did. 	Thus, 	there 	do 	not
appear 	to 	be 	any 	consumer 	benefits 	stemming 	from 	the 	rule.
On 	the 	other 	hand, 	both 	consumer 	injury 	and 	competitive 	harm
may 	result 	from 	the 	rule. 	The 	"dignified" 	standard 	could 	be
construed 	very 	broadly 	in 	its 	enforcement 	to 	exclud~advertising
that 	contains 	such 	things 	as 	pictures 	of 	caskets. 	Furthermore,
whether 	the 	Department 	or 	the 	Board 	would 	construe 	it 	broadly,
the 	rule 	may 	inhibit 	truthful, 	non-deceptive 	advertising 	if
funeral 	directors, 	unaware 	of 	what 	mayor 	may 	not 	be 	considered
"undignified," 	reduce 	the 	amount 	of 	their 	truthful 	advertising 	to
avoid 	any 	ris~ 	of 	violating 	the 	vague 	standards •	. ' .-,
B. 	Limitation 	on 	Information 	That 	Mav 	Be 	Advertised
Illinois 	Rule 	250.205(b) (1-10) 	lists 	specific 	kinds 	of
information 	that 	may 	be 	included 	in 	advertising 	by 	funeral
directors. 	Subsection 	11 	restricts 	other 	information 	that 	may 	be
included 	to 	that 	which 	"a 	reasonable 	person 	might 	regard 	as
relevant 	in 	determining 	whether 	to 	seek 	the 	registrant's
services."
As 	with 	the 	"dignified" 	standard 	discussed 	above, 	we 	are
conce rned 	that 	such 	a' vague, 	s ubj ecti ve 	standa rd 	may 	tend
unnecessarily 	to 	inhibit 	truthful, 	non-deceptive 	advertising. 	If
a 	funeral 	director 	included 	irrelevant 	information 	in 	his
advertising, 	there 	would 	not 	likely 	be 	any 	consumer 	injury 	unless
the 	information 	were 	also 	deceptive. 	If 	it 	were 	deceptive, 	it
would 	already 	be 	prohibited 	by 	Rule 	250.205(a). 	It 	is 	difficult
to 	define 	"relevant" 	in 	this 	context. 	Some 	consumers 	might 	find
certain 	information 	to 	be 	relevant 	while 	other 	consumers 	would
not. 	If ~ 	consumers 	find 	truthful 	information 	to 	be 	relevant,

Kathy 	Campbell 	Lynch
May 	9, 	1986 - 	10 	-
it 	is 	of 	value. 	If.!}£ consumers 	find 	it 	relevant, 	it 	is 	simply
wasted, 	inefficient 	promotion 	that 	doesn't 	harm consumers. 	We
urge 	deleting 	subsection 	11 	so 	that 	-- 	as 	for 	all 	other 	goods 	and
services 	-- 	it 	is 	left 	to 	the 	marketplace 	to 	determine 	what
information 	is 	relevant 	to 	prospective 	purchasers.
C. 	Fee 	Disclosure 	Recruirement
Illinols 	Rule 	250.205(b) (9) 	requires 	that 	advertisements
containing 	fees 	for 	funeral 	services 	and 	merchandise 	include 	a
statemen t 	that 	"fees 	may 	be 	adj usted 	due 	to 	unforeseen
circumstances." 	We 	believe 	that 	this 	requirement 	should 	be
eliminated. 	This 	requirement 	may 	serve 	to 	increase 	the
consumer's 	difficulty 	in 	discovering 	the 	true 	cost 	of 	services
and 	merchandise 	and 	could 	inhibit 	truthful 	advertising
unnecessarily. 	)
As 	discussed 	above, 	the 	Commission's 	Funeral 	Rule 	requires
disclosure 	of 	detailed 	information 	about 	prices 	to 	purchasers 	of
funeral 	goods 	and 	services. 	The 	Commission 	found 	the 	failure 	to
furnish 	price 	information 	to 	be 	an 	unfair 	or 	deceptive 	act 	or
practice. 	Nevertheless, 	in 	adopting 	mandatory 	price 	disclosure
requirements 	-- 	including 	telephone 	price 	disclosures 	-- 	the
Commission 	did 	not 	find 	it 	necessary 	to 	require 	a 	disclaimer 	such
as 	Illino~s' 	to 	protect 	consumers.
If 	a 	funeral 	director 	wishes 	truthfully 	to 	advertise
specific 	fees 	or 	a 	range 	of 	fees 	for 	services 	or 	merchandise, 	the
disclosure 	requirement 	is 	unnecessary 	to 	prevent 	deception.
Although 	unforeseen 	circumstances 	might 	require 	a 	fee 	adjustment,
these 	circumstances 	do 	not 	appear 	to 	be 	any 	different 	from 	those
in many 	other 	markets 	in 	which 	analogous 	disclosures 	are 	not
mandated. 	On 	the 	other 	hand, 	with 	the 	mandated 	disclosure 	in 	an
advertisement;-a 	funeral 	director 	may 	feel 	freer 	to 	adjust 	his
fees 	from 	those 	advertised 	without 	causing 	the 	consumer 	to
question 	the 	funeral 	director's 	actions. 	If 	such 	an 	adjustment
is 	made 	regularly 	and 	without 	regard 	to 	any 	truly 	"unforeseen
circumstances," 	the 	fee 	advertisement 	may 	in 	fact 	be 	false 	and
deceptive. 	Finally, 	unnecessary 	disclosure 	requirements 	tend 	to
inhibit 	truthful 	advertising 	by m~king it 	more 	costly.
D. 	Prohibitions 	on 	Specific Types 	of 	Representations
Illinois 	Rule 	250.205(d) 	prohibits 	certain 	representations
even 	if 	they 	do 	not 	contain 	a 	false 	or 	deceptive 	statement 	or
claim. 	Subsection 	2 	prohibits 	all 	representations 	that 	take
advantage 	of 	the 	potential 	client's 	fears, 	anxieties, 	vanities,
or 	other 	emotions. 	Subsection 	3 	prohibits 	all 	testimonials 	(as
well 	as 	exaggerations) 	pertaining 	to 	the 	quality 	of 	funeral
services. 	We 	are 	concerned 	that 	these 	provisions 	go 	well 	beyond
protecting 	the 	consumer 	from 	false 	or 	deceptive 	advertising. 	We
urge 	deleting 	these 	prohibitions.

Kathy 	Campbell 	Lynch
May 	9, 	1986 - 	11 	-
We 	believe 	that 	there 	is 	nothing 	inherently deceptive 	about
advertising 	that 	appeals 	to 	a 	person's 	emotions. 	Indeed, 	much
advertising 	appeals 	to 	the 	emotions 	of 	consumers 	and, 	thus, 	would
violate 	this 	standard. 	Like 	the 	"dignified" 	standard 	discussed
above, 	this 	vague, 	subjective 	standard 	may 	similarly 	result 	in
funeral 	directors 	reducing 	the 	amount 	of 	their 	truthful
advertising 	to 	avoid 	any 	risk 	of 	violating 	the 	prohibition.
Likewise, 	testimonials 	are 	widely 	used 	in many markets 	to
communicate 	consumer 	experiences 	with 	particular 	products 	and
services. 	In 	the 	funeral 	industry, 	they 	can 	be 	a 	highly
effective 	means 	of 	disseminating 	useful 	and 	truthful 	information,
including 	statements 	about 	a 	funeral 	horne's 	facilities,
personnel, 	prices, 	and 	types 	-- 	as 	well 	as 	quality 	-- 	of 	services
offered. 	Such 	advertising 	can 	foster 	competition 	by 	enabling
funeral 	directors 	to 	differentiate 	their 	goods 	and 	services 	from
those 	offered 	by 	competing 	funeral 	homes. 	For 	example, 	in 	order
to 	promote 	the 	availability 	of 	relatively 	new 	types 	of 	funeral
purchasing 	options, 	such 	as 	pre-need 	plans, 	some 	funeral
directors 	may 	wish 	to 	advertise 	the 	truthful 	opinions 	and 	beliefs
of 	consumers 	who 	have 	already 	purchased 	such 	plans. 	Testimonials
may 	be 	particularly 	useful 	in 	attracting 	those 	consumers 	who 	have
had 	little 	or 	no 	contact 	with 	funeral 	homes. 	In 	addition,
because 	many 	characteristics 	of 	a 	funeral 	service 	are 	not 	readily
described 	in 	objective 	terms, 	consumers 	may 	find 	especially
useful 	another 	consumer's 	honest 	appraisal 	of 	the 	services
rendered 	by 	a 	particular 	funeral 	horne. 	SUbsection 	3 	prohibits
all 	testimonials 	concerning 	quality, 	including 	those 	that 	are
truthful 	and 	nondeceptive. 	This 	approach 	raises 	serious
antitrust 	concerns 	because 	it 	may 	significantly 	reduce 	the 	amount
of 	truthful 	information 	available 	to 	consumers 	about 	the 	relative
attributes 	of 	different 	funeral 	homes.
E. 	Prerecording 	and 	Record-keeping
Illinois 	Rule 	250.205 (c) 	provides 	that 	the 	registrant 	must
prerecord 	broadcast 	television 	and 	radio 	advertisements, 	and 	that
a 	copy 	of 	the 	transmission 	must 	be 	retained 	for 	five 	years. 	We
believe 	that 	this 	provision 	should 	be 	modified 	to 	eliminate 	the
prerecording 	requirement, 	and 	to 	eliminate 	or 	shorten 	the 	record-
keeping 	requirement. 	The 	prerecording 	provision may 	serve 	to
inhibit 	advertising 	by 	increasing 	its 	cost. 	In 	any 	event, 	it
appears 	unnecessary 	as 	a 	means 	of 	protecting 	the 	pUblic 	from
false 	or 	deceptive 	advertising. 	The 	prerecording 	requirement
prohibits 	the 	use 	of 	less 	expensive 	"spot" 	announcements 	that 	the
registrant 	could 	prepare 	or 	approve 	for 	reading 	over 	the 	air 	by 	a
radio 	or 	television 	announcer. 	We 	also 	recommend 	that 	the
Department 	and 	the 	Board 	consider 	whether 	the 	five-year 	record-
keeping 	requirement may 	be 	unduly 	burdensome. 	If 	such 	a
requirement 	is 	deemed 	necessary 	to 	prevent 	false 	or 	deceptive
advertising, 	we 	would 	urge 	that 	a 	shorter 	time 	period 	-- 	such 	as
one 	year 	-- 	be 	considered.

Kathy 	Campbell 	Lynch
May 	9, 	1986
III. 	Conclusion
- 	12 -
We 	hope 	that 	our 	comments 	concerning 	the 	possible
anticompetitive 	effects 	of 	restrictions 	on 	advertising 	and 	the
solicitation 	of 	funeral 	services 	will 	assist 	you 	in 	your
deliberations 	on 	the 	proposed 	amendments. 	We 	appreciate 	the
opportunity 	to 	present 	our 	views 	and 	concerns.
Sincerely,
WIlliam 	C. 	MacLeod
Di rector
CHICAGO 	REGIONAL 	OFFICE