Cremation giant agrees to $23mil settlement with Calif. over refunds for dying customers

California has settled a lawsuit with the nation’s largest funeral service provider, which was accused of breaking the law by not refunding the full amount to customers when requested. 

California Attorney General Rob Bonta announced the settlement last week. 

The big picture: Per the settlement, Service Corporation International (SCI) will provide full restitution to consumers, comprehensive injunctive relief and $23 million in civil penalties. 

• SCI operates in California as the Neptune SOciety and the Trident Society. 

Driving the news: California law requires all money paid for pre-need funeral arrangements to be placed in a trust until either the beneficiary dies and services are provided or the consumer cancels the contract. 

• Consumers are entitled to a full refund if they cancel the service. 
• But SCI was accused of misleading its consumers about its trusting practices, refund policy and veterans’ burial benefits and cremation. 
• SCI would inform customers that they had 30 days to cancel their plans and receive a full refund, which was false because customers could receive a full refund at any time before the services were provided. 
• SCI also sold its highest-selling pre-need cremation package as the Standard Plan, which includes both cremation services and merchandise. It was marketed and sold to customers as a single plan and priced to be cheaper than stand-alone cremation services in order to encourage customers into purchasing the plan. 
• When customers would sign their contracts, SCI presented two contracts – one for heavily marked up merchandise and another for deeply discounted cremation services. SCI placed only the discounted funds into a trust, withholding over half of the total price of the Standard Plan from the trust. 
• When customers requested a refund, SCI only returned the portion that it had placed in the trust, meaning the company would typically refund less than half of the money the consumers spent. 

What they’re saying: “California’s robust consumer protection laws protect all Californians from unlawful, unfair, and fraudulent business and marketing practices,” Bonta said. “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.”