It’s hard to manage to target more vulnerable groups than the elderly, mentally disabled and nuns, but fraud schemers have set their target on the dead and their emotional families. Funeral fraud is commonly thought of as unscrupulous funeral home owners or directors taking advantage of families trying to honor their departed loved ones, but new fraud schemes are actually aimed at the deceased themselves.

The Federal Trade Commission has reported there are millions of Americans each year that enter contracts for prearranged funerals to help alleviate the financial and emotional burden of funeral costs and planning on their families. In one case, around 97,000 customers were victimized in over 16 states, leading to more than $450 million in losses that led to smaller death benefits or none at all. A Missouri man, along with five others, were sentenced to federal prison for lining their own pockets with the profits.

The scheme started back in 1992 and lasted through 2008. The defendants came up with a scheme that would defraud the purchasers of prearranged funeral costs and victimized the funeral homes that were in business with the company along with financial institutions that were appointed as trustees to the prearranged funeral trusts and state insurance guarantee associations.

For the scheme to work, the defendants and company would discuss what the customer was looking for and agree upon a price, then accept a payment for that price. After that point, the company would make arrangements with a funeral home chosen by the customer and the funds would be placed with a third party, per state law. However, the company left out a crucial detail: not all funds were placed into a trust or life insurance policy. Instead, applications were altered, such as deposit amounts being changed, in order for the money to be used for unauthorized purposes such as risky investments, personal gain or payments on current funeral claims.

Other times, defendants in the case would remove funds from trusts and life insurance policies, routinely lying to state regulators about their practices. However, it goes even further. The company also purchased large blocks of prearranged funeral contracts from funeral homes and told the homes that the contracts would be rolled into life insurance policies, which never happened.

Protecting yourself from such unscrupulous acts comes down to doing due diligence on the party from whom you are purchasing such as reading reviews and checking with the Better Business Bureau. Additionally, be sure to consider what you are paying for, what happens with the money you are paying per state law, how you can cancel, what happens to interest that accrues and more. If you are wary about the practices of a company offering prearranged funerals, contact our team today. At Bochetto & Lentz, we have the experience with cemetery and funeral fraud to ensure your rights as a consumer are protected.