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					                              Funeral Consumers Alliance's Investigation of
                                 the Funeral Consume r Guardian Society
                      Joshua Slocum, Executive Director, Funeral Consumers Alliance
                                           December 29, 2004

The Funeral Consumer Guardian Society (FCGS) describes itself as an “independent, not-for-profit
organization established in 1981, now serving over 70,000 Americans.” Through the use of a name very similar
to that of the nation’s oldest and largest nonprofit funeral consumer advocacy group (Funeral Consumers
Alliance), the use of a Web site domain name (www.funeralconsumer.org) that is also similar, and through
vague marketing materials, FCGS makes itself appear to be a consumer advocate group. This is misleading to
the public, as FCGS appears to be intimately connected with, and operated for the economic benefit of, the
Lincoln Heritage Life Insurance Company (LHLIC), a division of the Londen Insurance Company. While
FCGS may be incorporated in many states under the states’ not-for-profit incorporation codes, consumer
complaints and research on FCGS lead me to believe its true purpose is to sell prepaid funeral insurance.

Background

I became aware of the Funeral Consumer Guardian Society in December, 2003, after receiving an email from
Betty Youngren, a board member of the Funeral Consumers Alliance. Youngren related that a member of the
FCA of Northern California had received a “consumer survey” in the mail from the Funeral Consumer Guardian
Society (FCGS). The survey (see file C-4) asks a series of questions about the respondents’ funeral plans,
whether the respondent has prepaid, and how much the respondent believes a “traditional” funeral will cost.

Soon after that, I received emails and telephone calls from two other members of FCA-affiliated groups.
Monica Perry of the FCA of Idaho (see file B), and Phil Downs of the Los Angeles Funeral Society (see files
beginning C-1), both reported that their families or they themselves had received the same consumer survey
from FCGS.

My review of FCGS’ Web site, its literature, and reports from consumers who claim to have been solicited to
buy funeral insurance by FCGS representatives have convinced me that:

   FCGS is tied to Lincoln Heritage Life Insurance Company (LHLIC) and is operated primarily to sell the
    company’s funeral insurance
   FCGS representatives are, in fact, insurance salesmen and women
   FCGS works hard to represent itself as a consumer advocacy organization, but is primarily a sales vehicle
   Consumers have been mislead by FCGS’ appearance and have been subjected to sales pitches for e xpensive
    insurance

FCGS Masquerades as a Nonprofit Consumer Advocacy Organization


FCGS appears to have lifted certain nomenclature and marketing approaches from legitimate, nonprofit
consumer advocacy groups in order to deceive the public. FCGS’ Web site (see files C-38 through C-43) refers
to the organization as a not- for-profit membership “society” whose sole purpose is to give members “objective”
funeral information and to help them carry out their wishes economically. The use of the word “society”
connotes a nonprofit, consumer orientation. Because much of the commercial funeral trade coopted the word
"society," Funeral Consumers Alliance abandoned its former name, the Funeral and Memorial Societies of
America, to better distinguish itself from the commercial funeral trade.



           Funeral Consumers Alliance Report on the “Fune ral Consumer Guardian Society”                      1
In addition, the FCGS Web site’s reference to a “funeral home selection process based on competitive bidding .
. . an innovation offered exclusively by the Society” sounds very close to the method used for decades by
nonprofit consumer groups affiliated with FCA. FCA groups have long acted, in part, as cooperative buyers’
clubs, negotiating discounts on funeral services for their members.

FCGS’ approach has confused several members of the public. A caseworker in California called FCA in March,
2004, to report that a couple she was serving had been approached by FCGS about buying funeral insurance
after the couple responded to a newspaper ad offering an “end-of- life planning kit” (see file C-26). The
caseworker visited the FCGS Web site and said “I thought they were a consumer protection group, like you.”

FCGS Is Primarily a Front Group to Sell LHLIC Life Insurance

While FCGS’ Web site makes no mention of funeral insurance, it does include a link for the viewer to send for
information on “career opportunities.” When I wrote to the email address listed, I received an email back from a
LHLIC employee asking me to call one of their “recruiters.” When I did, a representative asked me whether I
had an insurance license, whether I’d taken a national insurance examination, and whether I had any experience
in insurance sales (see files C-30 and C-31). I found this surprising coming from an organization that claims to
be a nonprofit consumer advocacy group.

Then, I ran a “whois” search on the Internet to determine the ownership of FCGS’ Web site,
www.funeralconsumer.org. Perhaps unsurprisingly, I found the site was registered to Londen Insurance Group,
of which LHLIC is a division (see file C-48).

Company reports from LHLIC lend further support to suspicions that FCGS is merely a front for the sale of
insurance. The company’s 2002 Progress Report states that LHLIC is “ attacking the senior market
aggressively.” Among the highlights of this attack, according to the report, are “free me mbership in the Funeral
Consumer Guardian Society. This not- for-profit association was formed to allow consumers to plan for their
final expenses and also to help families receive maximum value for their dollars” (see file C-49).

A LHLIC Quarterly Report from May, 2003, again lists the Funeral Consumer Guardian Society as one of
several “marketing initiatives” by LHLIC (see file C-47). Page seven of this report states, in part:

“The Londen Group has a contract with the FCGS to do the administration for the Society. In addition, Lincoln
has the exclusive right to market the Society’s services and is the only carrier that is endorsed by the FCGS.
That means two things for you. First, it means that the service provided by the FCGS will be of the same high
quality that you receive from Lincoln, with the same friendly and helpful staff [emphasis added].”

It appears that the Londen Group has more than a “contract” to administer the Society’s work. Indeed, the
Executive Director of the Funeral Consumer Guardian Society, Joe Kraft, is listed as an “Agency Vice
President” of the Lincoln Heritage Life Insurance Company (see file C-47, page 10). This fact calls into
question the claim by FCGS President, George Katosic, that the FCGS is “an independent” entity (more on this
below).

Reports from consumers further confirm FCGS’ primary motivation appears to be the sale of LHLIC Life
Insurance Products. Philip Downs, a former director of the Los Angeles Funeral Society (a true nonprofit
associated with FCA), reports that he was repeatedly solicited by FCGS representatives to buy a prepaid funeral
(see files C-2, and C-8 through C-12 for a complete narrative from Downs). Downs was visited in his home by a
John Applegate, a FCGS representative. It is interesting to note that Applegate's business card bears the logo of
the Funeral Consumer Guardian Society, but at the bottom it includes the phrase "Represented by Preliant
Funeral Planning," and shows Mr. Applegate's California insurance license number (see file C-24).

2           Funeral Consumers Alliance Report on the “Fune ral Consumer Guardian Society”
Other consumers have contacted FCA to say they have been contacted by FCGS, sometimes in order to induce
them to buy prepaid funeral insurance policies. Among them are John Carroll, of California, who actually
purchased an insurance policy (see file C-28), Monica Perry, of the FCA of Idaho (see file B), an unidentified
California couple (as reported by a health caseworker; see file C-26), and a member of the FCA of Northern
California (see file A).

Literature from FCGS is also worth a look. At first glance, their glossy brochures do appear to be merely
consumer-oriented information. None of the literature I have seen specifically mentions the sale to the customer
of prepaid funeral insurance, though one brochure (file C-36) does mention somewhat vaguely, "Guaranteed
Funeral Funding" as an "Optional Membership Benefit."

One consumer sent a photocopy of a receipt form used by FCGS. The form has blank spaces for the amounts
paid by the customer for a Lincoln Heritage Preliant Plan, and the membership fee for FCGS (see file C-23).
Why would the Funeral Consumer Guardian Society be collecting money for the payment of LHLIC insurance
premiums, through the use of a FCGS staff member? For other examples of FCGS' literature, see files C -34
through C-36.


FCGS Accuses FCA of Defamation

Dr. Gere B. Fulton, then-chairman of the Funeral Consumers Alliance Legal Committee, wrote to the FCGS on
March 23, 2004, to request information about the group, its services, and the prices it charged (see file C-50).
On April 12, Fulton received a letter from George Katosic, an attorney writing on behalf of FCGS. Katosic
wrote, in part, “In respect to FCA's 'concerns' regarding the alleged similarity of names, we have no such
concerns because no substantive similarity exists. The names are distinct. In fact, the Funeral Consumers
Guardian Society holds numerous state certificates of authority. No state secretary of state has ever found such
a similarity. I trust this response concludes these matters."

On May 18, Fulton wrote again to Katosic to request another copy of Katosic’s letter, which Fulton had
misplaced. On June 14, Katosic replied to Fulton. Katosic wrote:

 “The Society has no obligation to provide your organization any information whatsoever, regardless of its
purpose or function. "Nevertheless, the Society is a not- for-profit corporation domiciled in the District of
Columbia whose purpose it is to provide its members access to funeral related benefits and services at
reasonable costs and to assist them in accessing the necessary funds to pay for funeral expenses. The Society
provides consumers the opportunity to do funeral planning without committing to a contract with a single
funeral home, and to offer unbiased assistance in placing the funeral at the time of need. The services provided
are most definitely pro-consumer. In addition, when a passing does occur, the Society significantly assists its
members in the funeral arrangements. We are quite proud of the services we provide to our members and we
find that they are well satisfied with the services they receive."

In the meantime, Katosic sent me a letter on July 12, 2004, accusing me of having defamed the FCGS. Katosic
had learned of a series of emails I posted to the Funeral Consumers Alliance electronic discussion list. In these
emails, I described FCGS as a “copycat” consumer group whose Web site was “deceptive" and who appeared to
be engaging in fraudulent marketing practices. For a copy of these emails, see file C-30.

In his letter, Katosic claimed FCA had "a most incorrect impression of the Society," and that FCGS was "an
independent, not-for-profit entity" that merely "endorse[d] Lincoln Heritage Life Insurance Company because
of its expertise . . ." (see file C-44). Katosic denied that FCGS had appropriated techniques from other nonprofit
organizations, and demanded that FCA issue a public retraction of my emails, a retraction which Katosic was
kind enough to draft for us.
              Funeral Consumers Alliance Report on the “Fune ral Consumer Guardian Society”                      3
Lamar Hankins, current chairman of the FCA Legal Committee, responded by mail to Mr. Katosic on July 20,
2004 (see file C-46). Hankins stated that before FCA could consider retracting, FCGS must supply documentary
proof refuting FCA's suspicions about the nature of the FCGS.

Katosic responded to Hankins' letter on August 25, 2004 (see file C-45). Katosic took umbrage at our request
for more information, and claimed FCA had the burden of proving that it did not defame the FCGS (a curious
reversal of the universal concept that the "plaintiff," not the "defendant," bears the burden of proof). Katosic
then stated FCA and I, personally, had "very serious liability concerns." Katosic gave FCA a deadline of
September 18, 2004, to distribute the above- mentioned retraction. We have not distributed this retraction, nor
have we corresponded with the FCGS or Katosic since his letter of August 25.


Conclusion

To my mind, any reasonable person would conclude that the relationship between the Funeral Consumer
Guardian Society and Lincoln Heritage Life Insurance Company is far closer than a mere mutual endorsement.
In several instances, they share the same staff and officers, they appear to share some field employees, and I can
find no record of any beneficial activities for the public, devoid of profit motive, performed by the FCGS.
Indeed, FCGS staffers seem interested in each case in selling consumers life insurance for LHLIC. I can find no
record of the FCGS or its ghostly "parent organization," the American Senior Security Association, being
registered with the Internal Revenue Service as a 501(c)(3) organization.

FCGS has provided FCA with no substantive documentation describing the organization, mission, finances, or
bylaws of the Society — documents one would expect that any legitimate, nonprofit consumer organization
would be glad to make public.

By presenting itself to the public as a nonprofit consumer protection organization — through words, phrases,
and literature uncannily similar to those used by Funeral Consumers Alliance — FCGS has packaged itself in a
deceptive fashion in order to lure unsuspecting citizens into purchasing life insurance.




                                                      END




4           Funeral Consumers Alliance Report on the “Fune ral Consumer Guardian Society”