STAND

STAND. COM. REP. NO. 1302

Honolulu, Hawaii

, 2005

RE: S.B. No. 60

S.D. 1

H.D. 1

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Consumer Protection & Commerce, to which was referred S.B. No. 60, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO CEMETERY AND FUNERAL TRUSTS,"

begs leave to report as follows:

The purpose of this bill is to protect consumers of pre-need funeral and interment services, and in particular, those who default by failing to make required payments under the pre-need contract, by:

(1) Providing that the purchaser may cancel the pre-need contract at any time;

(2) Requiring that prior to canceling or terminating a contract for default, the cemetery or pre-need funeral authority must give written notice of a purchaser's default, describing the default, the amounts that are delinquent, and explaining how the default can be cured;

(3) Giving the defaulting purchaser 90 days to cure the default and continue the contract under the same terms and conditions, and the right to receive a statement of the payments made and amounts owed on the contract;

(4) Entitling purchasers, upon cancellation or default of the contract, to a refund of all amounts paid less an unspecified percentage of the contract price to cover cemetery or authority costs, within 15 business days of cancellation of the contract;

(5) Requiring the contract to be written in plain and clear language and include, among other things, the total contract price, any credit terms, information about purchaser payments to be placed in trust, and terms of refund, cancellation, and default; and

(6) Changing the 30 percent of the contract price that a pre-need services business may keep upon default of a contract to cover its costs, to an unspecified percentage.

AARP Hawaii, Funeral Consumers Alliance Hawaii, and numerous individuals supported this bill. The Funeral Consumers Alliance, Inc., supported the bill with amendments. The Department of Commerce and Consumer Affairs supported the bill in part. The Hawaii Allied Memorial Council, Mililani Group, Inc., Hawaiian Memorial Life Plan, Ltd, Dodo Mortuary Life Plan Inc., Paradise Acquisition Inc., and numerous individuals opposed this bill.

Your Committee finds that an increasing number of consumers are entering into pre-need funeral and interment agreements, products that are often purchased by seniors who are vulnerable to unscrupulous sales and business practices. This industry is not regulated by the federal government, and your Committee heard testimony that Hawaii's pre-need laws are among the weakest in the nation.

Your Committee finds that stronger consumer protections are needed for this industry, especially with regard to procedures and rights protecting consumers who default by failing to make required payments on a contract. However, your Committee also believes that the majority of pre-need businesses in Hawaii care for, and work to accommodate the needs of their customers. Regulation of this industry must account for the industry's economic realities, and avoid discouraging competitors from entering the market.

Upon further consideration, your Committee has amended this bill by:

(1) More clearly delineating the 90-day period in which a purchaser may cure a default;

(2) Increasing from 15 business days, to 30 days, the time within which a pre-need funeral authority must make a refund upon cancellation of a contract;

(3) Removing the provision that would have changed the percentage of the contract price that a pre-need services business may keep upon default of a contract;

(4) Changing the effective date from upon approval to January 1, 2006; and

(5) Making technical, nonsubstantive amendments for clarity, consistency, and style.

As affirmed by the record of votes of the members of your Committee on Consumer Protection & Commerce that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 60, S.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 60, S.D. 1, H.D. 1, and be placed on the calendar for Third Reading.

Respectfully submitted on behalf of the members of the Committee on Consumer Protection & Commerce,

		____________________________ KENNETH HIRAKI, Chair