North Carolina Funeral Law Practice Exam

What action is required by a funeral establishment when a pre-need funeral contract is canceled?

1. Notify the local health department

2. Return all funds to the consumer

3. File a report with the state board

4. Notify law enforcement

The correct answer is: Return all funds to the consumer

When a pre-need funeral contract is canceled, the funeral establishment is obligated to return all funds to the consumer. This is essential as it ensures that the consumer is not financially disadvantaged when they decide not to follow through with the pre-need arrangement. The refund of funds helps maintain trust between the consumer and the funeral establishment, as it upholds ethical practices within the industry. This requirement reflects the consumer's rights and the need for transparency in financial transactions related to pre-need contracts. The other actions listed are not typically required in the context of canceling a pre-need funeral contract. For example, notifying the local health department or law enforcement is not pertinent to the contractual obligations between the consumer and the funeral establishment, and filing a report with the state board does not usually apply in standard cancellation scenarios. Therefore, the requirement to return all funds highlights the emphasis on consumer protection in funeral law.