Life insurance firms in the US are now dealing with a new type of fraud as some people have taken to organizing sham funerals in order to collect life insurance money.

Report said increasing number of people accused of involvement in the fraud attempt are now being charged to court.

In Los Angeles, two women who reportedly staged sham funerals to collect thousands of dollars in life insurance payouts have appeared before a federal court to plead not guilty to the charges.

The two women, Faye Shilling, 60, a phlebotomist, and Jean Crump, 67, a mortuary worker, entered pleas earlier in the week.

They were charged with a mail and wire fraud, but were released on bail.

The scam against insurers and funeral-related businesses, according to prosecutors, started with the accused purchasing life policies on fictitious people and then staging their funerals so as to make a claim.

Reports added that two other people, including a mortuary worker, have pleaded guilty to related charges.