Judge Imposes Preliminary Injunction
Against Federal Record Service Corporation
A Federal Judge from the United
States District Court in the Southern District of New York has issued
a preliminary injunction against the Federal Record Service Corporation
for using misleading and fraudulent solicitations that include the
program names of the Social Security Administration (SSA). The judge,
in a stinging opinion issued on May 21, 1999, required Federal Record
Service Corporation to cease disseminating its misleading and fraudulent
solicitations, froze the corporations assets, and authorized
the United States Postal Service to detain all incoming mail.
This is very good news
for consumers, commented Kenneth S. Apfel, Commissioner of
Social Security. The Courts action should serve notice
to those who use Social Security program words to ply their trade.
Our Inspector General is vigorously monitoring these activities
and the Social Security Administration will act to shut down those
who do not obey the law.
Section 1140 of the Social Security
Act prohibits the use of Social Security program words, symbols
or emblems in any solicitation or advertisement to convey the false
impression that the solicitation is approved, endorsed or authorized
by the Social Security Administration.
Federal Record Service Corporation
targeted new parents and new brides for the approximately 2.2 million
solicitations it sent each year. Of these, the company asserts,
between 90,000 and 100,000 made use of the companys services
that resulted in gross annual revenues in the range of $1.5 million
per year. The Court noted in its opinion however, that this profit
level is understated due to the substantial consulting fee that
Federal Record Service Corporation pays to another company, National
Investment List Services, owned entirely by Darrin Gleeman, President
of Federal Record Service Corporation, and employing only Gleeman
and his wife.
The mailings to new parents
stated that their newborn children must have a Social Security number
and offered to help the parents acquire the number for a $15 fee.
Over 96% of the parents of children born in hospitals apply for
a Social Security number during the birth certificate registration
process which means there is little need for the service the company
provides. Often these confused parents believed that the mailing
from the Federal Record Service Corporation was a follow-up mailing
from the Social Security Administration. Many parents learned that
they were not dealing with SSA when the Social Security card they
applied for in the hospital arrived a few days after they had paid
the fee and provided the company with personal identification information.
Mailings to new brides informed
the brides of the need to change their name on Social Security Record.
Many brides, thinking that they had been contacted by the Social
Security Administration, mailed in the $15 fee and included all
their personal identification information.
The companys mailings
are well known among consumer protection groups across the country,
including the Better Business Bureau, which has received 443 complaints
against Federal Record Service Corporation since 1996. This total
makes Federal Record Service Corporation the third most complained
about company to the Better Business Bureau over the last three
years. SSAs Office of Inspector General has received a substantial
number of complaints as well. We have received more complaints
against the Federal Record Service Corporation than any other company
in the history of OIG, SSA, James G. Huse, Jr., Acting Inspector
General, SSA, said. We have taken aggressive action to stop
Federal Record Service Corporation from misleading the public with
deceptive Social Security-related solicitations.
By Court order, mailings sent
by consumers to the Federal Record Service Corporation have been
detained by the United States Postal Service and will be delivered
to the Social Security Administration in Baltimore. SSA will respond
to all mail sent by consumers to the Federal Record Service Corporation.
Individuals who have sent a $15 fee to Federal Record Service Corporation
will have their money returned to them by SSA. For parents of newborns
who have replied to the Federal Record Service Corporation solicitation,
SSA will check its records to determine if they applied for a Social
Security Number at the hospital. Parents who applied at the hospital
will receive a letter stating that they will receive the card soon
and parents who did not apply for the number will receive an application
and instructions on filling out the form.
SSAs Office of Inspector
General has been instrumental in investigating and compiling information
and complaints about the Federal Record Service Corporation. Consumer
complaints to SSA were included in the U.S. Attorneys filing
with the court. SSAs Office of General Counsel worked closely
with the Inspector General and the United States Attorney in Manhattan,
logging many hours to develop the case and prepare it for court
I commend U.S. Attorney
Mary Jo White for the time and energy that she and her staff have
devoted to this case, commented Commissioner Apfel. Through
the team efforts of the Social Security Administration, our Inspector
General and the U. S. Attorney, new parents and newlyweds across
the country will be spared from the deceptive practices of the Federal
Record Service Corporation.