News Release

Federal 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 corporation’s 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 Court’s 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 company’s 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 company’s 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. SSA’s 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.

SSA’s 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. Attorney’s filing with the court. SSA’s 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 action.

“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.”