Current Events in September 2010

Avvo.com, a website that provides consumer ratings of attorneys nationwide, has been slapped with a lawsuit spearheaded by a Florida attorney. Larry Joe Davis, Jr. says he was defamed by the site and punished when he tried to fight back.

Davis, of St. Petersburg, says Avvo "purports to list over 90 percent of lawyers in the United States, and...all members of the Florida Bar." According to the suit, those listings are made "without [the lawyers'] knowledge, input or approval, based on allegedly available public information, primarily, information made available by the Florida Bar."

Bad info

Davis, who is representing himself, claims much of the "public information" listed on the site is just plain wrong.

He notes that he is "board certified" in health law, meaning that he has attained "the highest level of evaluation by The Florida Bar of competency and experience within an area of law, and professionalism and ethics in practice."

Despite this certification, Davis says Avvo lists him "as practicing '100 percent employment/labor' law" -- an area in which he does not practice at all. Davis says Avvo never brought the error to his attention. Avvo made the same mistake with eight out of ten other board-certified health attorneys in the Tampa Bay area, according to the suit.

Plaintiff in the dark

Davis didn't become aware of the erroneous listing until August 19, when a prospective client called him seeking advice regarding a "hostile work environment," according to the suit. It was the latest of several calls involving such a situation.

When Davis asked the consumer how she found his number, the client "responded that she had found the name on Avvo.com and that [Davis] was listed (in a pie-chart at the very top of the screen) as '100 percent employment law.'"

If that wasn't bad enough, the client told Davis that she called him "because he was the lowest rated employment lawyer" on Avvo.com, and none of the other lawyers had answered her call. The client thought that Davis, "being a poorly ranked lawyer, might answer her call (i.e. she assumed that [Davis] would be desperate for employment law clients)."

Davis also alleges that Avvo got his address wrong, "despite that Avvo.com asserts it provides the business address 'of record' with the Florida Bar."

Error by design?

Immediately following the August 19 call, Davis logged onto Avvo in an attempt to correct the information on his profile. As soon as he logged in, according to the suit, his "rating jumped from a 4.3 out of 10 to a 5 out of 10."

After exploring the site a bit, Davis decided he was "not thrilled with Avvo.com's business strategy" and tried to get his profile removed altogether. As soon as he removed the information he had added -- leaving those fields blank -- his "rating...automatically became a '3.7 Caution' (in red letters) out of 10," according to the complaint.

According to the complaint, Davis's troubles were by design. Davis alleges that Avvo purposely and regularly publishes "false and misleading information regarding attorneys, and by doing so attempts to coerce their participation in exchange for improving (making accurate) their Avvo.com listing and rating." Thus, Davis alleges, his rating jumped from a 4.3 to a 5 as a result of his simply logging into the site. Conversely, if a lawyer doesn't affirmatively participate on the site, the suit alleges, "Avvo.com punishes the lawyer with a much lower rating."

Davis's suit charges Avvo with libel, libel by omission, and violation of several Florida statutes. He is seeking damages and an injunction.

Bally Total Fitness Corp. has signed an agreed judgment with the Texas Attorney General's Office that prohibits the California-based company from continuing to send its former members misleading "past-due" mailings.

Under the agreement, Bally must provide refunds to Texas consumers who were deceived into paying fees they did not actually owe and who did not use its fitness facilities.

Bally operates 24 fitness centers in and around the Dallas, Houston and San Antonio areas. An investigation by Attorney General Greg Abbott's office revealed that between summer 2009 and March 2010, Bally mailed more than 11,000 misleading "past due" collection notices to former customers in an attempt to encourage them to rejoin their former gym.

Notices of arrears

The notices, which created the false impression that former members owed Bally outstanding membership fees, were actually an attempt to get former members to renew their memberships.

The judgment also includes an injunction that prohibits Bally from indicating that current or former members owe a balance unless the balance is actually owed. Bally also is banned from claiming harmful information may be submitted to a credit bureau when Bally's records do not support such a representation.

According to records obtained by the state, more than 1,000 Texas consumers made payments to Bally after receiving the improper past-due collection notices. Under the agreement, Bally will send out settlement notices to customers who are automatically eligible for restitution. Any customers who do not receive a notice but believe they are entitled to restitution should file a complaint with the AG's office.

The improper collection notices that led to the enforcement action indicated that recipients owed "past-due" fees under Bally's "Value Plan" -- fees for which the notice demanded immediate payment. Some of Bally's past due notices even claimed that failure to remit a payment could result in a negative entry on the former members' credit reports.

Texas's enforcement action charged Bally with attempting to confuse its former Value Plan members with deceptive bills so they would make payments that were not actually owed and which effectively reinstated a lapsed membership they did not want.

Under their skin

It isn't just Bally's collection notice practices that have consumers ticked off.

"I signed a one year contract with Bally's and used my Visa to pay the entire year in one payment -- I specifically did not want to be charged a monthly fee," Alba of Bothell, WA, tells ConsumerAffairs.com. "Six months after the one year was up, my husband noticed Bally's charge on the Visa -- a review of Visa charges showed monthly charges past the one year contract. When I complained to the corporate office they said that they could not give me a refund because 'that's just the way the paperwork came to us'. No where on my paperwork does it say that I agreed to pay monthly payments!"

Stavros of Schererville, IN, says he cancelled his membership by sending a registered letter and the signed cancellation notice to Bally. "I continue to receive monthly bills. When I tried to call to complain, the recording said that there is a high volume of calls and they could not answer my call. This has been a big harassment from Bally's."

Texas consumers who believe they have been deceived by similar fraudulent business practices may call the Office of the Attorney General's toll-free complaint line at (800) 252-8011 or file a complaint online.

The Federal Deposit Insurance Corporation (FDIC) warns that 829 of the nation's 7,800 banks were on its problem list at the end of June, up from 775 three months earlier.

So far this year, 118 banks have failed, compared to 140 closed by regulators during all of 2009.

The banks on the problem list are mostly smaller institutions, not surprising since most of them did not benefit from the massive government bail-out of Wall Street. As smaller banks set aside more money to be ready for future loan losses, it becomes harder for them to remain competitive.

Not surprisingly, the troubles on Main Street are reducing the number of banks in the U.S. The FDIC said in its regular quarterly report that there were 104 fewer banks in the second quarter of the year, compared with the first quarter. And for the first time in the 38 years that the reports have been issued, no new banks were added.

"The smaller banks are recovering, but it is at a slower rate," FDIC Chairman Sheila Bair said. "It hit the large banks first and then the community banks, so they will be lagging the larger banks in terms of coming out of this."

"Without question, the industry still faces challenges," Bair said. "Earnings remain low by historical standards, and the numbers of unprofitable institutions, problem banks and failures remain high. But the banking sector is gaining strength. Earnings have grown, and most asset quality indicators are moving in the right direction."

Commercial banks and savings institutions insured by the FDIC reported an aggregate profit of $21.6 billion in the second quarter, a $26 billion improvement from net loss of $4.4 billion posted by the industry in the year-ago period. This is the highest quarterly earnings total since the third quarter of 2007. Despite the improvement, earnings remain below historical norms, the FDIC noted.

The FDIC doesn't publicly identify the banks on its problem list.