March 31, 2008

Internet Lawyers Blog | LegalZoom.com Faces Consumer Fraud Class Action

Internet Class Action Update:

There are a lot of people out there wondering if Legal Zoom is a scam. Legal Zoom essentially takes publicly available forms, re-packages them, provides non-legal consumer support fee and offers the form for sale to the public. For many people who are prone to 'do it yourself' and for those who don't know or want to pay an internet lawyer, legal Zoom is a solid consumer option for trademark registration

OFL has a comprehensive list of information posted on the internet about Legal Zoom which contains informational content, consumer reviews and other assessments of the Legal Zoom service and business model. Click Here.

Some people take issue with Legal Zoom's marketing which, to some, suggests that you will receive some level of help from real internet lawyers, or that their forms were developed by attorneys.  If you read the disclaimer, you are advised that Legal Zoom does not provide attorneys or legal internet law advice. Other people take issue with the fact that many of the forms which Legal Zoom uses are already available on-line for free.  For instance, Legal Zoom re-packages the otherwise already available free trademark forms through the USPT.gov Trademark Office. Finally, some point out that even if the legal Zoom customer is able to navigate the examination process on their own without legal, their trademark registration, for instance, might be unenforceable because of technical errors which would have been obvious to any trademark attorney. Legal Zoom can give customers a false sense of security and success.

Legal Zoom was recently sued on allegations of consumer fraud related to its trademark registration fees of $325.  Actually, the registration fees vary depending on whether the filing is electronic (which it always is with LegalZoom.com) and which eTEAS system is accessed. Is Legal Zoom a scam?  Keep reading ....

LegalZoom appears to have used a USPTO service with a registration fee of $275.00, but represented on its web site that 'hard' or "pass-on" "Standard Government Filing Fee" was $325. LegalZoom has since changed its web site to add a $50 administrative fee to the USPTO filing fee.

Law.com - Class Certification Sought Over LegalZoom's Filing Fees

As alleged in the petition, LegalZoom charges consumers a "U.S. Government Filing Fee (required)" of $325 and a $159 service fee to file a trademark application with the USPTO. But LegalZoom pays $275, the actual fee for the USPTO's TEAS Plus (Trademark Electronic Application Service), and has been overcharging consumers since July 2005, when the TEAS Plus application service took effect, Solotko alleges.

"They're misleading consumers," contends Robert Kleinman, a shareholder in Austin's Sutton Kleinman and one of the internet attorneys representing Solotko.

Solotko says in an interview that after LegalZoom filed the trademark application, he determined through research of USPTO public records that the actual government fee for the TEAS Plus application was $275. "Once I discovered this, I realized there were probably many, many people like me," says Solotko, who paid an extra $50 for his filing.

On-line retailers, merchants and service providers must be extremely careful to ensure that its on-line information is extremely accurate on deliverables and pricing.  Internet lawyers at Traverse Legal expect to see an growing trend in these types of consumer class actions against on-line web service providers and e-commerce retailers.

COMMENTS

A friend of mine used legal zoom to change her mother's will and cheat everyone out of the inheritance. I wonder if it will stand in court. Anyone have a guess? Thanks.

I would strongly caution anywone from giving Legal Zoom a dime. They have sent me three differnt form letters in my five weeks of having them attempt to file a pending trademark. Whether it is $275 or $325, they try and unload $100 artwok fees and the entire service back on the customer who has already given them in my case $598. It is a straight scam, nothing has been filed or paid in direct conflict with their "shopping cart"

Why is it problematic for LegalZoom to process completed forms for a fee? If that's actionable, I want to be lead Plaintiff in a class action suit against H&R Block. No - I want to be lead counsel. That's where the real dollars are to be found.

Although I am not a lawyer, and am only speaking through the lens of a "common man," I think the real issue here is disclosure. There does not appear to be anything per se illegal about the activities you cited LegalZoom as participating in, as long as the buyer is aware of the costs and potential risks, and can read this information without a magnifying glass.

An exception to the above would be the provision of paper forms, which are identical to those available for free from other sources (such as government agencies). In such case, this may amount to substantive fraud, as the buyer is paying for what he mistakenly thinks is a value added service. But the added fees for electronic filing services cannot be viewed in this light, as LegalZoom is actually performing some work (filling out the online form for the customer).

I agree Legal Zoom does not do enough when it comes to Trade Mark. There fees are too high for just form completion. I used them a few months ago.

An overwhelming majority of time in trademark prosecution counseling is spent determining what goods and services the client needs (vs wants) protected. The description of those goods or services determines the govt fees the applicant pays. In 2005, the Office started TEAS Plus where if one files electronically, he pays $275 per International Class. The catch is that you MUST use and keep the goods/service descriptions already approved by the Office. If there is no "ready made" description that accurately identifies your product or service, you create your own and pay the $325 fee per class. In sum, determining which US trademark govt filing fee is applicable ($325 vs $275), many times involves consulting with the client about his goods or services. LegalZoom cannot do this without walking that tightrope of providing legal advice.

LegalZoom is not a trustworthy way to take care of a legal need. They are cashing in on people who are gullible and lazy or who are cheap and don't want to pay for an attorney to take care of their needs. It is a glorified document service-cum-scam and I will be very happy when they are litigated into bankruptcy.

total scam, waste of money.
Ironicly, Legal Zoom itself is sneaking arround to post their bs messages and save their asses.

If you have no past knowledge in law, I would recommend to file with an attorney or document assistant. If you screw up the docs like I have in the past, trust me the $159 fee is well worth it!

LegalZoom LLC is owned by lawyers right? Does that mean a lawyer is going to review my submission for trademark or company formation?

I can't even begin to imagine why anyone would use something like LegalZoom for a partnership agreement or even an LLC. Why would you trust your heart and soul-your very business-to someone who has never even listened to your business plan?! Using LegalZoom for anything important is simply crazy.

Using forms is a reasonable idea until those forms are challenged in court through litigation. The idea that LegalZoom saves you money is simply erroneous. In the long run, using form contracts will cost most business more money because an attorney will need to come in and clean up a complex litigation mess when the contract, trademark, or other form agreement is challenged. It doesn't make sense for any business that wishes to remain in operation for anything other than a small amount of time to use a forms service like LegalZoom because, ultimately, the forms will be challenged in court. It just isn't worth it, in my opinion, to take the risk when you dedicate such a significant amount of time towards making your business stand out among the crowd. Plus, LegalZoom likely violates several states' unauthorized practice of law statutes.

Last year I completed numerous legal forms for my family without help from anyone. I realized then that using attorneys to create these forms in unnecessary.

The service LegalZoom provides for the every day consumer JUST MAKES SENSE.

I'm sure those in the legal field are furious that such a practical approach to handling personal legal needs is a threat to their over-glorified and over-priced work.

Man. It sounds like it would be interesting to be a class action attorney specializing in internet law!

- I would recommend Legal Zoom without hesitation to all of my friends and family.

- LegalZoom is my number one online legal choice.

- Would certainly use Legal Zoom again

- I wanted to trademark my business logo and company name. Legalzoom was recommended to me via another company I have purchased services through. For over $600 I received a document with over 376 pages with a letter stating that I was to review the documents for potential conflicts. However, a picture of a potential conflicting logo's was not included nor were any logo's included. I was under the impression that Legalzoom was going to do the work...

- I found LegalZoom to be professional and patient in listening carefully to my needs and identifying a potential problem with the paperwork being emailed to me.

- Legalzoom was professional, fast, and cheap.

A couple of months ago I received Sirius satellite radio as a gift. I love it except for one constant ad that drives me absolutely bonkers. About every fifteen minutes I hear an ad from LegalZoom, a legal document company. LegalZoom touts that its fees are 85% less than those of lawyers.

First, with most Iowa lawyers the fee comparison is just not accurate. Second, while LegalZoom's ad says it is not a law firm it fails to highlight an important part of its disclaimer pointing out that the legal information on their site is not legal advice and is not guaranteed to be correct, complete or up-to-date. But as they say, it is experience you can trust. Or is it? Be sure to check out this post from a Colorado lawyer who loves LegalZoom because he has landed more business fixing mistakes from LegalZoom than he would have earned had he done the work in the first place.

One of the craziest things LegalZoom offers is a prenuptial agreement. First, if you have enough money for a prenuptial agreement you can afford a lawyer. Second, a prenuptial agreement is one area of law that if a mistake is made it could cost you - I'd say approximately half your assets. Let's just say I have trouble believing any attorney worth his or her salt - including those "top attorneys" who founded LegalZoom - could in good conscience recommend a person use a legal forms company for a prenuptial agreement. I also wonder what my friend Brett Trout thinks about their offers on patents, trademarks and copyrights.

Use LegalZoom if you must but I highly recommend talking to an attorney before you go that route. You might be surprised by the expense comparison, and even if the cost is slightly more, the legal advice is usually worth it. As the saying goes, you can pay now or pay later. The choice is up to you.

LegalZoom has its place. But too many customers probably think they are receiving legal advice from LegalZoom because of their deceptive advertisements. LegalZoom tells you they were formed by leading attorneys in one breath, then tell you they are not providing legal advice in the next. LegalZoom needs to be much more clear about the fact they merely provide publicly available forms.

If you are looking for real attorneys to provide real legal advice, you should not use Legal Zoom. While Legal Zoom will put you into a form for trademark registration, a trademark attorney will provide advice about whether the trademark is available, whether other registrants may already be using your mark in commerce, what international class to file in, how to phrase your product or service description, etc. A trademark attorney will also work directly with the examining attorney when questions arise during the trademark process. Legal Zoom won't provide legal advice about these critical issues.

You know those advertisements for LegalZoom with the attorneys and such. Well, it turns out that LegalZoom is not a law firm and offers NO legal advice. In fact, it appears that they are little more than a glorified forms service. What's worse is that the forms they offer are largely already available on-line for free. If you need a real attorney, don't be fooled. you won't find one at LegalZoom.

Legal zoom is essentially a form service. They take forms that are already publicly available and put a few bells and whistles on top of them. Their marketing pretends to offer legal advice and services, but then disclaims that their services are not legal advise or reviewed by any licensed attorney.

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