Class Action Lawsuit Filed Against Yelp Alleging “Extortion”

It must be the season for litigation. Two class action law firms have filed suit in Los Angeles federal court claiming that Yelp has attempted to “extort” money from small businesses by offering to remove negative reviews in exchange for payment. The suit contends:

Yelp runs an extortion scheme in which the company’s employees call businesses demanding monthly payments, in the guise of “advertising contracts,” in exchange for removing or modifying negative reviews appearing on the website.  The plaintiff, a veterinary hospital in Long Beach, California, asked that Yelp remove a false and defamatory review from the website.  In response, as set forth in the lawsuit, Yelp refused to take down the review.  Instead, the company’s sales representatives repeatedly contacted the hospital and demanded a roughly $300 per-month payment in exchange for hiding or removing the negative review.

This kind of allegation has been out in the media in the past. Most notably in an article that appeared in weekly publication the East Bay Express almost exactly a year ago. The article was called Yelp and the Business of Extortion 2.0:

During interviews with dozens of business owners over a span of several months, six people told this newspaper that Yelp sales representatives promised to move or remove negative reviews if their business would advertise. In another six instances, positive reviews disappeared — or negative ones appeared — after owners declined to advertise.

Because they were often asked to advertise soon after receiving negative reviews, many of these business owners believe Yelp employees use such reviews as sales leads. Several, including John, even suspect Yelp employees of writing them. Indeed, Yelp does pay some employees to write reviews of businesses that are solicited for advertising. And in at least one documented instance, a business owner who refused to advertise subsequently received a negative review from a Yelp employee.

At the time of publication Yelp CEO Jeremy Stoppelman responded to the article.

These claims about extortion and other allegations of manipulation of reviews or wrongdoing are generally based on misunderstandings by the businesses themselves about how Yelp’s algorithm works (which causes some positive and negative reviews to be flagged and removed). And although I’ve never been on a sales call with Yelp reps I’m extremely skeptical of the contention that there’s a pattern of extortion or other, alleged strong-arm tactics.

Like Google, Yelp is now a target because of its success and visibility. Some business owners are frustrated with Yelp because, again like Google, positive or negative reviews can materially impact a business. The rampant proliferation of user-generated content and reviews is viewed by many SMBs as a positive thing but by others as a nuisance or even destructive.

It must also be said that there’s also a very distinct marketing angle here for the involved attorneys who are likely to grab national publicity from this action. This is a “sexy” case for them and the PR may be worth the effort even if there’s no money in the end. However, ethically attorneys are bound to not file frivolous lawsuits and can suffer penalties and potential civil damages if they do (i.e., “malicious prosecution”).

There must be some testimony or facts here to at least form the basis for the claims alleged in the action. The question is, beyond the perception of the individual plaintiff, is there objective evidence that Yelp offered to remove the negative review in exchange for payment and that there was a larger pattern of doing so to justify the class action.

Yelp does allow advertisers to highlight a (presumably favorable) review but that’s quite a different matter. Here’s an example for “Dentist, Berkeley CA

Picture 216

The truth will out of course but I would be stunned if these claims were based in truth rather than the frustrations and misunderstandings of the plaintiff in this case.

Related Topics: Channel: Local | Legal: General | Search Engines: Maps & Local Search Engines | Yelp

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About The Author: is a Contributing Editor at Search Engine Land. He writes a personal blog Screenwerk, about SoLoMo issues and connecting the dots between online and offline. He also posts at Internet2Go, which is focused on the mobile Internet. Follow him @gsterling.

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  • http://searchengineland.com Jonathan Hochman

    Let’s see. Yelp hires a bunch of sales staff and probably puts them on a quota. That’s what most sales organizations do. We’ve all had experiences with pushy and even unethical sales people who do or say whatever is necessary to get the job done. The claim rings true to me.

    If Yelp offers advertising there should be no connection, none whatsoever, to the editorial content including user reviews. As soon as they breach that wall, they expose themselves to this sort of claim.

  • http://www.bastyr.edu coquina

    Well then i guess i’m getting jipped. the business i work for recently signed on as a yelp client, is payin the $300 monthly tab, and guess what??? the negative user reviews ARE STILL THERE. We DID, however, get to bump a positive review up to the #1 position. But the bad reviews DID NOT GO AWAY. That $300 buys us text ads w/ higher visibility allover yelp.com, a special spot to announce a customer discount offer, & maybe more profile imgs…. but no absolution of negative user reviews here. that’s my experience as a business advertiser on yelp.com.

  • http://www.finditbyme.com FindItByMe

    To be stunned that a lawsuit progresses to this point due to a misunderstanding of the plaintiffs is a remarkable statement. Yelp has been in court before and settled. I personally know business owners that have been subjected to Yelp’s tactics. If the “truth will out” then let’s see what happens as the case develops. If in fact Yelp is acting in bad faith, then they should be stopped by whatever legal remedies are available.

    What Yelp has allegedly done gives everyone affiliated with local search a bad name. It’s very difficult in good or bad times to convince an SMB to pay for a local listing if there is no “gut ROI” apparent to them. And then we tell a local baker who works 18 hours a day to then go home and keep all the local search engines up to date and do their Facebook and Twitter updates. Help.

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