Wednesday, February 24, 2010
Class-Action Lawsuit Filed Against Yelp
Breaking News / Business / Law Enforcement & Crime Kathleen Richards — Wed, Feb 24, 2010 at 11:37 AM
A class-action lawsuit was filed against Yelp by two firms in Los Angeles federal court yesterday. The lawsuit alleges unfair business practices against the San Francisco-based user-generated review site, and, in particular, that the company “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,” according to the official press release.
Last year, the Express published two articles detailing similar extortion claims by local business owners, which were cited in the lawsuit announcement. In this case, the plaintiff — a veterinary hospital in Long Beach — had contacted Yelp and asked that the company remove an allegedly false and defamatory review from its web site. After refusing, Yelp then had its sales representatives call the hospital and demand a roughly $300 per month payment in exchange for “hiding or removing the negative review,” according to the release.
Gregory S. Weston, managing partner of the Weston Firm, one of two firms that filed the lawsuit, Cats and Dogs Animal Hospital Inc. v. Yelp Inc., said his client was never contacted by Yelp sales reps until the hospital contacted the company about the false review. Sales reps then contacted the hospital “almost immediately. And they were very frequent and high pressure,” he said.
Yelp continues to deny such allegations. And in response to the lawsuit, the company told TechCrunch: “The allegations are demonstrably false, since many businesses that advertise on Yelp have both negative and positive reviews. … While we haven’t seen the suit in question, we will dispute it aggressively.”
Feeling helpless against damaging reviews, some business owners and individuals have filed lawsuits against Yelp, but the online site has always been protected from liability of third-party content under Section 230 of the Communications Decency Act. But, following publication of our articles, Yelp decided to allow business owners to respond to reviews if they signed up for a free business-owner account.
Yet this lawsuit has nothing to do with defamation, says Weston. “The lawsuit is not about what people say about Yelp but about Yelp’s attempts to say, ‘Give us money and then we’ll take down these negative reviews,’” he said.
Weston added that a lawsuit is the only way to stop this practice. “My client contacted Yelp many times,” he said. “Trying to negotiate before filing suit would be fruitless because this is a very widespread practice. Your article didn’t get them to change their practice. … I think they need to be forced by a federal judge to stop the practices.” Weston cited the Napster case as evidence that it’s possible for a judge to order web sites to change their practices.
Yelp has 21 days following the lawsuit filing to respond. Weston says they plan to obtain and comb through Yelp’s sales e-mails. “We’ll probably also see evidence that Yelp executives knew of this and didn’t care and were more concerned with covering it up than stopping the practice,” he said.
A class-action suit can have more than one lead plaintiff, he noted. “I’m happy to take their call.”
Comments (6)
Showing 1-6 of 6
Thank you for doing exactly what I have been trying to get you to do. I do not want to be associated with yelp in ANY way. I have read reviews on your company and none were favorable. I have had customers of mine post to you only to be hidden in a "filtered" area unable to be read. You chose to blast evert negative remark made by an x- boyfriend hell bent On causing grief for us. I was unable to reach you or have it removed unless I pay you to open a business account. My company will be seeking legal action against this person . Your company will also be named as a contributor . It is unfortunate for small companies like mine to be at the mercy of sharks like you and him. I have done business for 5 years with 3000 consigners and just as many buyers. Don't you find it a bit strange that the only two reviews from you were so negative. I am sorry for you and your company for painting such a negative picture of a family owned, community serving company as mine. Shame on you. Susan Margaret p.s. The two people posting against us didn't even have the integrity to use their real names. What does that tell you?"
On Aug 31, 2011, at 10:53 AM, 'Miranda @ Yelp HQ' wrote:
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I, too, am a small business owner who has been unfairly harmed by Yelp. I am interested in joining a class action suit.
Yelp has hurt us at: WWW.SOSMOVERS.COM with the same scam of holding us down to a 3.5 average reviews while we have been at 5.0 for the past three years. Most of our 5-STARS review are filter from the public view. Yelp posted every negative reviews we got from non-customers, or Anti-Military & other moving companies hating on our movers who are made up of mostly Marines & Soldiers. Yelp has also contacted us about advertising with them to get better reviews posted. Yelp is the modern day Mafia.
We have a predominate salon in Los Angeles for the past 10 years and have been written up in over 60 magazines worldwide for being the “best of” and are on countless TV shows. We did not know what Yelp was until 2009 nor did we care. When we looked at Yelp and noted many good reviews. Then we started getting calls to “sponsor”- a sponsor is when you willingly give money to sponsor an event or charity. Lets use the real term when it pertains to Yelp- "pay to play buy having your name come up first on the search site". We declined because in the past 9 years there has been no need to advertise on a search engine like Yelp to get our business. Then shortly after the decline a horrible review came on, then another two. We knew something was odd because the review referenced having their hair done by the owner during a time when the owner was out of the country filming. And one review that personally attacked the owner for his conduct outside of the business while he was working out at his gym. I contacted Yelp to have the reviews removed based on the reviewer's violation of the Yelp's Terms of Conduct and reviewers numerous unfounded accusations and inaccurate statements. The reviews were removed. However, shortly after that another review came up that stated “several years ago I got my hair done at…” Most all of our good reviews were gone and only 3 remain. So, we “sponsored” or should I say payed the extortionist for 3 months, good reviews returned however no increase in revenue from Yelpers patronizing the business. Then as any smart business owner seeing no increased revenue we terminated the “sponsorship”. Just recently there is an update by the bad reviewer stating blatant lies & last week a scathing 5k plus review. Moreover, if you look at the stats on the "business trends page views" it has gone from sponsorship period of 148 clicks to 45 clicks, please note prior to sponsorship we were at 177 clicks per page. We just find this fishy. Our City Search is vastly different than Yelp's, although we understand our business cannot satisfy everyone and there will be disgruntled clients that need to vent, Yelp's conduct is unacceptable.
We confider Yelp the modern day SCHOOL YARD BULLY. Its amazing how our business can be selected as on of the "Best Top Ten Cutters in the World" by ELLE UK magazine, "Best Salon" by ALLURE magazine 2007 & 2009 (voted by the subscribers), "Top Ten Amazing Blowouts" by INSTYLE, however on Yelp we only have 6 reviews.
Yelp will counter the negative review argument with the line "businesses on Yelp average 3.5 stars", Which they deem to be "great". This is the scam itself. They require 3.5 stars to "qualify" for Yelp sponsorship. If Yelp was a quiz, that's a C-. What business thinks 3.5 stars is great or even ok? And, what business would pay for sponsorship if they had 4-5 stars already? It is in the financial interest of Yelp to keep businesses in the 3.5-4 star range. "Qualified", but not satisfied. Bring them down. I'm surprised this doesn't fall under the rico act...
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