Yelp CEO Responds to Class-Action Lawsuits Alleging Extortion

Yelp

Yelp has been the subject of fairly continued grumblings, some louder than others, that its ethics are less than stellar—and last week, the user-generated reviews site got hit with an official class-action lawsuit making those grumblings legal accusations. Even worse, yet another (very similar) lawsuit just emerged, accusing Yelp of the same underhanded tactics. Today, Yelp's CEO, Jeremy Stoppelman, responded on the official Yelp blog.

Essentially, the rumors of ethical misconduct all come back to an alleged "pay to play" tactic. Yelp is accused of offering to remove or downgrade negative reviews if the business in question purchases advertisements on the site. If that's true, a judge could agree that it sounds exactly like extortion or, at the very least, a huge disservice to the users who rely on Yelp. In the past, users have quietly come forward to voice their concerns and frustrations with the tactic, but accusations are now specific enough to name the exact dollar amounts supposedly demanded by Yelp. And this is the first lawsuit that's actually been filed, so Yelp is taking it very seriously—there have been four blog posts in the past two weeks defending the site.

Today's example features CEO Jeremy Stoppelman calling the claims "false and easily refuted" and "without merit," and accuses the lawyers involved of pursuing a "frivolous" lawsuit purely for a cash settlement. He even notes that the suit came in the wake of Yelp's latest round of financing, and that the plaintiffs may just be trying to cut themselves a piece of that cash.

These misconceptions are also fueled by lawyers, who may have heard about Yelp's recent financing round and may be seeking a share. So it's no surprise that today another lawyer has filed a virtually identical lawsuit making the same inaccurate claims. (Don't worry; they're still not true.)

Stoppelman admits no guilt or shades of gray in the post, stating, "We will fight [the suit] aggressively and I believe we will win." He's quite confident throughout the post, despite the fact that these rumors have dogged Yelp for years. From the tone of the article, it seems like Yelp would rather take it to court than try to settle beforehand—we'll keep you updated as to when the next step is announced.

[Via Yelp]

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3 Comments

  • LISA DIVER

    You know that song? BAAD COMPANY! You cant deny it!

    Baaaaad company. You cant deny it.

    Listen, here is a solution. Go around to businesses that sport the Yelp sticker and ask them. Take a survey of 100, see what they say. They'll tell you about a shake down, exactly as it is stated.

    Whats more, it is totally true, even today, right now. TEST IT! Put a bad review and watch it pushed down!!! Really? YEAH! REALLY! Try it!

  • Craig Faucher

    I'm sure the lawsuit will be hard to prove. Yelp is more subtle with their "persuasion." I've had more than 20 positive reviews written about my business by happy customers and all but five of them have been systematically removed by Yelp's automated "spam" filter, over which everyone at the company claims to have no control.

    After making complaints and getting no response other than a canned email referencing their "inappropriate postings" policy, I start getting sales calls from yelp saying that advertising is the way to get real exposure. After the call half of the reviews returned for a short time.

    A little research revealed that my competitors who pay for advertising had no shortage of reviews. It's the flip side of what the lawsuit alleges and it's a little more insidious.

    All the bad publicity, however, won't affect Yelp so long as they continue to publish the witty reflections of their hippest users. The Yelpers don't really care about the site's policies toward businesses and the businesses know that. That's where the unspoken extortion lies and it won't be evidenced in a court of law.