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More Plaintiffs Allege Extortion in Yelp Lawsuit

The legal pressure on Yelp is mounting: New plaintiffs have joined the case which alleges the social media review site offered to remove bad customer reviews of a business if that business bought advertising space on Yelp itself.

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The legal pressure on Yelp is mounting: New plaintiffs have joined the case which alleges the social media review site offered to remove bad customer reviews of a business if that business bought advertising space on Yelp itself.

One of the new complainants, Chicago Bleeding Heart Bakery, alleges that Yelp made a direct offer to demote any bad user reviews to the end of the Yelp listing for the business. A Yelp sales representative also offered to personally delete any reviews the bakery’s owner identified as “bogus.”

Legally the matter is likely to hinge on whether this behavior constitutes a form of extortion. Yelp contends they are in fact behaving legitimately, and the plaintiffs are misunderstanding how a standard Yelp “review filter” system works. (This overlaps some of the same issues being hashed out in a lawsuit brought against Variety by the maker of film Iron Cross–he bought a $400,000 promotional package in the industry paper during the Oscars runup only to have one of the publication’s critics excoriate the film.)

Yelp’s system exists to “protect consumers from fake or shill reviews,” chief Vince Sollitto said recently, and Yelp really does need a system in place to do this. That’s because the old saying “the customer is always right” also is joined by the much more accurate “the customer is sometimes a complete and utter bastard.” We’ve all witnessed people complaining loudly and publicly in a store or restaurant about a matter that’s actually quite trivial–Yelp, and systems like it, give these types a new public forum to vent spleen in. And such public bad reviews are a black mark against a company’s reputation that may impact revenues if the enterprise concerned is small enough. Hence, there needs to be a mechanism to delete false or misrepresentative ones.

Yelp may even have a slight case for charging for this service: After all a Yelp worker will have to expend time and effort to dig through the reviews and verify if bad ones really do need weeding out. But Yelp makes money from these reviews, which it peddles alongside advertising, so removing false reviews should be a core part of its business, acting in good faith to defend businesses against unscrupulous types.

The other thing the lawsuit makes clear is that location-based social gaming or review sites like this are rapidly maturing to the point that they can have serious business impacts. As we all carry cleverer smartphones, and engage in more Twittering, Buzzing, Yelping, and Foursquaring on the go, we can expect more thorny legal cases like this to pop up.

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[Via Wall Street Journal]


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