Law & Disorder

Businesses dependent on Yelp cry for help: More extortion lawsuits for review giant

Businesses dependent on Yelp cry for help: More extortion lawsuits for review giant

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Yelp, the fast-growing and highly-popular local reviews Web site, is fighting off more charges that the company manipulates its reviews to encourage advertisers.

A former Yelp employee who requested to remain anonymous told CultureMap that "In my personal experience I heard from many small business owners about their positive, 5-star reviews disappearing without explanation other than the famous 'Yelp Algorithm' story. I have been told by some of these same business owners that once they became advertisers on the site, the problem of disappearing positive reviews stopped or dropped off."

According to TechCrunch.com, the latest lawsuit was filed as a class action in San Francisco by Boris Levitt, the owner of Renaissance Furniture Restoration there. Levitt alleges in the suit that Yelp participates in "unfair and unethical conduct in promoting, marketing and advertising its website as maintaining non-biased reviews." 

Specifically, Levitt has filed charges alleging violations of business and professions codes, negligent misrepresentation and intentional misrepresentation.

The suit states, "Once a business is actively receiving reviews on Yelp, Yelp starts to manipulate the overall rating and presentation of a business by deleting positive reviews from the business page and/or posting negative reviews to the top of the review page. After the overall rates or/and presentation of the business decline, Defendant will contact the businesses and offer the opportunity to purchase advertising.

"If the business declines Yelp's offer, Yelp continues to manipulate the overall rating by removing most of the positive reviews, which causes the business's overall star rating to fall.... Once a business's reviews are manipulated by Yelp, the business itself is impacted by either by loss of revenue or by the requirement of paying hundreds of dollars for advertising each month on Yelp."

This lawsuit is the third in recent weeks, and one, filed in Los Angeles by Miami firm Beck & Lee and The Weston Firm in San Diego, has expanded to nine plaintiffs from across the country alleging explicit extortion in addition to similar unfair business practices. 

“We believe that Yelp’s sales tactics amount to high-tech extortion,” Jared H. Beck, co-managing partner of Beck & Lee Business Trial Lawyers, said in a statement.

These court cases come just over a year after Kathleen Richards of the East Bay Express, a Village Voice-affiliated alt-weekly paper, published an explosive exposé about Yelp detailing claims of extortion by sales reps.

Yelp's CEO Jeremy Stoppelman responded to the lawsuit allegations via the Yelp blog and denied any wrongdoing.

"There has been a long history of people accusing Yelp of monkeying around with reviews in exchange for money. The allegations are disappointing, not only because they are false, but because they ignore empirical evidence in favor of conspiracy theories .... We know this lawsuit to be without merit, we will fight it vigorously, and we are confident we will prevail," Stoppelman said.