November 23, 2017

Class action lawsuit against Yelp

Over the past year or so, there have been a lot of complaints about Yelp using questionable business tactics when soliciting businesses for advertising dollars. It looks like some businesses have decided that these tactics go to far. TechCrunch announced that two law firms – Beck Lee from Miami and The Westin Firm in San Diego have filed a class action lawsuit against Yelp for unfair business practices.

Quick Yelp Overview

For people that don’t know, Yelp is a “local search” site that allows users to review businesses. Kinda like a yellow pages where people post comments on their experiences. Users can search for a business – like an Italian restaurant in Atlanta – find results and see the business’ profile along with all of the reviews that business has received. Each review is tied to a registered user with their picture and a little bit of personal information about them, which gives business owners a way to better understand who the reviewers are. Users of Yelp build credibility in the system through these reviews that are rated by other users as funny, cool, useful, etc.

Why businesses like Yelp

Businesses seem to like Yelp because there are a ton of people using it, it provides them with feedback, but mostly Yelp lets them advertise. In that search for Italian restaurants mentioned above, at the top of the list will appear a restaurant that is paying Yelp for sponsored ads. As a user browses the site, additional sponsored ads appear on the right side of the page. Yelp provides businesses with information on the number of people that visit their Yelp profile which presumably translates into “butts in seats.”

Why businesses don’t like Yelp

The biggest reason businesses don’t like Yelp is because they sometimes get bad reviews and these are visible to anyone that visits the site. One can convincingly argue that people are entitled to their opinion and Yelp is simply providing a venue for those opinions to be expressed so that other people might make better informed decisions.

For a long time, businesses just had to take the negative reviews. Then Yelp allowed businesses to respond directly to a reviewer to try to address complaints in private. This led to some abuses as users posted negative comments in hopes that business owners would bribe them into changing the review. Last summer, however, Yelp started letting business owners respond in public to reviews. This was a little better, but businesses still don’t like negative comments (obviously). Rooz Cafe in Oakland even created a “No Yelper” policies.

Why are businesses accusing Yelp of “Extortion”?

There are a couple of reasons for this. A minor one that is frequently mentioned is that Yelp will show ads from your competitor’s business (who are paying) on your non-paying business’ profile. This practice isn’t that egregious, though and I think is up for debate.

The biggest reason stems from complaints from multiple businesses, the accusation that Yelp offers to squash bad reviews if they pay for ads (see the comments section on the TechCrunch article to get a feel for this). The business story generally goes something like this:

I had some negative reviews on Yelp and was contacted by a Yelp sales person that said if I paid $300 per month for advertising, those reviews would disappear.

That’s what all of the hullabaloo is about … these alleged sales calls.

Is all of this just business owners that are so upset about bad reviews they are making wild accusations or errant sales people within Yelp offering benefits off script? Maybe, but a quick search of Yelp extortion turns up a lot of results, dating back to 2008:

http://www.switched.com/2010/02/25/yelp-embroiled-in-bribery-extortion-and-defamation-dispute/

http://www.eastbayexpress.com/eastbay/yelp-extortion-allegations-stack-up/Content?oid=1176984

http://consumerist.com/2009/03/more-business-owners-accuse-yelp-of-review-extortion.html

http://blogs.sfweekly.com/thesnitch/2008/11/is_yelp_extorting_san_fran_bus.php

http://www.theregister.co.uk/2008/08/13/yelp_sales_pitch/

There is even a website dedicated to the topic:

http://www.yelpscam.com/press.html

Community Question

Yelp tries hard to present itself as a place to get quality reviews – their tagline is “Real People. Real Reviews.” Although, I guess that is still true, even if some of those reviews are removed. But the community question is: If these allegations are true, even if Yelp is not what we might want it to be, are they guilty of extortion?

Let me know what you think and tell me about your experiences with Yelp – good, bad or neutral.

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Comments

  1. Kendra Demler says:

    LOVE IT! Awesome! Awesome! Awesome! Well done!

  2. Bill says:

    Yelp should be shut down. They have a so called “filter” to give a fair review of your business. However, half of the filter reviews are good reviews. I had review with factually wrong information about my business. I had customers complaining they did not get refunds or that I did not honor my contract. I personally handled these matters before they were posted on Yelp. I contacted Yelp and dismissed me. They said they did not care if there was factually wrong information. This site is a joke. At least with google you have the choice whether to had you business. Yelp just puts your business on their site.

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