Marketplace Scratch Pad

Yelp needs legal help

Scott Jagow Feb 24, 2010

There are few websites that prompt such acrimonious yelping as Yelp. Until now, the barking has been confined to blogs and comment sections, but yesterday, a class action lawsuit was filed against the company — for extortion.

Cats and Dogs Animal Hospital Inc. vs. Yelp Inc was filed in California district court. It claims that a Long Beach veterinary hospital asked Yelp to have a bad review removed from the site. Instead of agreeing, the suit alleges that Yelp sales representatives called the hospital repeatedly “demanding payments of roughly $300 per month in exchange for hiding or deleting the review.” The plantiffs have set up their own blog:

We believe that Yelp’s sales tactics amount to high-tech extortion,” observed Jared H. Beck, co-managing partner of Beck & Lee Business Trial Lawyers, which filed the lawsuit along with The Weston Firm. “The victims tend to be small businesses, such as our client, who often have no choice but to pay Yelp exorbitant sums in order to prevent further harm to their livelihoods.”

Gregory S. Weston, managing partner of The Weston Firm, said, “We are asking the court to certify a nationwide class and enter an injunction to bring a stop to Yelp’s wrongful conduct. I urge any other small business that has been victimized by these tactics to contact my law office.”

Yelp responds this way:

Yelp provides a valuable service to millions of consumers and businesses based on our trusted content. The allegations are demonstrably false, since many businesses that advertise on Yelp have both negative and positive reviews. These businesses realize that both kinds of feedback provide authenticity and value. Running a good business is hard; filing a lawsuit is easy. While we haven’t seen the suit in question, we will dispute it aggressively.

While the lawsuit is new, the allegations aren’t. A year ago, a Bay Area newspaper suggested Yelp was using shady tactics, like offering to remove bad reviews in exchange for advertising dollars. Yelp aggressively disputed those claims too. Yelp accused the writer of suspicious sourcing — quoting business owners only using their first names.

So, it was difficult to tell if someone just had an axe to grind? It was hard to know whether the information was planted? Or that it was accurate? Or maybe it was the way the information was arranged that seemed suspicious.

Is this ringing any bells?

I guess the courts may decide whether there’s fire behind the smoke. What do you think?

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