Yelp Class Action Lawsuit

The online review site, Yelp, has been accused of extortion in a class-action lawsuit filed in Los Angeles in February 2010. The suit alleges that Yelp tried to get a Long Beach veterinary hospital named Cats and Dogs Animal Hospital to pay $300 per month for a minimum of 12 months, the extortion part was to suppress or delete review that disparaged the hospital. According to the complaint filed in the U.S. District Court for the Central District of California, the site manipulated the reviews and therefore the ratings for a business. The extortion scheme offered a business removal of any negative reviews or relocate them to the bottom of a listing page, where fewer visitors go, but only if the said business would purchases a monthly advertising subscription.

Yelp is a popular San Francisco based site and is one of the leading sites where consumers can post reviews and comments about their local businesses and services. Yelp touted its integrity with this slogan saying Real People – Real Reviews. Yelp was founded in 2004 and worked its way through the United States. In 2009, Yelp launched its site in the United Kingdom and in Ireland. Yelp capitalized on the presumed integrity of their ratings system to extort business owners to purchase advertising.

The suit alleges that in September of 2009, Cats and Dogs owner Dr. Gregory Perrault became aware of a negative review posted on Yelp by a user named Chris R., and Dr. Perrault viewed it as defamatory and possibly false. He researched the information given in the review and discovered that the defamatory review referred to a hospital visit that happened more than 18 months prior to the posting and Yelp’s policy only allows reviews to be posted within 12 months of an experience with a business.

Dr. Perrault ask that Yelp remove the bad review because it was in violation of Yelp’s guidelines. But, a second negative review appeared about five days later from a user identified as Kay K., and once again Dr. Perrault claimed not to know any person named Kay.

The class-action suit claim is backed up by an East Bay Express article published last year that also accuses the site of running an extortion racket. In the article, numerous business owners described similar scenarios as the one alleged by the plaintiff. In reply, Yelp made a statement about the lawsuit saying that the allegations are false, because there are numerous businesses that advertise on Yelp who have both positive and negative reviews. They also said that running a good business is hard, but filing a class-action lawsuit is easy.

This entry was posted on Wednesday, March 10th, 2010 at 1:09 pm and is filed under Yelp. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.


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