The website Yelp has been accused of trying to extort money from companies. The company is a customer review website and the class action lawsuit filed in court states that Yelp is extorting companies through high pressure sales tactics. The lawsuit, filed in Los Angeles federal court, alleges unfair business practices.
The lawsuit states that employees from Yelp contact the businesses that are listed on the website and request or demand that the company makes monthly payments to Yelp in order to have the negative reviews removed or modified. Yelp allows users to post favorable or negative customer reviews on the website about local businesses.
The law firms filing suit state that many of the businesses that have reviews from customers and are contacted by Yelp are small companies. The companies feel they have no choice to pay in order to protect further harm on their businesses.
However, the question that the lawsuit needs to answer is whether or not Yelp is offering to run a positive advertisement for the company above the negative reviews or if the company is offering to remove those reviews for a payment. If it is the second, this could be considered extortion since the payoffs to Yelp prevent the website from doing harm to the business.
The lawsuit is based on the California Unfair Competition Law, which dates to 1933 and is a broad law covering a large number of unfair business practices including any type of untrue or misleading advertising.
Cats and Dogs Animal Hospital is the plaintiff in the case. The veterinary hospital asked Yelp to remove false and defamatory review from the listings at the website. The website reviewed to remove the review, but the company’s sale representative called the veterinary hospital numerous times demanding that the hospital pay a hefty $300 payment in order to have the negative reviews hidden or removed from the website.
According to the lawsuit filed, a sales person contacted the hospital and stated that if a one year advertising subscription was purchased that the website would “Hide negative reviews on the Cats and Dogs Yelp.com listing page, or place them lower on the listing page.”
Further, it promised the animal hospital that if it purchased this type of subscription, no negative ads would appear in Google or other search engines. The hospital would also be able to choose a tagline and choose the order in which customer reviews appeared on Yelp.com.
Although the hospital is named the plaintiff in the case, the law firm handling the lawsuit has heard from numerous other small business owners who claim to have experienced the same type of extortion.
Vince Sollitto, vice president of Yelp states that the allegations are false and that many businesses advertise on Yelp when they have negative and positive reviews on the site.
Yelp is one of the largest customer review websites in the world. Each month more than 26 million people read and use the user generated content. The website contains more than eight million reviews.
On a related note, a recent article on TechCrunch.com states that Yelp owners walked away from a Google buyout offer worth over half a Billion dollars in December 2009.
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