Is Yelp The Mafia?

Yelp is again in the news for extortionate sales practices alledged by small business owners (see More Complaints About Yelp Business Practices, Now In Chicago, and Is Yelp Committing Extortion?), but this time they are headed for court:

- Christie Lagorio, Yelp Lawsuit Alleges Extortion Tactics

Customer-review website Yelp’s sales tactics included demanding $300 monthly payments in exchange for removing negative reviews, a class-action lawsuit alleges. But are these just sales calls and payments for “advertising contracts” or payoffs to prevent future harm to a business or livelihood?

The named plaintiff, a veterinary hospital called Cats and Dogs Animal Hospital in Long Beach, California, asked that Yelp remove a false and defamatory review from its listing on Yelp.com. Yelp refused to take down the review, the suit alleges.  What happened instead? The company’s sales reps called the hospital repeatedly, demanding payments of about $300 per month in order to have the negative review hidden or removed.

“The allegations are demonstrably false, since many businesses that advertise on Yelp have both negative and positive reviews,” Vince Sollitto, Yelp’s vice president of communications, said in a statement. “These businesses realize that both kinds of feedback provide authenticity and value.

“Running a good business is hard; filing a lawsuit is easy,” Sollitto said. “While we haven’t seen the suit in question, we will dispute it aggressively.”

The claim is being made under the California Unfair Competition Law, a broadly-worded law dating back to 1933 that covers an assortment of fraudulent or unfair business practices, including “unfair, deceptive, untrue or misleading advertising.” 

According to the lawsuit, the Yelp salesperson who contacted Cats and Dogs stated that if Cats and Dogs purchased a one-year advertising subscription, Yelp would “hide negative reviews on the Cats and Dogs Yelp.com listing page, or place them lower on the listing page,” and also ensure negative reviews will not appear in Google and other search engine results. The advertising subscription would also allow Cats and Dogs to choose the order in which customer reviews appeared and pick its “tagline,” or phrases in a single review that show on every search page.

Gregory Weston, founder of the Weston Firm, tells Inc.com his firm has already heard from dozens of small business owners who have been similarly affected.

“It’s definitely not an isolated situation,” he says. “We’ve had calls and plenty of emails as evidence, too. Since the press release we’ve gotten notes from people saying they’d been affected in exactly the same way. So I think we’re going to discover a lot of people that will testify against Yelp.”

As I said in an earlier piece on Yelp, “The Yelp story is like a fire in a peat bog: it doesn’t go away, even when it looks like the flames are completely gone.”