Web search site Yelp, Inc. resorts to litigation prevent small business owners from posting fake customer reviews.
The San Francisco-based company Yelp, Inc. provides a service to web-savvy consumers and small businesses by collecting customer reviews of local establishments and making them available to the web-surfing public. Combining social media and implied advertising, the site allows users to, for instance, find a neighborhood restaurant that serves excellent tacos, or an experienced and dependable auto mechanic in the local area.
Over the years since its launch in 2004, however, Yelp has entered into a number of disputes requiring legal resolution. In 2010, Yelp became the target of a class-action lawsuit initiated by a complaint filed in the U.S. District Court of Central California by a Long Beach, Florida veterinary hospital. The plaintiff claimed that Yelp had used extortionate tactics against it, alleging the online company had demanded $300 a month in order to remove strongly negative reviews of the hospital from its website, or at the very least to move these reviews to the bottom of its list. (Wired Magazine, "Yelp Accused of Extortion.") In October of 2011, the case was dismissed in San Francisco court. (Los Angeles Times, "Yelp Wins Dismissal of Class Action Lawsuit.")
Yelp’s statement of response to the lawsuit was succinct to the point of glibness.
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. (Wired Magazine, "Yelp Accused...")
In September of 2013, a new spate of legal give and take has embroiled Yelp in questions related to the presence of fake customer reviews on its site.
The impetus for the dispute comes from a grievance filed by an independent San Diego-based bankruptcy lawyer named Julian McMillan. According to Bloomberg Businessweek,
McMillan took Yelp to small-claims court earlier this year, alleging that the website didn’t fully deliver on ads he bought from the company. In April, the judge ruled in McMillan’s favor and ordered Yelp to reimburse him $2,700. Last month, days before an appeals court would overturn that ruling, Yelp sued McMillan over charges he planted fake reviews of his own law firm. (Bloomberg Businessweek, “Yelp's Newest Weapon Against Fake Reviews: Lawsuits.”)
According to the Bloomberg article and Yelp CEO Jeremy Stoppelman, the online company strives to provide unbiased customer reviews. This effort is underpinned by its use of a computer algorithm designed to detect and filter reviews written and posted by small business owners themselves, or by their employees, family members, or friends.
Yelp’s legal response to McMillan has been to file its own complaint against the independent attorney in San Francisco California Superior Court. The suit alleges that employees of McMillan composed positive reviews of his firm, amounting to fake evaluations that violate Yelp’s terms of service and effectively undermine its reputation and efforts to provide impartial assessments of local businesses by reproducing real customer reviews, whether they be positive or negative. The suit seeks upwards of $25,000 in damages.
McMillan’s reaction to the suit invoked the metaphor of big business versus small. “This is their way of swatting down a gnat,” he stated. “They’re trying to get me to spend money because they want to give pause to the next business that sues them.” (Bloomberg Businessweek, “Yelp's Newest Weapon…”)
As a follow-up to McMillan’s initially successful but later overturned small claims suit against Yelp, this new case raises some interesting legal points. Firstly, Yelp, has officially denied that the timing of its complaint against McMillan—which came only days before its reversal of the small claims case—should be construed as a retaliatory counterclaim. Yelp spokeswoman Kristen Whisenand told Bloomberg Businessweek, “We take a very aggressive stance against all attempts to mislead consumers…. McMillan’s behavior is particularly disappointing given they have targeted some of the most vulnerable consumers of all: individuals who are at risk of losing everything and are using Yelp to find assistance.”
Secondly, the suit particularly highlights the pitfalls of small business owners seeking to provide their own home-cooked reviews of the services they provide. Whether the legitimate assessments of actual customers may be on the whole positive or negative, their intent is to let consumers legitimately speak to one another about the quality of their experiences with a particular local business. This free exchange of opinions should, ideally, not be subject to exterior considerations, such as the revenue stream of Yelp, Inc. or the advertising wishes of the small businesses featured on their site. Until this happens, Yelp and some segment of the local businesses it features will likely continue to make appearances in this country’s legal courts.