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Yelp Shakedown? Complaints, Lawsuits Over Site's Practices

By William Peacock, Esq. | Last updated on

A few weeks ago, we advised you to handle your Yelp disputes with clients using kindness and confidentiality. Shortly after the post went live, a concerned reader wrote in to ask if we had heard about the Yelp extortion allegations and lawsuits.

We have definitely heard the conspiracy theories, they've been around for years. But, coincidentally, the owner of a fabulous local Chinese restaurant had just complained to me, the night before, that after she had turned down Yelp's advertising services, negative reviews popped up on her page, and positive reviews were hidden by the site's quality control filter.

Still, negative reviews happen, right? The timing could be mere coincidence.

The East Bay Express Expose

Way back in 2009, a local paper, the East Bay Express, responded to the concerns of Bay Area small businesses by writing a lengthy feature on Yelp's controversial practices. In addition to the filter, which is supposed to remove shill and spam reviews, but some say only removes positive reviews for those who refuse to pay for advertising, there were also allegations of ad sales reps from the company offering to hide negative reviews for a price.

The feature includes statements from aggrieved business owners, Yelp executives, and a disgruntled former employee, and in total, the sum seems to be loads of suspicion and not much proof.

Yelp denied the allegations and dismissed the article on their official blog ... twice.

MuckRock's Freedom of Information Request

MuckRock, a Freedom of Information clearinghouse-type service, submitted an FOI request for all FTC complaints regarding Yelp. The total? Six hundred and eighty-five complaints over the preceding four years, all of which are available on MuckRock's site. Most involve the typical accusations: sales reps promising to hide negative reviews if the business pays for expensive advertising.

Litigation Lost and Litigation Won

Two previous lawsuits against Yelp, in 2010 and 2011, failed. Earlier this year, however, a San Diego law firm sued -- and won. The judge in the case described Yelp's advertising practices as, "the modern-day version of the mafia going to stores and saying, 'You wanna not be bothered?'"

In legal terms, the court held that the advertising contract was a contract of adhesion.

The dispute arose after the firm, noticing an increase of clients from Yelp, paid $540 for 1,200 ad impressions per month. The firm argued that Yelp didn't provide the full amount of impressions, and after the contract was terminated, Yelp allegedly retaliated by lowering the firm's visibility on the site and filtering positive reviews.

According to The Wall Street Journal, the case will be appealed to a higher court. Julian McMillian, an attorney at the firm, told NBC San Diego, "I'm going to find out everything everybody wants to know about this filter soon enough ... I'm not the techno-geek. But I'm going to get him in here, get him into the courtroom, and I'm going to get him to explain it to everybody."

For Your Firm

For our tipster, he chose not to list his firm on Yelp. However, you may want a Yelp presence, especially if positive reviews have led to clients in the past. For now, we'd recommend following the best practices we mentioned before: kill negative reviews with prompt responses filled with kindness, while maintaining as much confidentiality as possible.

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