Yelp Hit with Class Action Lawsuit

Yelp, a popular user-generated review site, has been hit with a class action lawsuit that accuses the site of running an extortion scheme. Two law firms reportedly filed the suit against Yelp in Los Angeles Federal court on Tuesday on behalf of Cats and Dogs Animal Hospital, a veterinary animal hospital in Long Beach, California, according to a press release. Last year, Yelp was accused of similar questionable business practices by two San Francisco-area newspapers.

The Complaint

Cats and Dogs Animal Hospital reportedly contacted Yelp to ask the site to remove a negative review from the top of their page. In response, a Yelp sales representative purportedly refused to take down the review, and demanded a monthly payment "in exchange for hiding or removing the negative review." Based on this conversation, the lawsuit accuses of Yelp of running an extortion scheme where Yelp demands about $300 a month for something called "advertising contracts" to remove negative reviews from a business owner's Yelp profile page. At the time of this writing, the Cats and Dog Yelp page had three positive reviews at the top of its page followed by two negative ones.

Yelp supplied the following statement to numerous news outlets in response to the charges:

"Yelp provides a valuable service to millions of consumers and businesses based on our trusted content. 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."

Accusations Nothing New

Tuesday's class action lawsuit comes a little more than a year after similar accusations against Yelp appeared in stories in the East Bay Express and the student-run newspaper Daily Californian . The accusations at the time said Yelp was demanding about $300 per month from business owners in order to hide negative reviews. The Express also detailed one instance where negative reviews began to appear at the top of a business owner's Yelp page after the business declined to advertise with Yelp.

Big Misunderstanding?

Yelp denied any wrongdoing when last year's accusations were first reported. Yelp's Chief Operating Officer, Geoff Donaker said the accusations could have been part of a larger misunderstanding. Business owners who advertise with Yelp are given the option of moving a favorable review, clearly marked as a sponsored review, to the top of their Yelp profile page. "When you get to pick your favorite review and put it to the top, if I said it a little different way, it might sound a little nefarious," Donaker told the Express.

Yelp advertising partners can also have an advertisement appear in a sponsored results box above Yelp's regular search results, and their advertisements may appear on the pages of competing businesses. However, Yelp allows advertising business to prevent similar competing advertisements from appearing "on the middle" of their Yelp profile page.

Yelp's Image Problem

Just like previous accusations, the lawsuit filed against Yelp is reportedly based on statements made by the company's sales staff. If, once again, this lawsuit is based on misunderstandings, perhaps Yelp should reconsider its sales tactics and the importance of instilling good communication practices with its customer service staff.

What do you say? Have you experienced similar problems with Yelp or do you think this lawsuit is all hype?

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