March 20, 2011
This past February, two law firms filed a class action suit accusing Yelp.com of extortion. The lawsuit alleges that Yelp offers to hide negative customer reviews of their businesses in exchange for advertising sponsorship contracts and/or enrolling in a type of tiered membership.
Yelp.com is a user review and local search website that allows its users to search for businesses in specific locales and read reviews posted by others. Once registered with the website, viewers can review businesses themselves. While the site also incorporates aspects of social marketing in its interface, the majority of viewers visit to search or review local businesses. The website has become increasingly popular since it was launched for the San Francisco market is October 2004.
According to Wikipedia, Yelp.com had more than 39 million monthly unique visitors as of late 2010. Wikipedia states that revenues for the site were approximately $30 million for 2009, with $50 million expected for 2010. In the last two years, the site has expanded its markets throughout the U.S. and Canada to include the United Kingdom, France and Germany.
The class action lawsuit against Yelp was filed on February 23rd in the U.S. District Court, Central District of California, Santa Ana. You can view a PDF of the complaint here. The suit alleges that the site tried to convince a Long Beach veterinary hospital to pay $300 a month, for a minimum 12-month commitment, so that the owners could suppress or delete reviews that disparaged the hospital.
Yelp has received criticism from business owners since its inception. Many believe that it has a bad policy regarding restricting positive reviews as "suspicious" while keeping any and all negative reviews despite the fairness of the review or the possibility that it was intended to disparage a competing business.
So do your own research and decide for yourself whether Yelp portrays an accurate assessment of a business before you trust those star ratings. For more information on the extortion case, read the aforementioned complaint or take a look at the Wired.com and East Bay Express articles on the subject.
