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Summary:

Yelp was yesterday slammed with a prospective class action lawsuit over unfair business practices. To that I say, it’s about time! There have been rumblings and bitchings and stories for years about Yelp salespeople pressuring local businesses to pay to remove negative user reviews.

Yelp was yesterday slammed with a prospective class action lawsuit over unfair business practices. To that I say, it’s about time! There have been rumblings and whining and stories for years about Yelp salespeople pressuring local businesses to pay to remove negative user reviews. Yelp has steadfastly denied any wrongdoing, but the rumor mill persists. Let’s take it to a court and see if anyone can make the dirt stick.

The lawsuit, filed in Los Angeles by Long Beach, Calif.’s Cats and Dogs Animal Hospital Inc and first written about by TechCrunch, alleges that Yelp demanded $300 per month in order to hide a false and defamatory review of the pet hospital. (Cats and Dogs, by the way, currently has a respectable four stars on Yelp with 27 reviews.)

Though there has been chatter online in the past about filing Yelp class action suits, an online court search shows only a couple of actual lawsuits against the company, one over trademark infringement that was settled and one over patent infringement that involves a whole host of tech companies. The would-be class action suit hasn’t showed up in the system yet.

Yelp gave us a statement on the lawsuit, attributed to Vince Sollitto, VP Communications:

“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.”

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How Social Networks Could Help Yelp, Not Kill It

  1. “Running a good business is hard; filing a lawsuit is easy.”
    Does Vince imply that they are the only one running a “business” in this dispute?

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  2. I’m dubious, I think there’s a lot of sour grapes from mediocre companies who’s businesses became transparent through yelp reviews.

    My ongoing experience with yelp is that it directs me to reliable businesses who treat their customers well, and for that I’m very grateful to yelp. I moved to San Francisco 3 years ago and yelp transformed my experience of moving to a new city for me, which is why i’m an avid supporter of them.

    I hate to hear about unscrupulous sales people, but as a former sales person i know what pressure sales teams are often under which can lead to less than ethical behavior.

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  3. To some extent, Yelp is likely happy about the lawsuit since it will finally be able to demonstrate that it does in fact act respectably. It will be fun to see what kind of evidence the plaintiffs trot out and see Yelp demolish it with server logs, call recordings, training materials, rating history, feedback archives, etc.

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  4. I am not defending their business practice… but how is Yelp’s strategy any different than the Better Business Bureau?

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  5. This goes beyond a few pushy salespeople. The Yelp business model hides a big conflict of interest. You cannot ask for money from the same people whose reputation you are rating. I do not trust in Yelp reviews for this reason.

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  6. Nobody can speak to the truth of this “dirt” yet, that’s why this lawsuit is happening. I can tell you that most small businesses we’ve talked with feel mistreated and/or disadvantaged by Yelp. I don’t think that makes them “mediocre companies.”

    As I’ve commented elsewhere, if advertising is your only revenue stream, commissioned salespeople are going to be tempted to behave badly when they are in a position of power, which goes to Karl’s point.

    At Feedback.com we believe in a level playing field where both businesses and consumers can have their say. We believe in conversations where both sides are accountable.

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  7. Annonymous Yelp Supporter Wednesday, February 24, 2010

    Vince Sollitto is correct in saying Yelp provides a valuable service to consumers and businesses! If a business has negative reviews, they should utilize the tools to them to resolve any bad experiences customers have had with their establishment. Direct from Yelp: “Every business owner (or manager) can setup a free account to post offers, photos and message customers.” Being a paying customer will not remove negative reviews of a business. However, they do have filters in place to protect against fake or malicious reviews that may occasionally target legitimate reviews.

    http://officialblog.yelp.com/2009/10/why-yelp-has-a-review-filter.html

    In response to shyamster’s comment: “You cannot ask for money from the same people whose reputation you are rating. I do not trust in Yelp reviews for this reason.” Yelp sales associates are not allowed to review any business during their employment exactly for this reason. There is no conflict of interest as they are not the ones writing the reviews. I know because my s/o works there.

    Yelp is a great company and is well on it’s way to success. Hopefully this lawsuit will finally prove that Yelp is not guilty of any wrongdoing and it will only lead to more happy, satisfied customers and consumers.

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  8. Bizarre that it took a lawsuit to get Yelp to reveal why it removes reviews. They say it’s automated, and claim that giving insight into the algorithm will enable people to game the system.

    As a former reviewer who has both positive and negative reviews seemingly appear and disappear at random, I’m looking forward to learning why.

    If the reviews being removed really are “rants” (how a computer can tell, you tell me), let the readers have an option of seeing them and judging for themselves! At least publish the author name and timestamp of each removed review and give the public some data about this practice.

    Yelp may be up to no good, or it may be completely innocent. But their secrecy doesn’t help their case.

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  9. In response to “Anonymous Yelp Supporter”…

    Why anonymous? Besides, I did not imply that Yelp employees write the reviews themselves, but Yelp does crowd source reviews which I feel should not be filtered or have the businesses pay to filter out. That’s clear conflict of interest.

    I’d rather have a business respond to my negative review than have my review filtered out.

    Frankly the only thing useful about Yelp reviews are the number of reviews a business has – that says something about how many people have visited that business.

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  10. I like your angle on this Liz, I hadn’t thought about it this way. I talked to the Yelp folks about this a few months ago and left the conversation feeling like allegations like this were very hard to prove or disprove. That said, people who deny the utility of Yelp reviews seem pretty silly to me. The details in them are often useful in my experience. I don’t think anything much is going to satisfy the Yelp haters of the world. But then who thought blogs would become as trusted as they have by now, either.

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    1. Thanks Marshall. I honestly really am interested to see the outcome. Folks in SF have urged me to do the supposed big Yelp expose many times over the years, but often their complaints seem like sour milk. I see Yelp’s side about small business people overreacting when I hear stories like the one about the independent book seller who was actually physically violent with a Yelp reviewer (http://sfist.com/2009/11/03/ocean_avenue_books_owner_turns_viol.php). It’s a tender topic!

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  11. Offering to remove a critical review for money is not a conflict of interest. It’s extortion. I suspect this case will be settled out of court, litigants sworn to secrecy, and Yelp will continue its dodgy business practices.

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  12. As a small business owner I have had the same experience with yelp as others. They took two of my recent wedding photography reviews down and then called me try to sell me advertising for $350 per month. When I asked them about removing my new reviews, they told me it’s some kind of algorithm and they will come back over time. I personally think they remove the some positive reviews that boost a business to extort money and boost their advertising on their site. Also if you do not advertise with them, they will move your negative responses to the top and put all the positive reviews on the bottom. This can hurt a business if people only see a negative review, thank god I don’t have any.

    The best thing I can recommend to small business is:

    When you get a new review to screen capture or copy it into a word document, so that you have a record that you got a positive review and can show clients that yelp does take down reviews to build their advertising.

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    1. Annonymous Yelp Supporter Friday, February 26, 2010

      Brandon – keep an eye out on what reviews disappear on your page. Most likely you will find that they are new Yelp users that have no other reviews or linked to friends. This is to ensure that businesses are not creating fake accounts to write themselves positive reviews and things of that nature. And once a user expands their profile & continues writing reviews, they are probably no longer flagged as suspicious and return to your page. It makes sense! The fact that Yelp called you around the same time as this was, I’m sure, purely coincidence.

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      1. What is preventing Yelp from creating fake accounts and posting negative reviews? Which they then offer to remove for money.

        It’s simply not logical to assume Yelp is ethical without direct knowledge of how the company operates. Tough to do when Yelp keeps referring to the secret algorithm.

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      2. “Because they were often asked to advertise soon after receiving negative reviews, many of these business owners believe Yelp employees use such reviews as sales leads. Several, including John, even suspect Yelp employees of writing them. Indeed, Yelp does pay some employees to write reviews of businesses that are solicited for advertising. And in at least one documented instance, a business owner who refused to advertise subsequently received a negative review from a Yelp employee.”

        http://www.eastbayexpress.com/eastbay/yelp-and-the-business-of-extortion-20/Content?oid=1176635

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  13. [...] between user trust and revenue generation. After all, if there’s anything Yelp’s class action extortion lawsuit has taught us, it’s that communities lose credibility when a thirst for ad revenue sets the [...]

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  14. If the allegations are true then Yelp deserves the negative repercussions that will entail.

    The powers that be at Yelp would reveal themselves to be a dyed in the wool hypocrites – claiming to be purveyors of the glorys of web 2.0, all the while undermining the principles that make web 2.0 so powerful.

    The best business practice is take the $300.00/mo you would otherwise spend on yelp advertising (hiding legitimate customer feedback) and invest it into your customer service infrastructure, incorporate user feedback from places like Yelp into your business operations, then let the reviews speak for themselves.

    Hiding the truth is not what the Web 2.0 is about.

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  15. [...] examples of the downside of user-generated content come from Amazon and Yelp. The latter has been hit by repeated lawsuits from businesses alleging that negative reviews of their companies or retail outlets appeared after [...]

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  16. I find YELP! business policies and cancelation penalties are locked in stone, but when an established retail store has polices or penalties we are posted on their sight as bad places to do business. It’s OK to slam us without consquences or even listen to our side of the unpleasant transaction after it has been posted.

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  17. Yelp’s business model is flawed. The business owners will eventually ruin Yelps reputation.
    My site CustomerServiceNumbers.com is going into competition with Yelp and I’m glad to learn “what not to do.” from Yelp!

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  18. What Yelp does is pure extortion – I know several business owners who have had the same experience noted here; good reviews pulled off of their site after Yelp had repeatedly called to sell advertising revenue. I’m not sure this class action lawsuit will bear fruit against Yelp. But someone will win and hit them hard with a large settlement. Taking revenue from the clients they are supposedly being “objective” about is a conflict of interest. Mark my words: Yelp is a scam and will fall hard and fast in the next 12 months. Anyone here that knows small business owners should do their own survey and they’ll find that 9 out of 10 believe that Yelp is not respected and doesn’t reflect true opinion.

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