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Yelp Receives Lawsuit Accusing them of Extortion


Friday, February 26th, 2010

Yelp, an Internet company which allegedly exists for the purpose of allowing reviews of various businesses to be written on their web site, have been sued, being accused of extorting companies in order to make money through their advertising.

What the lawsuit centers around is the accusation that employees from Yelp, after a negative review is listed, will then call up a business and tell them they'll take down the review if they pay for advertising with them.

Worse though, according to the lawsuit, once the time period for the advertising is over, Yelp allegedly will allow the negative reviews to be put back up on the Web site where the implication is the company will have to continue on with advertising in order to keep the negative reviews from appearing there.

Not only that, but if it's true it gets even worse than that, as it is asserted that employees from Yelp itself write some of the negative reviews in order to create the circumstance in the first place.

Yelp claims they haven't seen the lawsuit yet, but will defend themselves aggressively from it. They responded in general, saying that many companies have negative and positive reviews on the Web site, and that the feedback is authentic and valuable to companies.

Here we really get to the crux of the matter. With a Web business like Yelp runs, if they lose their authenticity, they become an irrelevancy. It's not just about the money here, it's about survival, as if they lose their authenticity in the eyes of their readers, they will no longer go to the site for real feedback.

This is going to be tough for Yelp in my opinion, as there are very specific examples from specific businesses which evidently can be proven. Even if they may win the lawsuit, the question has already been thrown out there as to their credibility. And if it's found they have in deed done these things, they'll lose more than the lawsuit and money, they'll lose their credibility, which is everything in a business like this.



Article by Gary B

The views expressed are the subjective opinion of the article's author and not of FinancialAdvisory.com



Tags: business reviews , lawsuit , online reviews , yelp

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