Saturday, March 20, 2010

Yelp Extortionism: The Latest Lawsuit on our List

After the YouTube and Viacom debacle, which is currently ongoing, it seems there is still another lawsuit going on. This one, however, involves smaller companies and more legitimate claims. Multiple companies have filed class action lawsuits against review website Yelp for extortionism. It seems Yelp is threatening companies with bad reviews in exchange for cash. For a website of "Real Reviews, Real People", this does not seem very real. Yelp, of course, denies everything, but either way this is not going to be good for Yelp.

Now at first glance this seems like a classic company gone evil. However, like most other lawsuits involving online companies nowadays, it is more complicated. Nobody is claiming that Yelp is writing these bad reviews; they are only telling companies they will leave up whatever is there unless they advertise and pay. Giving companies an opportunity to pay and lower their negative review rate seems half as evil as Yelp "extorting" companies. In fact, this seems not to be illegal at all, albeit there is an ethical issue here. I have never used Yelp personally, but if they really want to keep a legitimate site running, there is no way they can have these "incentive" programs, if these allegations turn out to be true.

Unfortunately, this one lawsuit is only one from a string of complaints against Yelp, who began allowing users to post reviews about local places six years ago. Post and reviews have mysteriously disappeared and reappeared on random timelines. Is Yelp acting in their own best interest or that of the user? Even if this is not illegal, online companies need to develop a code of ethics for themselves, and do it early, because mini-scandals like this are not good for the company, and the events behind them are not good for the users. If you really want to run a successful online company, respect the user.

What makes it even more scary is a lawsuit back in January 2009, where the tables were turned, and a Yelp user was sued for defamation after publishing a negative review. So now do users not have the reassurance that their reviews will stay up, but they have to be careful to avoid lawsuits! As an individual without a Yelp account, it makes me not want to even visit the site any more, let alone sign up. Just goes to show what the result of not respecting your users is.

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