
Yelp Hit With Class Action Lawsuit For Running An “Extortion Scheme” - apowell
http://techcrunch.com/2010/02/24/yelp-class-action-lawsuit/
======
vegashacker
_The allegations are demonstrably false, since many businesses that advertise
on Yelp have both negative and positive reviews._

I don't see how that demonstrates the allegations are false. It demonstrates
that there must not have been an extortion scheme that every business paid
into.

 _Update:_ see mustpax's comment. Yelp is making a statement about businesses
which have paid them.

~~~
ellyagg
That, plus they obviously they wouldn't alter or remove all bad reviews. That
would be brain-deadeningly obvious.

~~~
ryanhuff
I personally know of somebody who had their review deleted on Citysearch. She
felt violated. If Citysearch does it, I wouldn't be surprised if their
competitors do the same.

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dpifke
Yelp could do a itself a huge favor by becoming more transparent about its so-
called "Review Filter." All it needs is a "show all" link somewhere on the
page showing the supposedly suspicious reviews that were deleted by the
filter, along with a list of reviews (maybe just the author name and/or first
sentence) that were deleted by the author or by Yelp staff due to a TOS
violation.

Yelp claims editorial is completely uninfluenced by the sales team, businesses
claim otherwise. Put the data out there and let people decide for themselves.

------
aresant
Where there's smoke, there's fire - I think at this point Yelp is going to
wind up paying out some bucks, but will likely refine their internal sales
process.

~~~
jeff18
"Where there's smoke, there's fire"

That's the mantra of conspiracy theorists, UFO forums, and Bigfoot
communities. Let's give Yelp the benefit of the doubt before we assume that
they are illegally extorting small businesses based on no public evidence.

~~~
andrewljohnson
There is a lot of smoke here, and by smoke I mean business owners saying this
is true and multiple law firms circling. This is getting ugly for Yelp.

~~~
alexyim
Just because there are accusations, doesn't mean that something is true. It's
not like they have no ulterior motive for making accusations.

~~~
aresant
Absolutely.

BUT tort-law firms do NOT lightly make decisions about where to allocate
resources when being the FIRST to move in a class-related suit.

Neither of the firms is huge or that well established, but I imagine that they
have sufficiently compelling evidence in hand to proceed, and the point of
doing a PR blitz like they’ve done is to find other pissed-off, potential
clients which will only grow the pool of riches should they win.

------
gxs
The article below was sumbitted to HN a while back- rather interesting.

Backstory: The East Bay Express published a story criticizing Yelp and
accusing them of extortion. Yelp CEO responds, criticizing the article's use
of anonymous sources and general accusations. The article below is a response
to the CEO's using named sources along with very specific accusations of what
yelp did wrong.

[http://www.eastbayexpress.com/eastbay/yelp-extortion-
allegat...](http://www.eastbayexpress.com/eastbay/yelp-extortion-allegations-
stack-up/Content?oid=1176984)

*this is not the same article linked to in the OPs post.

------
jeff18
Yelp does not need to extort people to be insanely successful. It would be a
pretty bad move, given that if they did actually do this, someone could:

a) Simply print out the email where Yelp explicitly extorted them.

b) Record the phone call using Google Voice or whatever, where Yelp explicitly
extorted them via the phone.

c) Save the hardcopy of the letter or fax where Yelp mailed them the extortion
offer.

Those are the only ways Yelp communicates. It would be trivial for one of the
millions of companies in Yelp's directory to blow the whistle with concrete
evidence. Yelp, an extraordinarily valuable company, would be pretty much
ruined overnight. Why would they run this risk to squeeze out a few extra
bucks?

~~~
jonknee
> Why would they run this risk to squeeze out a few extra bucks?

You must not hang out with enough sales people. Companies do irrational things
for short term gains all the time. See Wall Street for a recent example.

~~~
jeff18
That's not exactly my point.

Yelp has many _easy_ opportunities to be a shady company and raise its profit
margins in ways that are 100% invisible. For example, they could claim that an
ad impression got twice as many views as it actually did and there would be no
way to call them on it other than a few internal potential whistleblowers.

However, running a blatant extortion scheme where there is inherently a huge
paper trail is not one of those things. Any one of the millions of businesses
could become a whistleblower simply by posting an email to Hacker News, and
Yelp would go from a near billion dollar company to a fraction of that.

It saddens me that if someone accused my startup of doing something absolutely
atrocious, illegal, and irrational, instead of giving me the benefit of the
doubt, it looks like Hacker News would actually say "where there's smoke
there's fire" and start to rationalize how I am likely guilty given zero
evidence.

~~~
jonknee
> It saddens me that if someone accused my startup of doing something
> absolutely atrocious, illegal, and irrational, instead of giving me the
> benefit of the doubt, it looks like Hacker News would actually say "where
> there's smoke there's fire" and start to rationalize how I am likely guilty
> given zero evidence.

It's not someone, it's hundreds of companies over a long period of time. Now a
class action lawsuit. There are over 4 million hits for Yelp and scam on
Google--this isn't a one-off accusation.

~~~
HaloZero
And there are almost 4 million hits for moon landing conspiracy, just because
people believe there's faults doesn't mean there is.

------
jonbishop
I am a former Yelp Account Executive; I was one of the people that would call
these businesses. I have both positive and negative feelings about Yelp. It
was a short stint (November 07 to March 08) because I wasn't very good at the
job as I hated the work (though the company itself is fantastic) and didn't
believe in the product we were selling.

Account Executives (and pretty sure everyone in the sales division all the way
up to the VP of Sales) had no direct way of removing reviews (and I strongly
believe this has not changed). When I was there, the only way for an Account
Executive to have a review removed was to email customer service and provide a
solid explanation as to why it violated the review guidelines. And I can tell
you that many times it wasn't easy; customer service had strict guidelines to
follow and I (and my friends) had plenty of arguments that went nowhere.
Theoretically, an Account executive could make friends with a customer service
rep or someone on the development team and try to persuade them to remove a
review, but this is highly unlikely because if found out, everyone involved
would be fired (so there's a huge risk) and I can tell you from personal
experience, removing a few reviews is not going to make or break a sale (so
it's not worth the risk).

While it was a (sometimes extremely) frustrating process, I feel it speaks to
how the executives of Yelp really do believe in the integrity of their review
guidelines.

As for reviews being deleted, I can tell you that in many of those instances,
the review has been put in a "purgatory" where the system waits until it
receives a signal that the review is not actually spam to let it surface back
up to users. This happens to both positive and negative reviews; there is no
scam going on here to hide negative reviews for businesses that pay and
positive reviews for businesses that don't.

Why isn't Yelp more transparent about this process and their algorithm? For
the same reason Google isn't transparent about their algorithm - to prevent
gaming the system.

With the frequently repeated story of business owners being told that their
negative reviews will be removed, I believe it comes down to a
misunderstanding of the sales pitch (the majority of the time). One of the key
points of the sales pitch involved moving a positive review to the top of the
review order where a positive review would stay for the duration of the
contract. This was especially effective for completing a sale if there was a
negative review on top ("the first review your customers see will always be a
positive one"). So if a business became a Yelp advertiser, the review order
would change, but only with that one review that was moved to the very top. No
reviews were deleted or otherwise manipulated.

Why do I believe it's a misunderstanding on the business owner's part far more
often than a mistaken or even purposeful effort by the Account Executive? For
one, Yelp is pretty damn serious about their rep and will fire anyone caught
doing this on purpose right away. Also, Yelp's training was good when I was
there and has become phenomenal since I left so I don't see many mistakes
happening. Finally, and I'm not going to butter this up, there are a LOT of
business owners out there who don't understand the web and plenty who are just
plain dumb (Just because you own a business, doesn't mean you should). the
majority of businesses we called are one off restaurants/bars (just look at
the majority of restaurant websites), little retail stores or one man service
shops.

Yelp is about the customer first and businesses second; because of this, there
are always going to be business owners who feel screwed. With all that said,
though, I feel that this latest lawsuit speaks to a huge problem that is only
going to get bigger for Yelp as it gets closer to an IPO unless they
significantly change their business pitch.

~~~
ahi
"One of the key points of the sales pitch involved moving a positive review to
the top of the review order where a positive review would stay for the
duration of the contract. This was especially effective for completing a sale
if there was a negative review on top ("the first review your customers see
will always be a positive one"). So if a business became a Yelp advertiser,
the review order would change, but only with that one review that was moved to
the very top. No reviews were deleted or otherwise manipulated."

That's probably enough to give this case legs. IANAL but have been party to an
unfair business practices lawsuit, and it's very easy to step in it.

~~~
jonbishop
From the techcrunch article: "in which the company’s employees call businesses
demanding monthly payments in the guise of advertising contracts, in exchange
for removing or modifying negative reviews."

Yelp doesn't remove reviews and reviews themselves aren't modified; simply one
positive review is moved to the top. You could argue that by moving the
positive review to the top, that in turn modifies the order of other reviews
(positive and negative), but seems like very shaky ground for the case to
stand on. Of course, I'm no lawyer, so take this all with a grain of salt.

Or are you pointing out the loose quote I posted ("the first review your
customers see will always be a positive one") is what will give the case legs?

~~~
ahi
The loose quote mostly. It is essentially, "we can hide the bad reviews a bit
if you pay us." Again, IANAL, but it doesn't take much to lose some coin on
"unfair business practices."

------
drunkpotato
I've heard they treat their reviewers pretty badly, as well. Warning: this is
anecdotal and only one reviewer. He was pressured to stop writing anything
negative at all about certain restaurants until he quit reviewing for them
altogether. If that is how they treat volunteer reviewers, I imagine it's
worse for paid staff.

In any case, I have enough bad feelings and stories about them to not trust
anything Yelp publishes.

~~~
jeff18
Everyone is a "volunteer reviewer" on Yelp. That's how the site works. If Yelp
actually told this guy to stop writing reviews, he should post the email and
it would be #1 on Hacker News, etc.

------
NEPatriot
They have enough cash to beat out an animal hospital in a fight of
attrition...

Worst case they blame the one sales rep (this is not yelp company policy blah
blah), pay up, and promise to play nice in the future.

~~~
jonknee
Except the animal hospital isn't the only one who's made similar accusations.
If lots of parties join the class action it could get expensive quickly.

------
CoachRufus87
zing! should've taken that acquisition when they had the chance. "what's done
in the dark eventually comes to light"

~~~
dpifke
For all we know, the fact that this lawsuit was coming could have come out
during the acquisition talks and could be some or all of the reason they were
called off.

If the acquisition had gone through, this suit - regardless of merit - would
have been a huge PR black eye for Google. Similar anger/distrust has been
leveled at them by small businesses regarding search results placement and
AdWords.

------
martian
As a general user, I love Yelp. But I also have friends who run retail stores,
and they have reported feeling violated by the Yelp process, which suddenly
has a very large say in the success or failure of the business. There is no
"opt-in" option for retail stores, rather, those stores have to pay to
"manage" their listing. If Yelp were opt-in rather than opt-out, I suspect
they would have never had a lawsuit. (I know this would change a lot of Yelp's
site, though, so not sure how feasible it'd be.)

~~~
willwagner
Is there a way for a business to get themselves delisted from Yelp (either
manually or in a robots.txt automated way)?

~~~
qeorge
I doubt it, and honestly I don't think there should be. Businesses can't be
allowed to censor what is said about them at will.

Yelp may be a flawed implementation, but the concept is sound.

------
jrockway
Even when they stop doing this, businesses will still get mad. They are mad
that one bad employee can mistreat one customer, and the Whole Internet will
hear about it (because Yelp is actually popular). The extortion claim is the
only way to get Yelp into court.

In the end, the local businesses will lose. And I think that's a good thing;
they should hire good employees and provide good customer service! I'm glad
that Yelp can make some money off their indifference.

~~~
dan_the_welder
Well, on the other side of it. It only takes one bad customer having a bad day
to shit all over your business. Some people are crazy and vindictive. Like the
guy who reported me to the Consumer Product Safety Commission on fictitious
grounds because I refused to be extorted.

------
relme
<http://www.yelp.com/myths>

~~~
fnid2
Yes, that's a credible source.

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dasil003
I'm curious about the law here. What is the threshold for extortion? Seems to
me that despite Yelp being pretty shady, modifying the appearance of UGC on
their site seems like it might not rise to the level of extortion. After all
they are not writing these reviews or encouraging them in any way. We don't
even necessarily know if they are deleting them or just reordering or what.

------
sidbatra
Perhaps, we should wait for Yelp to give their side of the story before
hanging them a-priori. Perhaps a runaway sales account exec couldn't meet
his/her targets and got cheeky.

