Business Owners Try Again To Sue Yelp For Payola

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A group of business owners have filed another lawsuit against Yelp, alleging that the site offered to bury bad reviews in exchange for ad buys. The entrepreneurs' previous lawsuit against the review site was dismissed in March, after U.S. District Court Judge Marilyn Patel in the Northern District of California ruled that the complaint was too speculative.

The new complaint, filed this week, appears largely similar to the previous one. There are, however, a few key differences. One is that the amended petition also specifically alleges that Yelp has paid people to write reviews. In addition, the newest court papers include allegations for the first time by John Mercurio, an entrepreneur who owns the body shop Wheel Techniques. Mercurio alleges that in March of 2010, a Yelp representative unsuccessfully attempted to convince the company to purchase ads.

At the time, the company had a five-star review at the top of its Yelp page, Mercurio says. "Within minutes, a one-star review was moved to the top of its Yelp review page," he alleges. "Upon information and belief, Yelp placed the one-star review at the top of the Wheel Techniques review page as a threat to cause Wheel Techniques to fear that if it did not pay Yelp money to advertise, the negative review would remain at the top of its Yelp review page and/or additional negative reviews would appear, and lower its overall star rating."

Yelp's legal problems date to last year, when the company was hit with a flurry of lawsuits alleging that it pressured businesses to purchase ads. Those cases were consolidated into a potential class-action that's now before Patel.

One business to bring suit, the Cats and Dogs Animal Hospital, said in court papers that a Yelp salesperson offered to move two bad reviews to the bottom of its results, to ensure that they did not appear in search engine results. It would also allow the hospital to decide in which order reviews would appear on the site, in exchange for a one-year, $300-a-month ad buy.

Yelp CEO Jeremy Stoppelman has denied that the site ever offered to bury bad reviews for advertisers. The company has said that it filters reviews that it believes violate its terms of service, including ones by business owners. Last April, Yelp began allowing Web users to access reviews that had been filtered, but those reviews aren't counted toward the site's overall ranking.

Yelp also previously allowed business owners to pay to have a favorite review highlighted at the top of their page. The company discontinued that practice last year.

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