Business Owners Blast Yelp, Say Company 'Agents' Write Bad Reviews

Review site Yelp is facing legal complaints from yet more unhappy business owners who allege that the Web company's sales force engaged in "extortion."

Since February, two separate lawsuits have been filed on behalf of two companies -- a case by the California veterinary center Cats and Dogs Animal Hospital and one by the owner of D'Ames Day Spa.

This week the lawsuit by Cats and Dogs was amended to include nine additional businesses -- among them a bakery, restaurant and a day spa -- as plaintiffs. Additionally, the allegations appear worse for Yelp. Cats and Dogs originally alleged that Yelp offered to bury bad reviews in exchange for ad buys. But the latest court filing alleges that Yelp personnel "have in fact written and posted false negative reviews of businesses."

The complaint specifically alleges that Yelp's "Elite Squad" of reviewers are actually agents of Yelp because Yelp compensates them "through the provision of free parties, goods, services and other items."

"When Elite Squad members review Yelp sponsor, Yelp is endorsing paid advertisers," the lawsuit alleges.

One of the new plaintiffs, Michelle Garcia, who owns the Bleeding Heart Bakery in Chicago, alleges that she became a $600-a-month sponsor on Yelp after a sales representative told her that supposedly "bogus" reviews would be removed and bad ones buried. Instead, she alleges, six new bad reviews by Elite Squad members appeared.

Garcia says her sales plummeted to 24 cupcakes a week down from 300 as a result of the reviews. When she complained, she allegedly was told that if she purchased a more expensive "premier" ad sponsorship, Yelp might ask the Elite Squad to return to her bakery and "give it another shot."

Yelp denies the allegations. "Yelp does not manipulate review content to help advertisers or hurt businesses that don't. Never have, never will," the company said today on its blog. Yelp also alleges that it uses an automated filter to weed out shill reviews.

Whether the business owners can prove "extortion" or any other legal claim is unclear. Much might depend on the exact words that were used by the sales representatives, and that's still unknown.

But even if Yelp is vindicated in court, the company will still need to cope with the fact that some business owners -- and, perhaps, consumers -- seem to believe it doesn't play fair.

3 comments about "Business Owners Blast Yelp, Say Company 'Agents' Write Bad Reviews".
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  1. Randy Kirk from Randy Kirk & Associates, March 18, 2010 at 6:24 p.m.

    I am a marketing consultant and deal with dozens of small local businesses. Yelp constantly tells them that they will solve the bad review issue if they (the dealers) sign up. Moreover, one of my clients has had her customers put up good reviews and they never show up. Only one negative review can be seen. These guys are not playing fair as far as I have been able to see. I recommend that my clients steer clear of them.

  2. Brian Ferrario from Rocket Fuel Inc., March 18, 2010 at 6:34 p.m.

    My Yelp review for Yelp -- zero stars. Great business model -- extortion. It's like Mob 2.0.

    "automated filter to weed out shill reviews" -- it doesn't work. I used to own a retail store that had many, many happy customers that were also newbies or first-time Yelp users. They used to come in all the time and say, "Oh, i wrote a review on Yelp, but it disappeared." I guess the reviews were too good to be true for the "automated filter." I tried without success to get a hold of them and never heard back. I then remember getting a call from a sales rep saying how they could help me manage my business on Yelp. No thanks. Plus, now people are basically using Yelp as just another business directory -- and ignoring the reviews. I think these lawsuits are the tip of the iceberg -- and as the momentum and truth come to light, many other business owners should/will come forward to voice their experiences.

  3. Jerry Foster from Energraphics, March 22, 2010 at 3:25 a.m.

    All business models where one would profit from unethical activity, result in unethical activity. I had no idea until now that Yelp had such a conflict of interest.

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