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.