Small Businesses File Several Alleged Extortion Lawsuits Against Review Site Yelp


Our Chicago online business libel attorneys were interested to see a series of articles about several ongoing lawsuits against online review website According to a March 19 article from the Associated Press, multiple businesses allege the site demanded advertising dollars from them in exchange for control over negative and positive reviews. When potential advertisers declined, the lawsuits say, negative reviews appear or reappear. At least ten small businesses are part of a putative class action lawsuit filed in Los Angeles federal court — among them a Chicago bakery and a Washington, D.C. restaurant. At least two similar claims have been filed, both in California.

The ten-plaintiff lawsuit alleges extortion and attempted extortion by Yelp, saying it gained money “by means of wrongful acts and practices.” For example, the owner of Chicago’s Bleeding Heart Bakery said Yelp employees told her they would push bad reviews to the end of the list of reviews on the bakery’s Yelp page, in exchange for a paid sponsorship. The owner of a Long Beach, Calif. animal hospital said when he declined to pay for a sponsorship, a bad review that had previously disappeared from the page reappeared. A second bad review appeared later. Yelp CEO Jeremy Stoppelman said reviews come and go because the company uses a computer program to automatically remove reviews flagged as suspicious, such as negative reviews by a direct competitor. He claimed the only manipulation Yelp does is allowing companies to pick a positive review to place at the top of the site.

On April 6, Yelp called a news conference to announce changes it made to its site in response to the allegations. The site removed its “favorite review” feature that allowed business owners to choose a positive review for the top of the site. It will also allow users to see which reviews were filtered out, either because they were suspicious or because they violated review guidelines or terms of service. At the conference, Yelp announced future plans to form a Small Business Advisory Council to address these issues. Attorneys involved in the Yelp lawsuits said these were a step in the right direction, but declined to drop their claims.

As Highland Park, Ill. Internet product disparagement attorneys and Chicago business law lawyers, we’re not surprised that these businesses are claiming extortion rather than product disparagement. Under the federal Communications Decency Act, websites that host content provided by third-party users are not legally responsible for any content that is defamatory, negligent or otherwise legally actionable. That means Yelp is not responsible for defamatory postings by its users, even if it exercises editorial control over those postings. However, it may be responsible for content it provides itself. For that reason, small businesses like these plaintiffs have limited recourse in mnay instances to recover for online trade libel, even if they otherwise have strong cases. The extortion claims offer no such legal problem.

Lubin Austermuehle represents businesses caught on either side of a dispute about online or offline defamation of a business or its products or services. Self-publishing on the Internet, and sites like Yelp, make it easy for individuals to publish false information about a competitor or a business they don’t happen to like. Online business libel laws balance the need to protect small businesses from false and damaging information with the First Amendment right to free speech. Our Illinois trade libel and trade disparagment attorneys represent both plaintiffs and defendants in claims regarding false and misleading claims; deceptive online publishing; misuse of a trademark, logo or other identifying feature.

If you’re involved in a dispute over online business libel or trade libel, you should contact one of Lubin Austermuehle’s Chicago business law attorneys to find out how we can help. For a free evaluation of your case, send us a message online or call 630-333-0333 today.

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