Companies Sue Yelp Over Bad Reviews, Claim Extortion

| by Michael Allen

Reviews on the popular website Yelp can help make or break a business, but some companies have claimed that Yelp has tried to extort advertising money by raising or lowering their ratings, which go from one to five stars.

However, Yelp denies these allegations.

"It wouldn't pass the straight face test," Yelp spokesman Vince Sullitto told the Associated Press.

The 9th U.S. Circuit Court of Appeals declined to hear a class action lawsuit by several companies against Yelp last month. The companies claimed that Yelp removed positive reviews after they refused to buy ads on Yelp.

The 9th Circuit Court didn't find any evidence of Yelp manipulating reviews.

According to the Sullitto, Yelp sells advertising because the website has garnered trust with readers.

Yelp is a double-sided sword. The website wants to keep the trust of its readers, who do write bad reviews, but Yelp also depends financially on companies to buy ads.

Yelp reportedly uses an algorithm program to block fake reviews that may be written by businesses owners, friends of the business or a third party hired by the business. However, the algorithm could accidentally delete actual good reviews by customers.

Yelp, like many popular websites, will not release any details of its algorithm program.

Some companies that have received bad reviews on the website are suing the Yelp users who wrote them.

A construction company in Virginia sued a Yelp reviewer for $750,000 based on a claim of defamation, reported Forbes.

While the First Amendment protects free speech, it doesn't protect someone from willfully and knowingly defaming someone, or in this case, someone's company.

Yelp draws a staggering 84 million viewers every month and there are 33 million reviews written monthly, noted Forbes.

An increase of only one star on a company's Yelp profile can reportedly increase its income by up to 9 percent.

Sources: Forbes, Associated Press