POSTED BY Jeremiah Chapin
Since its creation in 2004, Yelp has become a household name. Many consumers have trusted blindly in the online resource that allows anyone with Internet access to post reviews on everything from the local pizza place to a hospital or doctors’ office. Many have praised the online service for bringing a level of transparency to business establishments that have, in turn, become increasingly more concerned about how they are portrayed to potential consumers on the site. It’s true– a Yelp profile can really make or break a business, and with so much riding on Yelp ratings, it’s no wonder several San Francisco-based businesses are taking their grievances to court.
Yelp works by allowing consumers to rate a business on a one-to-five star basis, and then post an optional comment. The key here is that Yelp itself serves only as a vehicle for others to share their experiences and has no influence on the feelings consumers express or the way they express them – or so they claim. That’s how Yelp works, but like many online businesses, they make their money from selling advertising space on the site. In 2013 Yelp grossed over 233 million dollars from ad space alone. They are primarily selling ad space to the same local businesses customers are reviewing, a practice that recently landed them in court.
The recent lawsuit suggests that Yelp may be exercising more control over the website than they claim. The complaint – filed by a dentist, an auto-body technician, and a veterinarian in the San Francisco area – claims that Yelp manipulated the order in which positive reviews show up on their site. And, by placing poor reviews ahead of stronger ones, they were alleged to have thereby introduced a bias that deters would-be customers from businesses that don’t advertise on Yelp. The plaintiffs claim that this was a deliberate form of extortion and that it was in response to the businesses refusal to buy add space on the site. The 9th U.S. Circuit Court of Appeals recently dismissed the case, holding that the alleged manipulation of reviews did not fit with the federal courts definition of extortion.
It is important not to overlook the power that several negative reviews at the top of a Yelp profile can have on an individual’s decision on where to shop, eat, or otherwise spend their money. So much so that if the top several reviews are negative, it really doesn’t matter if the remaining four hundred are positive, the consumer has seen enough and he or she is on to another business. This being said, although Yelp doesn’t write the reviews, they are in an incredibly powerful position when it comes to the layout of the webpage and, more specifically, the order in which the reviews show up.
With Yelp reviews just a click away on any smartphone or computer, it is clear that people will only become increasingly more dependent on Yelp, thus making businesses increasingly more conscientious of their status on the site. With the 9th Circuit’s ruling, the federal courts have put this issue on the backburner. However, given the ever more pivotal role the website plays in shaping the success and failure of businesses, they will undoubtedly be seeing more Yelp-based suits in the years to come.
Bio: Jerry is a staff member of the Journal of High Technology Law. He is currently a 2L at Suffolk University Law School with a concentration on Civil Litigation. He holds a B.A. in Political Science from Roanoke College.
