Appellate Court: Yelp’s “Manipulation of User Reviews Not Harmful” to Small Businesses

Several small business owners, including an auto repair shop, filed a lawsuit against Yelp claiming the company “extorted or attempted to extort advertising payments from them by manipulating user reviews and penning negative reviews of their businesses in violation of California state law.” After the lower court dismissed the complaint, the business owners appealed the decision to the Ninth Circuit Court. The appellate panel of judges agreed with the lower court’s decision. Three automotive glass company owners, meanwhile, disagree with the court’s decision.

“Small businesses can’t afford those types of advertising dollars,” says Peter Brown, owner of Tiny & Sons in Pembroke, Mass. “We depend on independent reviews online. This is an unfair advantage to the bigger corporations that can afford to advertise. We just couldn’t afford the rates that Yelp requires to boost ratings.”

“We’ve had them [Yelp] hide a bunch of the reviews,” says Robert Rask, owner of IntegraGlass in Orem, Utah. “We have six, seven or eight and only two are showing. All of our reviews are positive. It’s the filtering thing that they are using. They say it only removes reviews that might not be legitimate. They are all genuine reviews and they were filtered out when they should not have been.

“I’ve had calls from Yelp to advertise. We didn’t do anything,” he adds. “I’m not willing to pay for it. When they filter out reviews, it’s very misleading to customers and the end users. They trust a review on a review site. Online reviews have been a very helpful thing. It’s helping us grow. And our SEO has gotten better because of them. I don’t agree with the court.”

“I don’t think Yelp should be able to exclude or delete anything,” says Sam Shipley, owner of Maryland Auto Glass in Riglerville, Pa. “If you have negative reviews, I think you should change and grow from them. I don’t think they should manipulate it either way … good or bad. I’ve read reviews before myself. If they were all good, that’s why I choose that person to do work on my house or whatever. If they had bad ones, I might have chosen another person. I want people to choose me for glass because I did something right and have positive reviews. I would expect them to not choose me if I did a terrible installation. Yelp should not be able to manipulate the reviews either way.”

“Today, individuals can share their opinions with the entire world courtesy of a few taps on the keyboard. The appellee in this case, Yelp Inc., provides an online forum on which its users express opinions as to services ranging from dog walkers to taco trucks,” writes Judge Marsha Berzon on behalf of the appellate panel.

“The appellees, Boris Levitt, Cats and Dogs Animal Hospital Inc. (Cats and Dogs), John Mercurio and Dr. Tracy Chan, are small business owners (collectively, the business owners) who allege that Yelp extorted or attempted to extort advertising payments from them by manipulating user reviews and penning negative reviews of their businesses. The business owners filed a class-action lawsuit against Yelp for violations of California’s Unfair Competition Law (UCL), California Business & Professions Code § 17200 et seq., civil extortion and attempted civil extortion,” she explains.

One of the plaintiffs, Mercurio, owns Wheel Techniques, an auto body repair shop. He alleged that Yelp posted “false reviews,” or reviews not composed by actual customers, “as a threat to induce Wheel Techniques to advertise.”

“We conclude, first, that Yelp’s manipulation of user reviews, assuming it occurred, was not wrongful use of economic fear, and, second, that the business owners pled insufficient facts to make out a plausible claim that Yelp authored negative reviews of their businesses. Accordingly, we agree with the district court that these allegations do not support a claim for extortion,” writes the judge.

“[C]han had no pre-existing right to have positive reviews appear on Yelp’s website. She alleges no contractual right pursuant to which Yelp must publish positive reviews, nor does any law require Yelp to publish them. By withholding the benefit of these positive reviews, Yelp is withholding a benefit that Yelp makes possible and maintains. It has no obligation to do so, however. Chan does not, and could not successfully, maintain that removal of positive user-generated reviews, by itself, violates anything other than Yelp’s own purported practice,” she later adds.

However, Judge Berzon and the panel leave the door open for a follow up lawsuit.

“This conclusion is not entirely the end of the matter, as Chan alleges that the ratings manipulation negatively affected her ‘business’s reputation,’” according to the judge. “But Chan does not connect her claim of reputational harm to a specific allegation of wrongful conduct. We note, too, that unlike the other business owners, Chan at one time had a contractual [advertising] relationship with Yelp. It may be that by manipulating Chan’s ratings to induce her to increase her advertising dollars, Yelp ‘breached [its] duties under the contract. But those claims should be pursued through state-law theories of contract not [extortion].’

To read the appellate court’s decision, click here.