Subscribe to Entrepreneur for $5

Angry Business Owners Appeal Yelp Ruling Over Alleged Extortion

Opinions expressed by Entrepreneur contributors are their own.

Popular social-review site Yelp is in court once again over alleged extortion and review manipulating now that a group of business owners is attempting to appeal a ruling that was dismissed in federal court two years ago.

In 2011, a U.S. District Court judge ruled that Yelp was protected under the Communications Decency Act from accusations of offering to highlight positive reviews and hide negative ones in exchange for paid advertising because Yelp is not responsible for content written by its users. But now, in an appeal filed with the 9th Circuit Court of Appeals, plaintiffs argue that the law does not protect companies that "manipulate reviews for their own profit."

"At the point and time that [the merchants] refused to continue to pay for advertising the good reviews were stripped," said attorney Larry Murray, who represents the business owners. "There seems to be a one-to-one correlation between money and having a good rating and it has nothing to do with the truth."

Murray also accused Yelp of lying about user-generated reviews and skewing their rating system. "Yelp lies about these being consumer views," he said. "They're Yelp manufactured and Yelp tilts the scale however they want."

Related: Yelp Continues to Defend Against Claims of Review Manipulation

The case isn't expected to be decided until next week but, based on arguments in court today, Murray said he already thinks Yelp will find a way out of the lawsuit unscathed. "We want to argue about the Communications Decency Act and we didn't get a chance to," he said.

In its defense, Yelp says the law is and has been on its side. "This case has already been dismissed with prejudice by the court that heard it, which ruled in Yelp's favor and also found the claims not to be supported by credible evidence," Vince Sollitto, Yelp's vice president of communications said. "Plaintiffs are appealing this ruling that they lost, and we look forward to telling the appeals court today why the ruling should stand."

In a document called a "friend of the court brief," the Electronic Frontier Foundation, a San Francisco-based digital rights advocacy group, defended Yelp. The group said a ruling against the company would set a bad precedent, "jeopardizing service providers and undermining speech in the process."

This new round of legal action comes after a pair of efforts by Yelp to create business-friendly ecommerce applications. Yelp recently rolled out a fee-based Call to Action feature that lets businesses promote their wares right from their listing page. It also created Yelp Platform, which allows some businesses to make sales directly from their Yelp pages.

Related: Yelp to Business Owners: Don't Try to Game Our System


Entrepreneur Editors' Picks