Yelp has consistently challenged the notion that they've extorted small businesses by implying a pay-to-play structure when it comes to the way positive and negative reviews are displayed on the site, and so far, in court, they've won. Now a three-judge panel at the 9th Circuit has ruled that even if plaintiffs could adequately prove that Yelp has removed and replaced positive reviews and manipulated star ratings in exchange for paid ads, Yelp wouldn't have been doing anything illegal.
It's a weird ruling but perhaps cuts to the heart of what Yelp is responsible for, as a business, and what businesses' rights are when it comes to user reviews.
As the Chron reports, writing for the 3-0 majority, Judge Marsha Berzon states: "As Yelp has the right to charge for legitimate advertising services, the (alleged) threat of economic harm ... is, at most, hard bargaining." The ruling comes after a lower court also dismissed a class action suit brought by business owners who claim they were penalized by Yelp after refusing to buy ads on the site. Business owners cited evidence like watching nine 5-star reviews for their business disappear and reappear after refusing, and then agreeing to purchase ads. And one business, the Cats and Dogs Animal Hospital of Santa Barbara, claimed a sales rep offered to "hide negative reviews" in exchange for payment.
Berzon further said that extortion by threatening economic harm "is an exceedingly narrow concept," and the plaintiffs failed to prove such a thing in this case.
Whether or not this amounts to breaking the law or not I, as neither judge nor lawyer, can't say. It certainly makes one trust the integrity of the site that much less, however, knowing that they could continue bilking businesses this way with impunity, even if they have not admitted (and no one has fully proven) that all these business' complaints have a basis in fact.
Yelp issued a smug statement in response to the ruling, saying, "We are obviously happy that the Court reached the right result, and saw through these thin attempts by a few businesses and their lawyers to disparage Yelp and draw attention away from their own occasional negative review."
The company isn't quite in the clear yet, however. There's also this shareholders' lawsuit, recently filed, claiming the company mislead shareholders with their algorithm talk, if they can in fact manipulate reviews and ratings. That suit cites the fact that the Federal Trade Commission has received more than 2,000 complaints about Yelp, many related to the extortion issue. Also, there's a separate suit arguing that Yelp's claim of having "the most trusted reviews" is false, and therefore false advertising.