California Appeals Court Affirms Yelp's Ability to Manipulate Reviews for Money

The world of online reviews may have just gotten even more dangerous for business owners.
The world of online reviews may have just gotten even more dangerous for business owners.
Photo by Michael Dorausch/Flickr

You'll be wanting to take that Yelp review with an extra grain of salt in light of a California court's ruling last week. The Ninth Circuit Court of Appeals ruled Yelp is allowed to manipulate users' reviews for money. As in, it's not illegal for Yelp to remove positive reviews if a business declines to advertise on the site.

In a blog, Yelp maintains that the company "has never done this and individuals making such claims are either misinformed, or more typically, have an axe to grind" -- but the ruling sets an undeniably scary precedent for small business owners whose livelihood can be significantly affected by online reviews.

See also: Are Yelp Extortionists Giving Restaurants the Shakedown?

On Friday the court upheld a federal judge's dismissal of a proposed class-action lawsuit alleging that Yelp "extorted or attempted to extort advertising payments from" a group of business owners "by manipulating user reviews and penning negative reviews of their businesses."

The opinion, written by Judge Marsha S. Berzon, states that the plaintiffs didn't have enough evidence to prove they were extorted by Yelp. But on a more interesting note, it also noted that even if Yelp did manipulate reviews, it wouldn't constitute extortion. The judges ruled that in order to prove extortion, the business owners would have to prove "a pre-existing right to be free from the threatened harm, or that the defendant had no right to seek payment for the service offered."

"As Yelp has the right to charge for legitimate advertising services, the threat of economic harm that Yelp leveraged is, at most, hard bargaining," Berzon writes.

The ruling is qualified by the statement that "we are not holding that no cause of action exists that would cover conduct such as that alleged, if adequately pled." But that does little to calm the fears of business owners who don't want to spend hundreds of dollars a month to ensure their reviews are fair and accurate.

Of course, Yelp swears its mysterious algorithm doesn't distinguish between advertisers and non-advertisers, but the ruling is a good reminder that the company is first and foremost a profit-seeking machine just like any other publicly-traded corporation.

In light of the ruling, will you continue to trust Yelp reviews?

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