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Court Rules in Favor of Yelp in Ratings Manipulation Suit

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For years Yelp has faced claims that it was demanding businesses pay for advertising, and when they refused — or couldn’t afford to pay — Yelp suppressed positive reviews. In 2010, several business owners filed a class action lawsuit against the online review site, accusing Yelp of extortion and manipulating reviews — or writing fake reviews outright.

Last week, the ninth circuit court of appeals dismissed the suit, stating that businesses did not have the right to positive reviews and Yelp has the right to include advertising as part of its business model. The court also noted that the plaintiffs did not provide sufficient evidence to support their claim.

In the opinion written by Judge Marsha S. Berzon, Yelp had the right to charge for legitimate advertising and the right to arrange reviews in the order it saw fit. Berzon likened this leverage to “hard bargaining.”

Much like the previous court, the judge acknowledged that this ruling did not mean the end of the issue:

We emphasize that we are not holding that no cause of action exists that would cover conduct such as that alleged, if adequately pled. But for all the reasons noted, extortion is an exceedingly narrow concept as applied to fundamentally economic behavior. The business owners have not alleged a legal theory or plausible facts to support the theories they do argue.

Theoretically, this means that the plaintifs can file suit again, if they make the current accusation and provide adequate evidence. Still, Yelp accepted the victory, saying that it was “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.”

Yelp win aside, the results of this ruling could impact the entire foundation of the user-generated review system. Consumers were already skeptical of user reviews; now the court has given Yelp the right to manipulate reviews and use them as leverage to get businesses listed on the site to purchase advertising.

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