9th Cir.'s Yelp Decision: Pay Up or Watch Your Ratings Sink - In House
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9th Cir.'s Yelp Decision: Pay Up or Watch Your Ratings Sink

The Ninth Circuit has upheld Yelp's practice of manipulating ratings in order to extract advertising fees from businesses.

Several different businesses sued Yelp, all alleging about the same thing: Yelp removed some positive reviews from their business' Yelp pages, causing their ratings to go down. Yelp then appeared on a white horse, offering to "help" them with their negative reviews -- for a price. The subtext (which isn't so sub rosa as it is glaring rosa) is that Yelp intentionally removed positive reviews, then extorted money from the businesses in exchange for restoring the positive reviews (or, alternatively, threatening to remove positive reviews if businesses didn't pay up in the form of buying advertising from Yelp). One business owner signed such an agreement and found that her positive reviews were restored days later.

Nice Business You Got Here ... It'd Be a Shame If Its Rating Went Down

Though you might think that amounts to a shakedown, the Ninth Circuit agreed with the district court that the plaintiffs hadn't stated a claim.

The plaintiffs made several claims -- which they couldn't substantiate -- that Yelp was behind some of the negative reviews. But more importantly, the Ninth Circuit said that Yelp had done nothing wrongful, which is the hallmark of the economic pressure levied in extortion.

Yelp was entitled to extract advertising fees from businesses in exchange for higher ratings. They threatened no direct and explicit economic harm, and a business has "no pre-existing right to have positive reviews appear on Yelp's website."

What This Means for Your Company

The thumb has moved to the consumer side of the scale in terms of online reviews. Businesses can't go after reviewers for defamation unless the statements are factually false. Because they're mostly opinions, defamation isn't really an option. Businesses never wanted to go after individual reviewers, though; Yelp has deeper pockets, but it's protected by Section 230 of the Communications Decency Act, which gives a safe harbor to online service providers. But as the court pointed out practically in passing, "[b]usinesses cannot opt out of being listed on Yelp."

But more importantly, the thumb has moved to Yelp's side of the scale -- which isn't necessarily the same as the consumer's. The best thing general counsel can do -- since your company is now involuntarily listed on Yelp and involuntarily subject to their ratings manipulation -- is to play along as a cost of doing business until another court determines whether Yelp's practices are exploitative (and Tuesday's ruling doesn't preclude the FTC from getting involved).

Alternatively, if you do want to bring a lawsuit up about it, you'll have to do better than the plaintiffs in this case, who were short on evidence and long on inferences.

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