Why Big Businesses Like Yelp Always Win

In the latest episode of the TruReview podcast, we spoke with trial lawyer Jared Beck of Beck & Lee law firm, who made the news in recent years for representing small business owners in a class-action lawsuit against Yelp that was dismissed in 2011.

 Beck’s involvement with Yelp began in 2010, when he agreed to represent a veterinary hospital wanting to sue Yelp for extortion.  The hospital alleged that Yelp sales associates repeatedly contacted them asking them to buy $300 of advertising per month in order to keep a negative Yelp review of the hospital hidden.  Beck argued that Yelp had violated the California Unfair Competition Law which defines unfair competition as “any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising.”

Jared Beck

Jared Beck

Less than a month into discovery, nine more plaintiffs joined the class-action lawsuit.  These businesses strangely had stories very similar to that of the veterinary hospital; most stating they had also been continuously contacted by Yelp to pay for advertising in order to improve their rankings.

 The lawsuit was dismissed in October 2011 and  is currently on appeal in California’s 9th circuit court . The judge’s reasoning for dismissal was based largely on a set of laws called the Communications Decency Act (CDA).  The CDA was created in 1996 (which, as our founder Dwight Zahringer points out in the podcast, was around the time when really cool people were just starting to use AOL).  It was originally created to, as the name implies, keep communications decent (i.e. limit pornography and obscenity on the brand new World Wide Web).   Currently, a small section of the CDA has been repurposed to provide broad immunity for websites that publish content written by users.  Yelp is actively working to bring about more legislation that further limits companies from suing them for reviews posted on their website.

 Coincidentally, Yelp made a few changes to their services in April 2010, just about the time that the lawsuit was starting to heat up (thought they continue to deny any wrongdoing).  Yelp now allows users to view reviews that have been filtered out as fake, although these reviews still aren’t factored into the overall rankings for businesses.  Yelp also got rid of the “Favorite Review” feature, which placed a favorable review in the most prominent position on profiles of companies paying for advertising with Yelp.

 Beck says that after what he’s seen, it’s hard for him to be optimistic about small businesses standing up to corporate Goliaths. “We’re really living in an environment nowadays,” says Beck “where if you’re a small business, or an individual, and you’re going up against a large business like Yelp, you really can’t count on courts to protect your rights.”  It seems like the best option for small businesses at the moment is to take control of their online reputations before getting negative reviews.  You can’t change the way that big companies like Yelp operate, but you can become proactively involved in the online conversation about your business.

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