Yelp Ad Extortion Suit Tossed on Appeal

A group of small business owners lost their effort Tuesday to hold Yelp! Inc. liable for alleged extortion of advertising payment s by, what the owners say was manipulation of user reviews and even writing negative reviews of their businesses.

The 9th U.S. Circuit Court of Appeals upheld dismissal of the lawsuit against Yelp! Saying the business owners’ claims failed to rise to a level of legal violation under California’s Unfair Competition Law.

“We conclude, first, that Yelp’s manipulation of user reviews, assuming it occurred, was not wrongful use of economic fear, and, second, that the business owners pled insufficient facts to make out a plausible claim that Yelp authored negative reviews of their businesses,” wrote Judge Marsha Berzon.

Unless a person has a pre-existing right to be free of the threatened economic harm, threatened economic backlash to induce a person to pay for a legal service is not extortion, the court held.

U.S. District Judge Edward Chen in San Francisco dismissed the case originally, citing failure to state a claim under the state law.

Consumers share opinions on Yelp! About local businesses and services, from dog walkers to taco trucks, the court noted.

Boris Levitt, a furniture restorer; Cats and Dogs Animal Hospital Inc.; Kohn Mercurio and Dr. Tracy Chan sued accusing Yelp tried to get ad payments from them by writing negative reviews of their businesses or manipulating user reviews to show negative reactions.  Yelp assigns star ratings to businesses based on reviews and owners cannot opt out of Yelp listings.

Reviews may remain on the site for a limited period.  Either the reviewer may remove it, Yelp may remove it for violation of review guidelines, or it may be deleted by Yelp’s automatic filtering system, which attempts to spot fake reviews or planted reviews.

Yelp invites businesses to buy ads on its site, which appear above search results or prevent competitors ads from appearing on their page.

Levitt alleged that his business had 4.5 stars on Yelp until after he declined to advertise.  Then his overall rating dropped to 3.5 stars and he blamed Yelp for alleged manipulation of the reviews.

The Santa Barbara Cats and Dogs hospital said it had a similar experience.  After receiving two negative reviews, a Yelp sales person began making high-pressure calls promising to manipulate the listing page in exchange for ad purchases.

Case: Levitt v. Yelp! Inc., No. 11-17676



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