Review site Yelp battles against extortion claims

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Review site Yelp battles against extortion claims
Chef Michele Massimo poses in the dining room of his restaurant Botto Bistro Wednesday, Oct. 1, 2014, in Richmond, Calif. For years, many small businesses have complained that Yelp is extorting them by raising or dropping ratings depending on whether they advertise with the Web’s most popular review site. Yelp still faces several legal challenges and other forms of protests. One San Francisco Bay Area restaurant, for instance, is garnering national attention for its outspoken campaign to become the region with the worst Yelp review. (AP Photo/Ben Margot)
Chef Michele Massimo prepares a salad in the kitchen of his restaurant Botto Bistro Wednesday, Oct. 1, 2014, in Richmond, Calif. For years, many small businesses have complained that Yelp is extorting them by raising or dropping ratings depending on whether they advertise with the Web’s most popular review site. Yelp still faces several legal challenges and other forms of protests. One San Francisco Bay Area restaurant, for instance, is garnering national attention for its outspoken campaign to become the region with the worst Yelp review. (AP Photo/Ben Margot)
In this photo taken Friday, Aug. 1, 2014, Yelp CEO Jeremy Stoppelman poses at his company's headquarters in San Francisco. Stoppelman, 36, probably wouldn’t be running Yelp Inc. if he had paid more attention to the opinions of outsiders than his own insights. (AP Photo/Eric Risberg)
In this photo taken Friday, Aug. 1, 2014, Yelp CEO Jeremy Stoppelman poses at his company's headquarters in San Francisco. Stoppelman, 36, probably wouldn’t be running Yelp Inc. if he had paid more attention to the opinions of outsiders than his own insights. (AP Photo/Eric Risberg)
In this photo taken Friday, Aug. 1, 2014, Yelp CEO Jeremy Stoppelman looks over a wall signed by visiting employees from other cities at his company's headquarters in San Francisco. Stoppelman, 36, probably wouldn’t be running Yelp Inc. if he had paid more attention to the opinions of outsiders than his own insights. (AP Photo/Eric Risberg)
In this photo taken Friday, Aug. 1, 2014, Yelp CEO Jeremy Stoppelman poses at his company's headquarters in San Francisco. Stoppelman, 36, probably wouldn’t be running Yelp Inc. if he had paid more attention to the opinions of outsiders than his own insights. (AP Photo/Eric Risberg)
In this photo taken Friday, Aug. 1, 2014, Yelp CEO Jeremy Stoppelman poses at his company's headquarters in San Francisco. Stoppelman, 36, probably wouldn’t be running Yelp Inc. if he had paid more attention to the opinions of outsiders than his own insights. (AP Photo/Eric Risberg)
FILE - In this Oct. 26, 2011 file photo, the logo of the online reviews website Yelp is shown in neon on a wall at the company's new Manhattan offices in New York. Online reviews site Yelp is expected to price its initial public offering of stock on Thursday , March 1, 2012, and become the latest in a long line of social websites going public. (AP Photo/Kathy Willens, File)
FILE - This March 17, 2010 file photo shows the Yelp website on a computer screen in Los Angeles. New York City health officials found three unreported outbreaks of food poisoning by sifting through hundreds of thousands of comments on the popular website, according to a report released Thursday, May 22, 2014. (AP Photo/Richard Vogel, File)
The Yelp Inc. application and logo are displayed on laptop computers and an Apple Inc. iPhone 5s in this arranged photograph in Washington, D.C., U.S., on Friday, April 25, 2014. Yelp Inc. is expected to release earnings figures on April 30. Photographer: Andrew Harrer/Bloomberg via Getty Images
The Yelp Inc. app logo is displayed on an Apple Inc. iPad in Des Plaines, Illinois, U.S., on Tuesday, Feb. 5, 2013. Yelp Inc., owner of a website that lets consumers review local businesses, slipped after posting a wider quarterly loss than analysts estimated as it boosted spending on expansion into new markets. Photographer: Tim Boyle/Bloomberg via Getty Images
The Yelp Inc. logo is displayed in the window of a restaurant in New York, U.S., on Thursday, March 1, 2012. Yelp Inc., the site that lets users review everything from diners to dentists, is set to price it's IPO tonight and could potentially raise as much as $100 million, which would value the company at about $838 million. Photographer: Scott Eells/Bloomberg via Getty Images
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SAN FRANCISCO (AP) - First the chefs of a small Italian restaurant got mad at online review site Yelp. Instead of trying to get better reviews, they decided to take a different approach: get terrible ones.

The campaign helped Botte Bistro get a rating of one out of five stars, as more than 1,000 reviewers left hundreds of tongue-in-cheek reviews panning the Richmond, California, eatery, said chef Michele Massimo, adding that it boosted business.

It was the latest protest among businesses who for years have complained that Yelp was extorting them by raising or dropping ratings depending on whether they advertised with the Web's most popular review site.

Yelp has persistently denied those claims on its Web site, in court and at every opportunity when the question is put publicly to the company. It recently got a federal appeals court to throw out a lawsuit alleging the extortion.

"It wouldn't pass the straight face test," Yelp spokesman Vince Sullitto said of the extortion claims.

Sullitto said Yelp attracts millions of viewers and sells advertising to 80,000 businesses because of the site's credibility with consumers. Sullitto said many of the company's critics are businesses that have received bad reviews.

Last month, the 9th U.S. Circuit Court of Appeals tossed out a lawsuit filed by several businesses claiming Yelp extorted them by removing positive reviews after advertising sales pitches were turned down.

The court is one rung below the U.S. Supreme Court and the ruling could have been a definitive one for Yelp.

Instead, it served to fuel the company's critics because the court said that even if Yelp did manipulate reviews to penalize businesses, the practice would not constitute extortion.

The court said it found no evidence of manipulation and that it was ruling narrowly only on the question of extortion. Nonetheless, the company's critics said the ruling supported their claims of sharp practices.

Even before the 9th Circuit ruling, Yelp was battling two lawsuits filed by company investors who make similar extortion claims.

The suits, filed in San Francisco federal court over the summer, allege that the company's stock traded at artificially inflated prices because the "company tried to sell services designed to suppress negative reviews or make them go away" and then lied about it.

The company has yet to formally respond to the lawsuits in court, but says it will fight these legal actions as well.

Last year, a lawyer serving as a small-claims judge in San Diego likened Yelp to a "modern-day version of the Mafia going to stores and saying, 'You want to not be bothered? You want to not have incidents in your store? Pay us protection money.'"

The judge, Peter Doft, made the comments when he ordered Yelp to pay San Diego lawyer Julian McMillan $2,700 over a contract dispute involving advertising on Yelp.

The award was later overturned by a higher court, which ruled that McMillan's dispute with Yelp should be decided by an arbitrator instead of a court. McMillan didn't pursue his claim.

But Yelp did file a lawsuit against McMillan, alleging he and his employees submitted fake Yelp reviews of his law practice. McMillan denies the charges and alleges that Yelp sued him because of his small-claims court victory.

The allegations are so widespread and have persisted for so long that the company asks on its Web site: "Does Yelp extort small businesses?" The company answers no.

Yelp has had a complicated relationship with merchants, restaurateurs and other small businesses on which the company depends on for advertising revenue. To attract advertising, Yelp needs to maintain a popular and credible site.

To do this, Yelp says, its uses an algorithm to weed out fake reviews submitted by business owners, relatives and friends that is often misunderstood. The automated removal programs accidentally erase many positive reviews written by legitimate customers.

Yelp concedes that removing legitimate reviews is not ideal, but argues that's the price it pays for its credibility. Furthermore, Yelp keeps details of its algorithm under wraps so its review system can't be easily exploited and gamed.

That secrecy also breeds suspicion.

"We don't know who is leaving the reviews and we don't think it's fair," said Massimo, the chef. "You are so vulnerable."

Massimo said he and his partner decided to launch their novel protest for a one-star rating after receiving several aggressive sales calls from Yelp that they perceived to be veiled threats. The ploy worked and business continue to be brisk, he said.

"It was the best marketing idea I've ever had," Massimo said. "Thanks Yelp."

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