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Thursday, May 23, 2024 | Back issues
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Yelp Dodges Claim That Advertising Begets Praise

SAN FRANCISCO (CN) - A federal judge dismissed a class action that accused Yelp of bestowing positive reviews on businesses that advertise with it, while punishing those that decline with negative reviews.

U.S. Magistrate Judge Edward Chen found that a class of business including Wheel Techniques failed to support allegations that Yelp employees or people working on behalf of the company wrote business reviews or that Yelp paid users to write reviews.

Even if Yelp employees had written reviews, and even if they were paid for it, those acts raise only the "mere possibility that Yelp has authored or manipulated content" to "extort" advertising revenues, the 15-page decision states.

Wheel Techniques claimed to have noticed negative reviews that did not match its customer records, but that "does not support the logical leap that Yelp created those reviews," Chen wrote.

The judge was also unmoved by claims that an unnamed source allegedly told the company's owner that a former Yelp employee said that Yelp had fired sales employees for "scamming relating to advertising." The alleged scamming could refer to a host of practices not involving manufacturing false reviews, according to the court.

Unless companies like Yelp create or develop part of the content, the Communications Decency Act immunizes these companies from liability for reviews created by third parties. Wheel Techniques failed to prove that Yelp had a hand in content development, and thus cannot claim it manipulated third-party reviews.

Chen also rejected arguments that the motivation to drum up advertising revenue should eliminate its legal immunity. While Chen said he is "sympathetic to the ethical underpinnings" of the argument, he found that statute indicates that immunity applies regardless of whether the publisher acts in good faith.

Finding a bad-faith exception to immunity could force Yelp to defend its editorial decisions on a case-by-case basis and reveal how it decides what to publish and what not to publish, according to the court. Chen added that this finding could lead Yelp to resist filtering out false or unreliable reviews or to immediately remove all negative reviews that incite business complaints.

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