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Lawsuit Gets Yelp To Open Reviews, Curb Advertisers
Lawsuit Gets Yelp To Open Reviews, Curb Advertisers

By Barry Levine
April 6, 2010 1:44PM

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Prompted by a lawsuit alleging extortion, Yelp will let users see all reviews of local businesses. Yelp will also stop advertisers from posting favorite reviews at the top of a page. Yelp, which carries local reviews, says it filters out fake reviews but will open them all to viewers. An analyst said the move should raise Yelp's level of trust.

Yelp, which helps visitors find local businesses through user reviews, is taking steps to address criticisms by small businesses -- and to respond to a lawsuit that alleges extortion. The site said Monday that it will allow users to see reviews the site has filtered out, and advertisers can no longer post their favorite review at the top of a page.

These changes, wrote cofounder and CEO Jeremy Stoppelman Monday on his company's blog, "reinforce" the trust that led 31 million consumers to visit the site last month to find a "great local business." The changes, he said, "make it even more clear that Yelp treats review content equally for all businesses, with no connection between advertising and reviews."

'An Extortion Scheme'

A key incentive behind the changes is a class-action suit filed in February in a California federal court, alleging that Yelp, according to the plaintiff, "runs an extortion scheme in which the company's employees call businesses demanding monthly payments, in the guise of 'advertising contracts,' in exchange for removing or modifying negative reviews appearing on the site."

The plaintiff, a veterinary hospital in Long Beach, Calif., said it asked Yelp to remove "a false and defamatory review," but the site refused. Instead, the hospital said, the company's sales people kept demanding $300 a month in exchange "for hiding or removing the negative review." The hospital also said similar practices by the site relating to other businesses have been documented in news stories.

Yelp said the complaints were false.

The company said its filter uses a secret algorithm to move users' reviews from their own user pages onto business pages, in order to filter out fake reviews. Yelp said it continually tunes the filter to establish which of the registered users, who are the only ones allowed to post reviews, are the most trusted and therefore worthy of being shown with the business listing.

'Lift the Veil'

But now users can click a link to "lift the veil on our review filter," as Stoppelman wrote, to see all submitted reviews. He added this can help them see that the filter often helps "protect one business from malicious reviews that might stem from a competitor."

The company also said that the "Favorite Review" feature, although clearly labeled as part of an ad, "led some people to the wrong conclusions about whether businesses could control the review content on their page" -- which, it said, they can't.

Yelp, founded in 2004, focuses on helping people find local businesses such as restaurants, dentists, hair stylists, and mechanics. "Yelpers" have written more than 10 million local reviews, and businesses can post offers, photos and messages to customers. The site makes money by selling ads to local businesses.

Ross Rubin, director of industry analysis for consumer technology at the NPD Group, said that, "in general, transparency should be the mantra for any site with reviews and advertising," since it can "raise the level of trust Yelp has with its visitors."

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