Yelp Court Ruling

Last week there was a momentous Yelp lawsuit ruling in California that allows Yelp to manipulate ratings and reviews as it so pleases. The key part of the court ruling in response to the lawsuit is not that the prosecution didn’t prove its case that Yelp manipulated ratings and reviews to “extort” paid advertising from clients – but that even if that had been proven, that Yelp has every right to do so.

Now based on my limited knowledge of the law, I think this Yelp lawsuit ruling may be the “right” decision, even though it’s not what I would like to see from the local search giant. As long as Yelp makes no promises to the contrary in its terms of service and marketing, they can package the content they own any way they like (yes, they own the reviews you post).

There is some precedent from the F.T.C. in a letter to search companies that “if a social network were to stream recommended restaurants based on what a particular consumer’s social contacts have enjoyed, it should clearly distinguish as advertising any information feeds included or prioritized based in whole or in part on payments from a third party.”

Seems darn close depending on how you determine whether you can consider Yelp as streaming recommended restaurants based on social contacts preferences, which Yelp does in part. Additionally, Yelp would argue that it does in fact indicate the “paid for priority” reviews.

What Does the Yelp Lawsuit Ruling Mean for Consumers

Yelp Court Ruling Consumers

For consumers, the lawsuit ruling is a potential threat to Yelp’s standing and trustworthiness.  I say “potential” because it’s important to reiterate that no study or court case has come up with any evidence that Yelp does in fact manipulate reviews. That said, the sheer number of reports regarding changes in ratings and reviews after not renewing the advertising package is disturbing and the plausibility of the activity is high given the economic impact to Yelp. The New Yorker, however, thinks it is unlikely.

Ultimately though, any such behavior undermines the credibility of Yelp reviews to consumers.  88% of consumers trust online reviews as much as personal recommendations, and that’s up 9% year over year. If you can pay to improve the presentation of seemingly organic reviews, you are deceiving consumers unless you make that clear.

If Yelp is willing to deny these lawsuit claims legally, I think they should also put it in their terms of service and announce it publicly and market it vociferously.  That’s the right thing to do marketing-wise, even though it bring undue attention to an issue they want to sweep under the rug. However, since this might open them up to liability such as the California case, I think it’s unlikely that they will do so.

So if consumers ultimately care about the trustworthiness of the reviews, I think it’s up to them to demand it. And only some grassroots campaign will get there, and I just don’t see that happening. The frustration I see is among local business owners rather than consumers.

What Does the Yelp Court Ruling Mean for Local Businesses
Yelp Court Ruling for Local BusinessesFor local businesses, the Yelp lawsuit ruling is bad news.   It specifically makes it clear that they have absolutely no claims, even if they can prove the ratings were “manipulated.”  Yelp holds all the cards and it is not going away.   Local businesses can demand Yelp transparency and honesty and try to get consumer awareness of the issue through a grassroots campaign banding together.  If it’s just a couple one-off businesses, it looks like sour grapes.

Either way, the Yelp lawsuit ruling puts even more focus on managing and improving your social reputation.    Here are 3 things you should be doing right now:

  1. Make sure you have social reputation management software and that’s as simple to use as our Social Inbox.
  2. Respond to every negative review.  33% of negative Yelp reviews turn positive when you respond to them.
  3. Solicit customers for reviews.  Use your email lists, social media and positive customer experiences to generate positive Yelp reviews.

For more great reading on managing your social reputation and Yelp, we recommend:

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