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Is Yelp Guilty Of Digital Racketeering, Extortion, Or Unfair Business Practices?

Yelp Walks A Fine Legal Line At The Expense Of Business Owners


Under U.S. law, no one is considered guilty of a crime unless it is proven in court and they are convicted (or, if they enter a guilty plea.) It is important to clarify that lawsuits have been filed against Yelp for alleged digital racketeering, extortion, and unfair business practices in a civil lawsuit -- but has not faced criminal charges. The civil lawsuit was dismissed. Twice. But accusations continue to fly that Yelp is still extorting "advertising" fees from business owners who claim if they refuse to pay, their positive reviews are suddenly removed and filtered.

I am not an attorney, and am not qualified to offer a legal opinion as to whether or not Yelp's business practices are unfair, illegal, or constitute any crime. But I am entitled to my own opinion and can state the obvious -- how Yelp operates, and much of what I have to say comes straight from Yelp's own website.

Yelp consoles businesses that have received bad reviews on their website suggesting you are in good company because Yelp claims they, too, bear the burden of their own share of bad reviews in the news and on other sites. So Yelp can now be in good company with the unhappy business owners because here is another unfavorable review of Yelp's practices (their concept is a wonderful idea promoting freedom of speech and consumer awareness.) My article intentionally disregards reviewer's rights and satisfaction, and focuses solely on how Yelp treats business owners -- and on the complaints made by some business owners.

Racketeering: Organized Criminal Activities

The word "racketeering" might conjure up images of the "mob" or organized crime syndicates (more commonly referred to as " Mafia") but there is a lot more to the legal definition of racketeering than you might think.

According to criminallawyers.com, "A racket can have several forms. It may involve an illegal business. Or a legal business in which the organization breaks the law to help it succeed ... However, it can really be applied to any activity run in an organized way. Protection racketeering is when a criminal organization coerces someone to pay money for protection. Often the organization's members provide the protection from harm coming from not paying the protection fee."

If a person(s), organization, or a business creates a situation that presents danger, harm, or threat of harm, and then offers protection from that danger for a fee, it could be considered protection racketeering.

For the most part, freedom of speech allows us to say what we want as long as what we are saying is truthful, not privileged, and does not amount to defamation (slander or libel). For example, I can create a website that says negative things about your business that may harm your reputation but if everything I said was true and not privileged information -- it would not be illegal simply to speak my mind.

What I could not do is create the website (creating the harm), and then offer to "protect" you from the harm I created. It would be illegal to try to extort money from you on the promise that if you pay me I will change everything on the website from negative to positive, or take it down. Nor can I threaten you by saying if you don't pay me I will continue to say bad things.

Yelp Maintains A Situation Where Business Owners Need Reputation Protection

In Yelp's case, the company created a forum that allows other people to say negative things about your business (the danger you might need protection from.) But you do not have an ability to opt out to protect yourself -- if Yelp includes your business in their listings there is nothing you can do about it.

Contrary to what many believe, reviewers do not decide a business' ratings on Yelp -- Yelp algorithms do. In other words, Yelp retains and exercise control over the actual star rating of any particular business. Filtered reviews do not affect a business' rating; Yelp filters positive reviews thereby, artificially downgrading a business' overall rating.

Nothing Illegal

Yelp allows negative, and sometimes what appears to be potentially libelous reviews to remain public on your profile, and does not offer an appeals process, nor will they arbitrate to help business owners falsely accused of bad service. So far, nothing illegal, even if it is unfair to business owners. However, an increasing number of business owners are making claims that Yelp contacts them and offers to sign businesses up for "advertising" services promising to filter negative reviews, and/or taking positive reviews out of their filter and making them public again. Some businesses have gone so far as to accuse Yelp of manipulating reviews to make a business that refuses to pay, look bad.

Unfortunately for business owners, so far, this seems to be legal. What would not be legal is if Yelp demanded money from business owners in exchange for "protection" or, improved ratings through manipulation of ratings by unfiltering positive posts. If a business owner refused to pay for "advertising" and Yelp responded by downgrading a business by manipulating reviews, that would also be seemingly illegal.

But does Yelp do those things? So far, that has not been determined in a court of law. When a case is dismissed, it does not mean Yelp was found innocent (or guilty), it just means their were not sufficient grounds presented in the case for it to proceed to trial.

For now, all business owners should periodically check Yelp to see if they have a profile and any reviews. Or, you must just be "lucky" and get a customer service call form Yelp offering to help you improve your standing with Yelp. For a big, fat fee.

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