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Yelp Embroiled in Bribery, Extortion, and Defamation Dispute

Two law firms have filed a class-action lawsuit against Yelp, charging the business review site with conducting unfair business practices, and running an "extortion scheme." According to the suit filed in Los Angeles federal court , Yelp's employees regularly "call businesses demanding monthly payments, in the guise of 'advertising contracts,' in exchange for removing or modifying negative reviews appearing on the Web site."

The entire controversy arose after a Long Beach veterinary hospital contacted the site to remove what they considered a "false and defamatory review" that someone had posted. As TechCrunch reports, the hospital alleges that Yelp, after initially refusing to take it down, later demanded $300 per month in exchange for hiding or removing the contentious review. In a statement, Yelp VP of communications Vince Sollitto said that although the company hasn't "seen the suit in question," it's pretty confident that "the allegations are demonstrably false, since many businesses that advertise on Yelp have both negative and positive reviews."

We think the entire story is pretty worrisome on a few levels, and not least because this isn't the first time that Yelp's faced these kinds of allegations. At issue, though, is not just Yelp's own credibility (which will probably take a PR hit no matter what goes down in the courtroom), but the larger question of how to best manage user-review based sites in general. The success of Yelp and its progeny is absolutely contingent upon an open-forum structure, which allows users to freely praise or, as the case may be, reprove businesses and service providers. But what happens when, for whatever reason, these free-range forums become cluttered with so-called "false and defamatory" critiques?

You could easily make the argument that Yelp shouldn't intervene, let the law of averages play out and wait for other legitimate reviews to dilute the extremes. But for a small business, one extremely derisive critique, founded on an erroneous or malicious premise, could have serious financial repercussions. Yelp needs to find a solution, but extortion and bribery, at least, is definitely not the way to go. [From: TechCrunch; via: NYTimes]

Tags: bribery, defamation, defamation lawsuit, defamationlawsuit, extortion, law, lawsuit, reviews, top, veterinarian, yelp, yelp.com