The fight over Cats and Dogs: Long Beach Vet initiates class-action lawsuit against Yelp

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class action lawsuit against yelpTwo firms, representing Cats and Dogs Animal Hospital in Long Beach, filed a class action lawsuit yesterday in Los Angeles federal court alleging unfair business practices against Yelp Inc., the company that owns and operates the popular consumer-review website

The veterinary hospital alleges that the website uses extortion tactics to convince business owners to buy advertising, and punishes those that don’t.

Review sites that  allow users to rate products and services and share their experiences online are increasingly popular and can have great power to sway local opinion. Many consumers check review sites before making purchase decisions because they believe that the information is unbiased. In fact, Yelp touts the tag line, “Real people. Real reviews.”

The lawsuit alleges that Yelp “regularly manipulates the content on listing pages” by promising to “remove a business’s negative reviews … if the business agrees to purchase a costly monthly advertising subscription.”

The complaint recounts the events leading up to the suit, explaining that Dr. Perrault of Cats and Dogs Animal Hospital found a negative review that violated Yelp’s review guidelines and notified the company. The review was removed, but within a few days a second review appeared stating:

Dr. Perrault is the rudest vet I’ve ever been to … probably one of the rudest people I’ve had the displeasure of meeting. I agree with the previous reviews about making you feel like an unfit mom. My pup had been sick and I had a theory on what the problem may have been and he wouldn’t even entertain the idea, but instead, made me feel bad because my dog got sick. And, my poor dog was terrified of him! He made me feel like I was 2 inches tall and repeatedly looked down his nose at me. Oh, and OVER PRICED! OMG! Who does he think he is??? I did not feel welcomed by him nor his staff. I paid you for a service! No need to treat me so bad!

This time, Yelp refused to take down the review.

Soon after the negative reviews appeared the plaintiffs say, Cats and Dogs began receiving high-pressure calls from Yelp advertising employees. Sales staff allegedly offered to hide or remove the negative reviews if Cats and Dogs would sign up for a one-year advertising contract at roughly $300 per month. When Dr. Perrault refused, the initially-removed negative review went back up on the website.

“We believe that Yelp’s sales tactics amount to high-tech extortion,” stated Jared H. Beck, co-managing partner of Beck & Lee Business Trial Lawyers, which filed the lawsuit along with The Weston Firm.  “The victims tend to be small businesses, such as our client, who often have no choice but to pay Yelp exorbitant sums in order to prevent further harm to their livelihoods.”

Similar claims have been made against Yelp’s sales practices before. Last year a series of articles in The East Bay Express chronicled more than half a dozen business owners all making similar accusations, along with confirmation by a former employee. This is the first time Yelp, Inc. will have to protest the allegations in court.

Gregory S. Weston, managing partner of The Weston Firm, said, “We are asking the court to certify a nationwide class and enter an injunction to bring a stop to Yelp’s wrongful conduct. I urge any other small business that has been victimized by these tactics to contact my law office.”

Yelp earns revenue from search and display ads and claims more than 26 million unique visitors in December 2009. The company says it has published more than 9 million reviews and released this written statement in response to the lawsuit.

“Yelp provides a valuable service to millions of consumers and businesses based on our trusted content. The allegations are demonstrably false, since many businesses that advertise on Yelp have both negative and positive reviews. These businesses realize that both kinds of feedback provide authenticity and value. Running a good business is hard; filing a lawsuit is easy. While we haven’t seen the suit in question, we will dispute it aggressively.”

The case, Cats and Dogs Animal Hospital Inc. v. Yelp Inc., was filed on February 23, 2010, and is pending in the U.S. District Court for the Central District of California. The law firms have set up a website with additional information including a copy of the lawsuit, press releases and links to published articles from major news sites.

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