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Yelp escapes extortion lawsuit unscathed, except for its reputation

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For years, businesses have accused Yelp of running an extortion racket. If companies refused to pay for ads, Yelp would allegedly pull down some of their positive reviews (and wreck sales) until they gave in. Well, those accusations don't appear to hold much legal water; an appeals court has upheld a California judge's dismissal of a 2010 class action lawsuit that claimed Yelp was committing civil extortion. Needless to say, the recommendation service is ecstatic. It cites the ruling as proof that the shops simply had an "axe to grind" and were either trying to "draw attention away" from bad reviews or else prop up review manipulation schemes.

Only that's not really why the court ruled the way it did. As Courthouse News Service notes, the plaintiffs lost because their claims didn't meet the requirements for an extortion case. They couldn't demonstrate that they had a right to hold on to those good reviews, or that Yelp had no right to demand payment. In other words, it's still possible that Yelp was pressuring stores to buy ads at the risk of losing positive buzz; it's just that no one was entitled to that buzz in the first place. The appeals court was quick to note that this "stringent standard" prevents abuse of extortion laws against upstanding businesses. Whether or not that's true, the ruling won't do much to reassure people that reviews accurately reflect a location's quality -- you might want to double-check ratings the next time you're thinking of visiting an unfamiliar restaurant.

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