Businesses join veterinarian in Yelp class action lawsuit

DVMs need guidance for dealing with online reviews

April 1, 2010 (published)
By Jennifer Fiala

Nine small businesses have joined a California veterinarian’s lawsuit that accuses the online review site Yelp of extortion, alleging that the site’s sales team demanded payment to hide negative reviews.

The new plaintiffs were added last month to the punitive class action, originally filed on Feb. 23 in Santa Ana, Calif. The 39-page amended complaint shows that a cruise line, appliance repair company, bakery, pet grooming service and furniture store, are among the businesses that have signed on as class representatives. In addition to the extortion charge, the lawsuit accuses Yelp of fraudulent and unfair business practices. 

Jeremy Stoppelman and Russel Simmons, with backgrounds in computer engineering and computer science, founded Yelp in 2004. Based in San Francisco, the online cityguide has been bashed by those who believe that sales representatives within the company manipulate reviews based on whether businesses advertise with them.

Yelp lawyers have not yet filed a response to the lawsuit though company officials have repeatedly denied any culpability in the case. A scheduling conference is set for April 26 in United States District Court, Central District of California.

Attorney Elizabeth Lee Beck, whose California law firm represents the plaintiffs, says future amendments to the lawsuit likely will be necessary as more businesses seek to be included in the action.

“We've been contacted by every type of business that you can imagine, all across the country,” she says. “We've been certainly contacted by a number of veterinarians, doctors and dentists, just to name a few from the medical profession.” 

The lawsuit began with Dr. Greg Perrault, a veterinarian who owns Cats & Dogs Animal Hospital in Long Beach, Calif. He alleges that a Yelp sales representative repeatedly offered to rearrange negative reviews of the hospital so that they appeared lower on the site’s listing page, effectively hiding them from the public, in exchange for the purchase of a $300-a-month advertising subscription.

In an interview with the VIN News Service, Perrault insists that this is not a case of “sour grapes” concerning the nature of his reviews. Cats & Dogs Animal Hospital earns four stars out of a possible five on Yelp.

Rather, Perrault says he contacted the company concerning a questionable review, which triggered a salesman to solicit his practice repeatedly. That’s when he was pitched an “unethical” advertising arrangement, he contends.

“I was told that with money, I could hide negative reviews and so forth,” Perrault says. “I never asked to be on Yelp, I never paid for anything, and yes, I’m getting some referrals. But this system is unethical. (As business owners) we’re half of the equation. We should have a voice in how this works and should be changed.”

The crux of the complaint centers on Yelp’s review filter, which Perrault and others claim is being manipulated. According to the company, the allegations are based on a lack of knowledge about how the system works.

Stephanie Ichinose, Yelp’s director of communications, explains the system this way:

Yelp users write reviews and post them to the site. Yelp does not verify the authenticity of reviewers but attempts to present the most useful and helpful reviews from engaged community members, many of whom have complete profiles and are frequent Yelp users.

Thirty million people visit the site monthly, making Yelp high-stakes publicity for businesses in the 35 major markets where the site is anchored. With that kind of leverage has emerged users who try to game the system by posting glowing reviews to promote businesses, usually for a fee. It’s a practice known as shilling, Ichinose says.

To combat shilling, Yelp employs a custom review filter to look for patterns of abuse. While Ichinose would not detail the filter’s recipe for catching phony reviews, she explained that it’s built on algorithms in the software. 

With that, reviews — both positive and negative — are suppressed from time-to-time, based somewhat on how active, or “trustworthy,” the reviewer appears. 

“Yelp isn’t a place where you can come in and throw up a review and expect it to remain. That doesn’t foster a sense of community,” Ichinose says. “We're trying to return the most helpful reviews for this business. Yelp is word-of-mouth in digital form, and we’re weighting voices. We want folks engaged in this process.”

Shilling is not an easy problem to solve, Ichinose admits. So she understands how business owners might be confused by the system: “Say you had 10 five-star reviews. Then a couple weeks later, you get a call from someone at Yelp to advertise. You come back, and six of the reviews have been suppressed by the filter and you only have four reviews still standing. The confluence of these independent events can be very confusing if you don't know about the filter.”

Yelp advertisers receive a photo slide show, the ability to call out one favorite review on their profile page and feature rotating ads on competitors' pages. Yelp does not allow advertisers or non-advertisers to manipulate the order of reviews, Ichinose says.

“We don't know when reviews will come up or go down. We can’t manage the order of the content," she insists.

The company also has stepped up efforts to get businesses involved in Yelp processes by hosting Webinars and how-to meetings to guide them on ways to respond to reviewers. 

Despite those efforts, Perrault wants Yelp’s business model to change. Rather than having businesses pay to advertise so that readers can use the site for free, he wants it to operate more like Consumer Reports, which employs the more traditional subscription-based system.

“There are other companies that do exactly what Yelp is doing, but their way of making money is different. I think the Yelp system is unethical,” he says.

To get the word out, Perrault is working with the Southern California Veterinary Medical Association to develop guidelines on what to do when faced with a negative review and managing client satisfaction online, in general. His legal efforts have attracted support on the Veterinary Information Network, where members have expressed disdain for online review sites that they consider to be lacking in credibility and objectivity.

“How do we deal with this?” Perrault asks, speaking to a notion that most reviews are from consumers who are extremely dissatisfied or very pleased. “We’re not restaurants. We fit into a different category. We are bound by ethics and rules and we can’t just comment back on the boards (to defend our practices).

“Veterinarians tend to believe that everyone’s honest, and they’re not,” he adds. “This is not the Yellow Pages. We’re a community and we need to stick together on this.”

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