Patty points us to a Reddit post where someone claims that after posting a negative Yelp review, the company being reviewed threatened the reviewer with legal action, claiming that the review violated a contract that the customer had signed. The business apparently is one that repairs damaged hard drives or recovers data off of them. The customer was clearly not satisfied. Where it gets strange though is that the company claims that the negative review violates the signed contract. As per standard Reddit practices, the details of the company are redacted, so it's a bit difficult to dig into the facts here. However, it seems likely that this threat is more about getting the person to back down than any realistic shot at legal action. One would hope the company would realize that if it actually took legal action, that information would spread far and wide across the internet, and would probably do significantly more harm than any single bad review on Yelp...

We've seen all sorts of business owners get upset about Yelp, but it seems to be ratcheting up a notch. For example, take Denver chef, Scott Parker, who lashed out at Yelp reviewers in a recent interview (sent in by visual77). After being asked what he'd like to see less of, he stated:

Amateur instant online restaurant critics -- specifically those who write reviews for a website that rhymes with "kelp." Think about it: They review a McDonald's and then turn around and review Mizuna. I just imagine bored, jobless layabouts with not many friends who are convinced that they're going to have a bad time before they even step through the door of a joint. The kicker is, you can't respond to these inbreds and try to educate, or at least explain, why some things happen the way they happen. Have a little fun, for chrissakes. Loosen up when you go out, and let me be the stress ball in the kitchen busting my ass for twelve-plus hours trying to make you the best food I can. Fuck you!

This, of course, resulted in a fair amount of Yelp backlash.

Now, I was going to use this as a story to highlight how bitching about your critics could seriously backfire, but before I could finish that post folks started sending over the even more extreme story of a doctor in Chicago suing three patients after they wrote negative reviews. Dr. Jay Pensler apparently felt that these comments were defamatory, though the article seems to suggest that the people who complained appear to have somewhat legitimate gripes. Pensler is a plastic surgeon, and one woman apparently posted a picture showing uneven breasts with nipples that point in different directions -- something I could see leading to a negative review.

Of course, this isn't really a first either. A few months back we posted about another plastic surgeon who sued her patients for bad reviews on Yelp. Either way, it's difficult to see how that's going to be good for business. Would you go to a doctor who sued online commenters? It seems like these people just aren't going to be willing to take much criticism if they do a bad job... Of course, the lawsuits have resulted in a number of people deleting their criticisms of Dr. Pensler, which is probably the point of his lawsuits. Hopefully a bit more attention on the lawsuits themselves will counteract this.

What's equally troubling, however, is that the court reviewing this case seems to be ignoring the basic First Amendment questions and denied requests to quash the subpoenas in question. It seems like the complaining patients have a pretty strong First Amendment claim to support their anonymity -- a claim that many other US courts have supported. It's a bit worrisome that this court seems to be ignoring that First Amendment right.

It's really quite stunning how frequently people sue review sites because they're unhappy about reviews of their business. You would hope that the lawyers these upset business owners use would know better -- but all too often the lawyers appear to be totally unfamiliar with Section 230 of the CDA and with the basic concept of properly applying liability to the party who actually did the action. And every time this happens, the case gets thrown out on 230 grounds. It's happened yet again, with a dentist having a case against Yelp dismissed thanks to Section 230. Sometimes we do see some creative lawyering to try to get around Section 230, and this time, beyond the basic defamation claim, the lawyer tried to also claim "deceptive practices" (under NY state law). The problem there is that the law in New York applies to "consumer-oriented statements," and the complaint was about inaccuracies in statements that were meant for small business owners. As Rebecca Tushnet notes:

However, the CDA doesn't contemplate protecting Yelp's use of speech as leverage in its business model. Reit alleged that Yelp provided deceptive terms on its website, encouraging both businesses and individual users to believe that the reviews are not manipulated by Yelp. Also, Reit alleged that Yelp's sales force used negative reviews on the site as leads for new ad business, and that sales reps told business owners that, if they paid for ads, the reps would assist in deleting negative reviews. But if a business owner refuses, Yelp would delete positive reviews. Yelp's guide for business owners stated "We remove the guesswork by screening out reviews that are written by less established users. The process is entirely automated to avoid human bias," and yet the system is not entirely automated. This allegedly deceived the public by representing that reviews are ordered, reviewed and removed by computers, and not manipulated by people. Reit referred to class action suits against Yelp of which he is not a member, and did not allege that he was a victim of this conduct.

The General Business Law bars deceptive acts or practices in the conduct of business and false advertising, giving a private right of action to any person who's been injured; a plaintiff need not be a consumer, but must allege consumer-oriented conduct that is materially misleading and that resulted in injury. However, the identified statement by Yelp isn't addressed to individual consumers seeking dentists, but to business owners. "Yelp's statement is not materially misleading to a reasonable consumer seeking dentistry, and is not a deceptive practice." Likewise, deleting postings for the purpose of selling ads would be business conduct, not consumer oriented conduct. Thus, the claim was dismissed.

Over the past few years, the review site Yelp has been no stranger to controversies regarding its treatment of comments and criticisms aimed at local businesses. Negative reviews on Yelp have spurred various lawsuits, accusing Yelp of unfair business practices that have been called "Extortion 2.0" -- referring to the accusation that Yelp salespeople put pressure on companies to pay up for better ratings to appear more prominently on Yelp (and to remove the bad reviews that coincidentally seem to appear on the site when these salespeople allegedly suggest that better ratings could be bought).

In response, Yelp has explained (over and over again) that its algorithms are optimized to display the most "trustworthy" reviews of local businesses -- in a way that's completely unrelated to its sales efforts. Trying to put a friendly wrapping around its umpteenth explanation, Yelp has even created a cartoon to help educate everyone on its methods:

However, no matter how simply these explanations are conveyed, they have not been particularly convincing to small businesses who feel punished by bad reviews and see Yelp's services as a veiled threat to their livelihood. So Yelp has taken another step by announcing some changes to its services to avoid further confusion:

Businesses can no longer buy a "Favorite Review" like they could before -- so that there's no confusion over businesses being able to influence reviews by paying Yelp. This sounds like a pretty big step towards making it clear that companies can't just buy better reviews, but what does this mean for companies that formerly bought "Favorite Reviews?" Those companies are being penalized with the unexpected removal of this service, and there's still no guarantee that ratings can't be manipulated by cunning business owners or competitors. Though, the conspiracy theorists may never actually be satisfied on this point, and gaming online rating systems will likely always be a nagging concern.

Yelp is still keeping its review filtering algorithms a secret, but it will now display reviews that have been removed by its automated filters in an effort to allow users to see a bit of the reviews that Yelp deems suspicious or untrustworthy. However, Yelp is not exactly highlighting these filtered-out reviews -- just making them available to be viewed in case anyone is curious to see what kind of reviews are tossed out on a regular basis.

Yelp is adding video ads as a service for businesses -- presumably to offset the loss of its "Favorite Review" feature.

Yelp says it's created a Small Business Advisory Council for companies to give feedback to Yelp management. This is an interesting development, but it's not exactly easy to find out more information on how this council works. Granted, it was just announced, but its announcement seems to lack a bit of commitment when there aren't any obvious links about it on yelp.com (yet?).

Yelp proudly states that it's increasing transparency with these changes, allowing businesses and users to peek into what its algorithms are filtering out behind the scenes. But it's not clear that anyone really asked for that feature -- and getting that look at the filtered reviews isn't going to ease the concerns that Yelp's algorithms are inherently weighted against small businesses who don't pay up for advertising space on Yelp.

The more significant change seems to be that Yelp is shifting away from a "Pay for Placement" business model with its reviews. Replacing its "Favorite Reviews" with video ads seems a bit odd, though -- but apparently video ads were a top request from merchants. So at least Yelp is listening to its customers and responding -- and if Yelp really wants to increase transparency, maybe we'll see how Yelp actually handles feedback someday. But since Yelp doesn't allow commenting on its own blog, chime in here and tell us what you think Yelp is doing wrong or right with its approach.

SF Weekly's 4,333 word exposition about Yelp delves into many of the recent foibles of the not-yet-profitable community site. Since its inception in 2004, Yelp has played a key part in imbuing every-day consumers with the powers of professional critics. Now, with consumer reviews posted and shared online, instead of disappearing into the black hole of the customer feedback box, businesses shudder with fear at the potential of a bad review on Yelp. Sure, any business that regularly provides bad service would eventually succumb to the collective ire of community displeasure, but anecdotally, Yelp seems to amplify this effect. Although consumer reviews have been around for ages on sites like Amazon and CNET, Yelp's focus on local businesses expose a vulnerability not really seen in, say, the consumer electronics or book industry. An evening's dining choice is relatively fickle compared to a decision to buy a plasma tv, and one can see how that decision could be easily derailed by one strategically placed negative review. That said, as consumers become more savvy to sites like Yelp, their tolerance for a bad review or two should hopefully build. Or, as seen in the recent case of a San Francisco pizzera, businesses could learn to embrace their bad reviews.

Here's a thought. Whenever I visit a new city, I ask my friends for their recommendations, not reviews, of restaurants in the area. While it might be amusing to hear them rant about how awful such-and-such place was, ranting really does little good when trying to pick a place to eat out of the vast array of options that a typical city has to offer. Instead, maybe it's time for Yelp to put on the rose-colored glasses and offer an alternative view of the world: one where only recommendations exist. This is the approach taken by eats.it, a restaurant recommendation site that currently only serves San Diego. With no bad reviews to complain about, the complaint that a merchant doesn't get enough recommendations sounds much more like sour grapes. Furthermore, advertising on a page that features only recommendations of their establishment is a much more palatable proposition. Is the consumer less served by this rosy-eyed view of the world? Perhaps, but it would not be hard to see which establishments received less recommendations than others. Maybe mothers everywhere knew the answer all along when they advised: "if you have nothing nice to say, say nothing at all."

With all of the recent news about merchants up in arms over negative online reviews, a San Francisco pizzeria has decided to take a brilliant approach to the (albeit few) negative Yelp reviews about their restaurant. In a sort of "take back the night" approach, Delfina Pizza has adorned its staff with t-shirts that bear the text of their 1-star reviews. With sayings like "The pizza was soooo greasy. I am assuming this was in part due to the pig fat," Delfina boldly acknowledges that it understands everyone is a critic, and that it is not afraid of a bad review or two. Gone are the Ratatouille days where restaurants live or die by one star of some food critic's review; instead, perhaps restaurateurs will learn that reviews are a starting point for holding meaningful conversations with their customers. Of course, in this particular case, the strategy may backfire -- already one Yelp reviewer has submitted a 1-star review asking "am i good enough for a t-shirt now?"

Last week, we wrote about a defamation lawsuit over a review on Yelp, which seemed to backfire -- bringing a lot more attention to the negative review than if left alone. That case actually was settled soon after, but yet another defamation lawsuit has been filed by yet another person -- this time a dentist -- over a negative review. There are a few things worth commenting on about this lawsuit, but the big one that caught my attention is that the lawsuit was filed both against the couple who wrote the review... and against Yelp.

Now, as pretty much everyone knows around here, filing against Yelp is a big no-no. Yelp is clearly protected by section 230 safe harbors that make third party service providers immune from liability for actions of their users. This is pretty widely known among anyone involved in anything having to do with internet law... but was not known by the lawyer who filed the suit. In fact, the lawyer admits in the article above that he "wasn't aware" of the law and will probably drop the suit against Yelp now that he knows about it. But, it certainly raises questions about the lawyer if he was totally unaware of a key piece of internet legislation before filing such a lawsuit.

Then, there's the bizarre response from the dentist, replying to the point that Yelp lets the service providers directly contact those who write negative reviews to try to clear up the problem. The dentist says: "I would be very upset and would not know what to say to them." Fascinating. So, rather than talking it out as adults and clearing up any misunderstanding (and from the sound of it, it was a basic misunderstanding), she jumps straight to the lawsuit stage? She doesn't know what to say to them, but has no problem dumping a lawsuit on them. Isn't America great?

There have been plenty of stories about companies suing people for posting negative reviews about their business practices, and it still seems like a really dumb thing to do -- as in the end all it does is call a lot more attention to the negative review. That's what appears to be happening with a lawsuit over a negative review of a chiropractor on Yelp. The review claimed that the chiropractor was using questionable business and billing practices. The chiropractor threatened the reviewer -- and even though the review was deleted, sued the guy for defamation. Of course, now the details of the supposed unethical billing practices (involved trying to bill insurance companies significantly more, and when that didn't work coming back to the guy and asking him to pay up instead) are getting a lot more attention.

Review site Yelp caused quite a ruckus this week when they deleted a bunch of user accounts that they deemed to be gaming the system. Many of the users whose accounts were deleted were business owners -- Yelp accused them of trading positive reviews with other business owners, quid pro quo. Yelp has had a tumultuous relationship with its merchants in the past because of negative reviews from Yelpers; some merchants had even tried to ban Yelpers from even visiting their establishments. This tension is unfortunate, since Yelp makes its money from selling these very merchants their services. That said, hopefully Yelp has not overlooked the larger problem that still exists on their site: an overwhelming number of reviews per establishment without any good tools for filtering or determining trust. Furthermore, Yelp has become quite a target for "Foodies," who complain that the reviews from users are pedestrian and inconsistent; Eater has an entire column devoted to the "shortcomings and nuances of the Yelp empire." Despite all of the negative attention that Yelp has been getting, the most important factor is whether or not it continues to grow as a useful resource for users. Yelp just recently surpassed Citysearch in number of users in March of this year, so perhaps they are on the right path.

One of the themes we've emphasized here at Techdirt is that it's essential to know what market you're in. We've mostly talked about that in terms of knowing when to give away infinite resources in order to sell expensive resources. But another key component is recognizing where the value of your business comes from. For example, one of the keys to Google's success has been their recognition that even though their revenue comes from advertisers, their real value is their users, and so they've focused on keeping users happy. Google knows that as long as they have a lot of users, the advertisers will come to them, but if they drive away users they may not come back. The Bits blog has an even more striking example of the same principle: Bits says that Yelp, the restaurant review site, is succeeding because they recognize that the key to success for their market was to cater to a subset of their users -- their volunteer reviewers. If they have good reviews, users will come to them, and if they have users, the advertisers will come. So they've focused on making reviewing an easy and rewarding experience. The site has focused on building community among the reviewers themselves, adding social-networking functionality so reviewers can connect with each other and follow each others reviews, and even hosting social functions where the most prolific reviewers can meet face to face. Yelp is also careful to shield reviewers from irate restaurant owners: a business owner is allowed to send a reviewer one message, but if he doesn't get a response he's not allowed to contact the reviewer again.

One way to look at this is as a multi-sided market. Traditional media outlets, for example, operate in a two-sided market, where they trade content for eyeballs, and then sell the eyeballs to an advertiser. Yelp's business model is similar, except that they exist in a three-sided market. First, they have to make the site appealing enough to reviewers that they'll write a lot of reviews. Then they use the reviews to attract eyeballs, which they finally sell to advertisers. All three of these are "customers" in some sense, but because the reviewers are what ultimately attracts everyone else to the site, they're ultimately the most important to the site's long-term success. Although Yelp certainly has its share of critics, the basic strategy of catering to reviewers seems like the right one for a review-oriented site.