Reviews in the News: The Ins and Outs of the (New) Yelp Lawsuit

It might sound ridiculous – many certainly thought so – but last fall a lawsuit was filed by certain Yelp reviewers who claimed they should be paid for their work. Yelp – the consumer review site that allows customers to leave feedback about any and all businesses and attractions – has always flourished because of the genuine nature of its reviews. Real customers volunteer to leave feedback, and, for the most part, get nothing more than the satisfaction that they’re supporting good businesses (and punishing bad ones). There’s been controversy before over allegedly inaccurate reviews, and even legal threats from businesses that claim they’ve been hurt by angry customers’ vitriol, but the idea that reviewers should be owed wages took many by surprise. In February, the suit – not surprisingly – was dismissed. Now, though, it’s been re-filed, with new attorneys and the same lead plaintiff leading the charge. Could the suit actually have some merit? It turns out the claims are a tad more nuanced than many are reporting.

Yelp is a business with one obvious flaw: people will abuse the system.

While the majority of Yelp reviews are submitted by members of the public on a volunteer basis, not all reviewers go unpaid. There are two different programs run by the company – Elite Squad and Yelp scouts – that offer, respectively, merchandise and special offers, and monetary compensation in exchange for leaving reviews. Members of Yelp’s Elite Squad (an “exclusive, in-the-know crew”) offer unbiased, honest reviews in return for access to invite-only monthly parties and branded swag. The company’s official blog also notes that:

Membership of the Elite Squad is obtained by application only and doesn’t seem to have any set list of requirements.

Now, Yelp “scouts” – not an official title used by the company – are another matter. When Yelp begins offering reviews in areas not previously covered, the company may offer to pay for reviews of local attractions in order to quickly fill up its pages. It’s perfectly above board and entirely legal, although it does add a new level to Yelp’s reviews. Yelp chief executive Jeremy Stoppelman has previously confirmed to the New York Times that the company can choose to pay reviewers when entering new cities, though it remains an exception, rather than the norm. It’s important to know that this goes on, though, to understand the new lawsuit. The suit claims that Elite reviewers provide a service to the site, and since some reviewers are paid, all of them deserve compensation.

Basically, Elite reviewers may be performing the same service as those who are paid to provide content for new markets, creating conflict over how the company compensates its “workers.” The lawsuit filed last year sought compensation under the Fair Labor Standards Act, claiming that Yelp was using a “discretionary method of paying some employees wages, but not others.” Whether you think that’s a strong argument or not, it’s certainly an interesting one. No one would enjoy finding out that a service they’ve been offering for free has also been paid for by the company. The suit points out that Elite members can also be “fired” by having their status revoked if they fail to meet specified criteria.

The plaintiff in both this and the previous lawsuit, Lily Jeung, seems to be a former Elite reviewer whose account is no longer active. Responding to the suit, Yelp had this to say:

Being realistic, it seems unlikely that this case will go anywhere. Still, questions have been raised before about the nature of the entire Elite program, with The Consumerist writing earlier this month that “it may be time for the site to reconsider how it runs the whole Elite program.” The article goes on to highlight problems with Elite members’ impartiality, their willingness to leave positive reviews without receiving special treatment, and even the fact that the program encourages more reviews rather than better reviews. Does quantity trump quality? When it comes to reviews, it shouldn’t.

In the end, Yelp is a business with one obvious flaw: people will abuse the system. Unfair and inaccurate reviews are known to affect small businesses, and the company has already adapted to address this by giving businesses a chance to respond to online criticism. Will Jeung’s lawsuit force Yelp to start paying their Elites? That will be up to the judge. The suit was filed as Lily Jeung et al v. Yelp Inc. on August 7 in the United States District Court for the Central District of California.