Home / Technology / Business Briefing |: Judge Dismisses Yelp Suit Brought by Shareholders

Business Briefing |: Judge Dismisses Yelp Suit Brought by Shareholders

Yelp won the dismissal of a lawsuit by shareholders who claimed they had been fraudulently misled about the authenticity and quality of its reviews, and who accused Yelp of manipulating those reviews to favor paying advertisers. In a Nov. 24 decision, United States District Court Judge Jon S. Tigar in San Francisco said reasonable investors would understand that not all Yelp reviews are real, particularly given the company’s admission that its technology to screen user-generated content is not foolproof. In April, Judge Tigar dismissed an earlier version of the complaint, which sought class-action status. He said the plaintiffs could not sue again because any amendment would be “futile.” Yelp lets users rate restaurants and other businesses on a five-star scale. Positive reviews can bolster sales and negative reviews can harm sales, especially if viewers perceive the reviews as unbiased. Shareholders led by Joseph Curry accused Yelp of inflating its share price by falsely promoting the reliability of its reviews, as part of a calculated strategy to extort businesses into buying ads or making payments in exchange for removing bad or fake reviews. But the judge said only 11 of the complaints accused Yelp of offering to manipulate reviews in exchange for fees, a small number.

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NYT > Technology

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