Yelp battles to keep local reviewers anonymous

Local business review site Yelp (YELP) is embroiled in a legal fight with a Virginia-based cleaning company. Potentially at stake: the ability for people to leave anonymous reviews without having their identities uncovered by an angry company owner.

Joe Hadeed of Hadeed In-Home and Office Cleaning Services allegedly found a string of negative reviews in 2012 that he blamed for a 30 percent drop in work, according to The Wall Street Journal. In a case headed to the Virginia Supreme Court, Hadeed is suing seven anonymous negative reviewers and insisting that Yelp identify them.

To this point, state courts have sided with Hadeed and held Yelp in contempt for not providing the names. Yelp argues that the First Amendment of the U.S. Constitution protects the reviews and the rights of the people who placed them to remain anonymous.

Although Hadeed, who has not yet responded to an interview request, apparently claims he has proof that the seven reviews in particular are fraudulent, his current reputation on Yelp is not sterling. Out of 19 reviews, nine are one-star, three are two-star, two are three-star, one is four-star and two are five-star. Only four of the one-star reviews are from 2012.

A statement from a Yelp spokesperson said, in part, "Some users may wish to remain anonymous for privacy reasons (i.e. reviewing a plastic surgeon or divorce lawyer) or fear of retaliation and it is important to protect these users as well since their opinion can provide valuable info to the marketplace." The statement went on to say that businesses could use free tools from Yelp to respond to negative feedback.

That said, the general situation is still murky. Last September, New York State Attorney General Eric Schneiderman announced a settlement with 19 companies that used fake online reviews on such sites as Yelp, Google Local and CitySearch. From Schneiderman's press statement:

In the course of the investigation, the Attorney General's office found that many of these companies used techniques to hide their identities, such as creating fake online profiles on consumer review websites and paying freelance writers from as far away as the Philippines, Bangladesh and Eastern Europe for $1 to $10 per review. By producing fake reviews, these companies violated multiple state laws against false advertising and engaged in illegal and deceptive business practices.

In addition, Schneiderman's office found that a number of "leading" search engine optimization consultancies offered to write fake reviews and post them in an effort to combat negative reviews.

Not only can companies indulge in false advertising, but they can also attack competitors through false negative reviews. Although people are entitled to offer their opinions, when they cross into claiming specifics, they potentially open themselves to defamation suits under which they must prove their statements.

At the same time, some business owners have indulged in so-called SLAPP (strategic lawsuits against public participation) legal actions without solid grounds or complaints to bully actual critics. Finding a balance is a difficult task.

This isn't the first time Yelp has landed in controversy. The company has faced other lawsuits over negative reviews and claims that its ad salespeople sometimes say they can have negative reviews removed if a company were to buy advertising.

"Yelp has a difficult problem," said independent local search consultant Mike Blumenthal. "They want to keep the integrity of their reviews high. They err on removing a lot of good reviews."

At the same time, Blumenthal said Yelp uses an old-fashioned and "manipulative" way of selling a service that's like a modern version of the old Yellow Pages. Salespeople pressured small businesses to take a display ad in the standard consumer business phone directory for fear of being overlooked in the line listings.

According to The Wall Street Journal, a Freedom of Information Request revealed that the Federal Trade Commission has received 2,046 complaints about Yelp from 2008 through March 4, 2014.