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November 30, 2015

Yelp wins fake review lawsuit against shareholders

News: Company previously acknowledged that its review screening technology is not up to scratch.

By CBR Staff Writer

Yelp has won the lawsuit against its shareholders in which the company was accused of misleading its stakeholders about the authenticity of its reviews.

The plaintiffs claimed that the reviews were manipulated to favour paying advertisers.

Yelp allows users to rate businesses on a five-star scale with reviews either helping or hindering business depending on the nature of the comments and stars awarded.

US District Judge Jon Tigar of the Northern District of California in his ruling said that the company itself admitted that the technology it uses to screen user-generated content for its website is not proper, and reasonable investors would have understood that not all reviews are real.

Shareholders led by Joseph Curry accused the site of falsely publicising the reliability of its reviews, in an attempt to lure businesses into buying ads or making payments in exchange for removing bad reviews.

However, Judge said that only 11 complaints were launched against Yelp where the company was accused of offering to manipulate reviews in exchange for fees, which is a small number compared to the millions of reviews hosted by Yelp, reported Reuters.

Tigar added by saying: "Yelp’s use of ‘community managers, scouts, and ambassadors’ to supplement its automated screening does not indicate that Yelp’s directors and officers knew that any significant number of reviews were not authentic or firsthand, beyond what defendants represented to the public."

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