Yelp shareholder lawsuit claims "reviews are a fraud"
- eatzalot Aug 8, 2014 05:43 PM
I searched and found no mention yet on CH.
Summarizing from today's Palo Alto (California) Daily Post, which serves the San Francisco peninsula: Page-1 story on a shareholder lawsuit filed Wednesday in San Francisco federal court, requesting class-action status. (Link to another local version of the story is below.)
According to the Post, shareholders allege that Yelp's stock price hit "artificially inflated" highs earlier this year after business misrepresentations by the firm, and that company senior management benefitted by selling at the inflated price. One plaintiff said that Yelp "hid the fact that it required 'business customers to pay to suppress negative reviews,'" and that "some reviews weren't even real," including " 'fraudulent reviews by reviewers who did not have first-hand experience with the business.' " Yelp responded that the allegations were "without merit" and the firm would "vigorously contest them," said a quoted statement to Reuters.
Plaintiffs further alleged that share prices plummeted after recent "claims about extortion practices" appeared earlier this year, but not before senior managers "unload[ed] the shares at a major profit."
The Post is print-only (except for paid archives). SF Chronicle's online version of same story http://www.sfgate.com/default/article...
(I've had no direct business dealings with Yelp; but more than one local small business owner, of demonstrated integrity and credibility, has told me of explicit offers by Yelp representatives to take down existing negative "reviews" if the business would buy advertising from Yelp. Those testimonials directly contradict claims that Yelp posts on its site.)