On-line customer harassment and bad Yelp reviews – What’s a business to do?

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One of the major concerns that many businesses have in seeking accounts payable, or even in litigating against other businesses who have breached contracts, is negative press.  A lawsuit never looks good, even when a business is “in the right.” Most businesses seek to appear “above the fray” and not given to litigation.  One serious concern in chasing bad debts is that the debtor may pursue an on-line “hate” strategy, designed to drag down the creditor in the eyes of the public.  Negative customer reviews whether they are placed on Yelp or other search locations can be posted as a means to drag the business down.

Online customer reviews have become a very important part of retail business. In one recent survey, two-thirds of shoppers said they consulted online customer reviews before buying. Of those, 90 percent said their buying decisions were influenced by positive reviews, and 86 percent were influenced by negative reviews. Accordingly, if even a small number of disturbed customers or “haters” who are not paying their debts decide to turn the tables with negative press,and post bad Yelp reviews, this can have a vastly destructive effect on a retailer.

A one-star increase in a restaurant’s Yelp rating led on average to a 5-9 percent increase in revenue, according to a recent Harvard Business School study. And a one-point increase in a hotel’s score on Travelocity and TripAdvisor allowed hotels to increase their rates by up to 11.2 percent, according to an analysis by Cornell University.

With online reviews becoming so important, it’s no wonder businesses are so negatively affected when customers post negative reviews, especially if the business thinks the negative marks were undeserved.  To the same extent that positive on-line reviews boost profitability, the negative reviews can significantly impede it.

Is there anything you can legally do about fraudulent or bad reviews ?

Yes and no. It’s possible to sue someone for posting a bad review, but given the high cost and difficult burden of proof, a business will generally want to sue only in an extreme case or if there’s actual fraud (such as if you suspect a competitor is behind the negative evaluations).

Truth can be a complete defense

Generally, customers have a right to express their own opinions and to state facts. So if a person writes that a plumber was rude and surly, that’s their opinion and there’s not much you can do about it. If a person writes that the plumber showed up four hours late, that’s also protected – assuming the plumber actually was four hours late. (Maybe the plumber stopped to save a child from a burning building, and you can respond to the review by providing that information, but the business cannot sue because the review was technically accurate.)  Truth can be a complete defense.

Lies are a different story but caution is in order

If a customer posts outright lies in a review, then the retailer can probably sue for defamation. But be careful! What may seem like a lie to you might seem to a jury (made up of other consumers) like a simple difference of opinion. And bringing a lawsuit can make the problem worse, by alerting the media and giving the original review more attention than it deserves.

On the other hand, if someone truly has a vendetta against you, and is working hard to spread lies and damage your business, then it’s worth considering bringing a lawsuit to protect your reputation.

And if you suspect sabotage, you should definitely talk to a lawyer.

Is there anything you can do about fake reviews?

Fake reviews, sometimes posted by competitors, are a serious problem. A Harvard Business School study recently suggested that roughly 16% of online reviews are fraudulent. And Yelp, which has a fraud algorithm to try to catch faked appraisals, says it excludes an astonishing 25% of its customer reviews as suspected fraud.

Recently, the Hadeed Carpet Cleaning Company in Alexandria, Va. suffered a rash of negative reviews on Yelp. Hadeed suspected that most of the reviews were fake because they tended to make very similar claims (such as that the final charges were double what was quoted) and Hadeed couldn’t match the details of the complaints to any actual customers.

Hadeed asked Yelp to turn over the identity of the reviewers, and Yelp refused. But the Virginia Court of Appeals ordered Yelp to turn over the data. While anonymity and free speech are important, the court said, Hadeed had made a sufficient case of “dirty tricks” because it could prove that some of the reviews could not have been made by actual customers, and so must have been full of false statements.

Think twice about asking your brother to review your business

By the way, not all fake online reviews are from competitors. The opposite problem is that companies sometimes pose as consumers and post highly favorable, made-up reviews about themselves, in order to boost their own scores.  This is illegal, and it might be a good idea to warn any of your employees who might be tempted to “goose” their review scores not to do so in a dishonest way.  Recently, the New York Attorney General’s office busted 19 companies for posting fake favorable reviews, issuing fines in some cases of almost $100,000. Yelp has also sued at least one firm for allegedly posting fake positive reviews.

If a business suspects that a competitor is posting “false positives,” it should consider reporting the action to the authorities.  Depending upon the degree of harm and the malicious intent, further consideration of options should be reviewed with counsel.

If you suspect your business is the target of fake reviews and/or online customer harassment, please consult with a business fraud attorney to protect your rights or if you are in Orange County, call Stephen Hammers, a business fraud attorney in Irvine, California at (800) 511-6058.
Stephen Hammers
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