Yelp Wins Court Ruling About Negative Online Reviews

A recent California Supreme Court decision that essentially allows a negative Yelp post to stand about a lawyer could help determine how online reviews are treated in the future. The case could also influence how much responsibility third-party platforms have when consumers complain about goods and services.

In a 4-3 decision on Monday (July 1), the California Supreme Court ruled that Yelp is not responsible for a one-star review left on its site about San Francisco lawyer Dawn Hassell. The Hassell Law Group represented Ava Bird in a 2012 personal injury case for three months. Bird, using an alias, then wrote on Yelp that the firm was incompetent, and told readers to avoid doing business with it.

“She dropped the case because of her mother and seeming lack of work ethic. (A good attorney won’t do this; in fact, they aren’t supposed to),” read part of the message, according to the court ruling.

Hassell then wrote back to Bird via email: “Slandering someone and intentionally trying to damage their business and reputation is illegal.” She eventually sued Bird for libel in 2013  but not Yelp and won a default judgement in 2014, winning $550,000 in damages. The ruling required Bird and Yelp to remove the negative reviews (another anonymous review leveled similar criticism at Hassell, though Bird denied writing it).

Liability Protection

Bird reportedly did not respond to the ruling. However, Yelp objected and said the 1996 Communications Decency Act, a federal law, protects it from liability for such reviews. An appeals court rejected Yelp’s argument, but the Supreme Court found in favor of the online review platform.

“The court ruling serves to protects the 1996 law, which is intended to promote online discourse and industry self-regulation,” Chief Justice Tani Cantil-Sakauye said in the ruling.

A colleague disagreed.

“The internet has the potential not only to enlighten but to spread lies, amplifying defamatory communications to an extent unmatched in our history,” said Justice Mariano-Florentino Cuéllar.

A ruling the other way could have had implications for other online review platforms.

“Thomas Burke, Yelp’s attorney, and several internet companies were worried that the initial ruling would threaten free-speech protections and lead to more lawsuits of the type,” according to Fortune. There was indication that Hassell may decide to appeal the case to the U.S. Supreme Court, but no immediate clarification was available.

The Power Of Reviews

Reviews, in fact, are vital to eCommerce. According to the PYMNTS Checkout Conversion Index, “a product that has only one review is 65 percent more likely to be purchased than another product that doesn’t have any reviews. And one-third of eCommerce shoppers will not purchase an item online unless it has positive reviews from customers.” Also, more than 56 percent of online shoppers read reviews before making a purchase.

The Yelp case in California comes as people increasingly use the online review platform to punish or support businesses caught in political controversies the recent news involving the Red Hen restaurant declining to serve the White House press secretary stands as the most recent notable example of that. Aside from that, Facebook Founder Mark Zuckerberg recently told Congress that the social media platform intends to delete posts its considers hate speech, another example of how politics is colliding with channels that also provide significant online marketing messaging.

Beyond the implications of negative reviews and political speech, companies face other challenges in the race to control their digital marketing efforts. Recent changes at Facebook, for instance, are forcing direct-to-consumer brands to rethink their advertising spend with the social media operator, lest they get lost in the flood of other content or reveal too much to competitors.

The California decision about the negative reviews on Yelp is certainly not the last word on how online marketing and reviews mesh with libel protections, free speech and moves toward transparency.