NPR

To Yelp Or Not To Yelp? Lawsuit Puts The Chill On Bad Reviews

Customer review websites like Yelp have exploded in the last few years, but are negative reviewers at risk of inciting the litigious wrath of angry business owners? (AP)

The next time you're about to post a scathing review of a business on a site like Yelp or Angie's List, you might want to think twice.

This week, a housing contractor named Christopher Dietz sued a former customer for $750,000 in defamation charges for what she wrote in a review on Yelp.

Jane Perez wrote that there was damage to her home and that jewelry was missing after she'd had work done from Dietz's company, Dietz Development LLC.

On Thursday, a judge took the unusual step of ordering Perez to take down parts of those reviews.

While this isn't the first lawsuit of this type, Santa Clara University law professor Eric Goldman tells NPR's Rachel Martin that these cases are, so far, uncommon, because online reviews are still such a new area.

"We're still developing the rules about how to deal with consumer reviews," Goldman says. He also says often the economics of litigation don't support lawsuits for a single, negative review.

The reality, Goldman says, is that it is extremely unlikely that a single review costs a business anything.

"My perspective is that any individual review is not credible, but the aggregate affect of the reviews ... tend to paint a pretty accurate picture," he says.

A Harvard study in 2011 showed that a one-star increase on Yelp leads to a 5 to 9 percent increase in revenue. That potential revenue bump gives businesses all the more reason to fiercely protect their online reputation.

The lawsuit itself, Goldman says, is a reminder that even though we have the freedom to voice our opinions on the Internet, we also own those words and can be held responsible for them.

"Most people don't realize that they're betting their house ... every time they put their opinions out into the public discourse," he says. "When people realize that, it becomes incredibly inhibiting."

That appears to be the danger here: Why risk posting a negative review if a business can sue you for it?

It's important to note, however, that Perez was sued for specific portions of her review that Dietz considered defamatory, libelous and untrue. In other words, a negative review that's true is, in theory, safe.

So, the next time you fire up your Yelp account after a dinner out, just make sure it really was the worst maple-glazed salmon you'd ever had and that fly in your drink was real.

Copyright 2014 NPR. To see more, visit http://www.npr.org/.

Transcript

RACHEL MARTIN, HOST:

The next time you're about to post a scathing review of some business online, you may want to think twice. Last week, a housing contractor named Christopher Dietz sued a former customer for $750,000 in defamation charges for what the customer had written in an online review. On the website Yelp, Jane Perez wrote that Dietz had stolen jewelry from her and damaged her home. And on Thursday, a judge took the unusual step of ordering her to take down parts of those reviews. Eric Goldman is with us. He's a law professor at Santa Clara University. He's here to tell us more about these kinds of cases. Professor Goldman, welcome to the show.

ERIC GOLDMAN: Thank you. Glad to be here.

MARTIN: So, are these cases very common or is this kind of a new area of law that's emerging?

GOLDMAN: Well, overall, we don't see a lot of lawsuits over consumer reviews of businesses. There's two reasons why. Consumer reviews are a relatively recent phenomenon. So, we're still developing the rules about how to deal with consumer reviews. The second is that in most cases, the economics don't support litigating. It doesn't sense for the business and it doesn't make sense for the reviewer. So, most of the time, the parties simply don't want to spend the money to fight in court.

MARTIN: The plaintiff in this case in Virginia has alleged that the damaging reviews have cost him $300,000 worth of business revenue. Can that be possible? I mean, it has been shown that an extra half-star on Yelp can bring in a lot of business. But can one negative review really cause that much damage?

GOLDMAN: It's extremely unlikely that a single individual review costs a business anything. My perspective is that any individual review is not credible, but the aggregate effect of the reviews, when you add them all up, tends to paint a pretty accurate picture. So, anything could be possible but I'm incredibly skeptical that the review has caused so many consumers to take their businesses elsewhere.

MARTIN: Do you suspect that the fact that this woman has been ordered to take some of her posting, is this likely to have some kind of chilling effect on reviews?

GOLDMAN: The order to remove the reviews isn't likely to have a chilling effect, but the lawsuit itself is quite a chilling development for reviewers. And the article quotes her as saying that she had no idea she could be sued for her words. And I think most people don't realize that they're betting their house. Whatever assets they have, they're putting on the line every time they put their opinions out into the public discourse. And when people realize that, it becomes incredibly inhibiting. And so the lawsuit itself is a good reminder to people that they own their words. We put a lot at stake when we share those words with the public.

MARTIN: That's Eric Goldman, a law professor at Santa Clara University. Professor Goldman, thanks so much for talking with us.

GOLDMAN: It's a pleasure.

(SOUNDBITE OF MUSIC)

MARTIN: This is NPR News. Transcript provided by NPR, Copyright NPR.

Most Popular