Internet Defamation Claims on the Rise as Online Reviews Impact the Bottom Line

We have all read, relied upon or at least considered those online reviews that are attached to internet products and services – right?  You know – the ratings, stars or “opinions” that represent a person’s experience with a product or service?  But what do we really know about the truth of those reviews, or the circumstances that surrounded the business transaction?  Nothing. 

In fact, relying on such reviews is an act of faith.  So what happens when an online review is not accurate, or the reviewer acts with bad faith in an attempt to ruin a business’s reputation?  Where can that business turn for help? 

Unfortunately, businesses often do not receive much help from the website itself.  They might not even find an appeal process to request that the false negative reviews be removed from the site.  In my experience, businesses have mixed luck when requesting that posts be removed.  Best results are obtained when statements appear malicious or threatening, not merely untrue. 

Internet review sites, like Yelp or Angie’s List, do not screen reviews and they certainly don’t (and really can’t) investigate the veracity of the statements, whether good or bad.  In fact, the sites are protected by the federal Communications Decency Act which generally shields those types of websites from defamation suits relating to content posted by third parties. 

So what can a business do?  Well, one option could be to target the individual reviewer by bringing a defamation claim. 

That is exactly what a Virginia contractor recently did.  Christopher Dietz filed a $750,000 internet defamation lawsuit against Fairfax resident Jane Perez.  Ms. Perez was unsatisfied with work performed at her residence so she took to Yelp and Angie’s List to voice her displeasure – even accusing the contractor of stealing jewelry.  In his lawsuit, Mr. Dietz claims the negative comments devastated his business reputation and cost him $300,000 in business. 

“The impact has been awful,” Mr. Dietz reported to the Washington Post, Virginia woman is sued over her Yelp review.  “There is no one to protect businesses when people slam their name.”  In some ways, the internet has made defamation much more damaging – a single false post can live forever in cyberspace, reaching millions of viewers, and causing untold harm.  On Wednesday, the trial court judge issued a preliminary injunction order requiring Ms. Perez to edit her Yelp review.

It may be that internet defamation suits will increase in frequency as review sites, such as Yelp or Angie’s List, become more prevalent in our everyday consumer transactions – and results like this could encourage such suits (for good or bad). 

But let’s all do a reality check – how big a deal is an online review?  A 2011 Harvard Study quantified the effects of a positive Yelp review.  The study found that a single star increase, on Yelp’s five-star rating system, among posts for Seattle restaurants led to a 5-9 percent growth in the business’ revenue. 

Conversely, a one-star review can sometimes have catastrophic financial consequences.  According to the Herald-Tribune, Online criticism sparks real world defamation lawsuit, Michael Rassel, owner of Razworks, a computer graphics company, found that a single person’s one-star review on Yelp dropped his annual income by 70 percent.  One online tirade against him, according to Mr. Rassel, resulted from a customer wanting, and ultimately pressuring, him to provide extra services for free.  The post called Mr. Rassel a “scam liar and complete weirdo.”  “They see something like this on the first page of Google, they’re gone, they’re not even going to give me a second thought.”

But is litigation the answer?  Mark Goldowitz, founder of the Public Participation Project, a group that monitors internet defamation lawsuits, sees the rise of internet defamation suits as a threat.  “The suits can have a chilling effect on people’s willingness to share information,” Mr. Goldowitz told the Washington Post.  “It does lead to people not posting reviews for fear of getting sued and to take them down when threatened by a lawsuit.” 

Regardless of your position on whether litigation is a good idea, businesses still need to be able to respond to inappropriate, threatening or untrue statements posted online.  Even Yelp notifies users that they can be held responsible for their online content.  The Yelp Terms of Service provide: 

You alone are responsible for Your Content, and once published, it cannot always be withdrawn. You assume all risks associated with Your Content, including anyone’s reliance on its quality, accuracy, or reliability, or any disclosure by you of information in Your Content that makes you personally identifiable.  . . .

You may expose yourself to liability if, for example, Your Content contains material that is false, intentionally misleading, or defamatory; violates any third-party right, including any copyright, trademark, patent, trade secret, moral right, privacy right, right of publicity, or any other intellectual property or proprietary right; contains material that is unlawful, including illegal hate speech or pornography; exploits or otherwise harms minors; or violates or advocates the violation of any law or regulation.

So what would you do?  Would you be prepared to bring legal action to put a stop to defamatory reviews that are harming your business?  In our next post we will talk about how some doctors are doing just that by taking legal action to counteract negative reviews.  Stay tuned!  

5 thoughts on “Internet Defamation Claims on the Rise as Online Reviews Impact the Bottom Line

  1. I think that it’s important to keep in mind that inaccurate bad reviews don’t just harm the businesses.

    People using these websites to select a business are harmed by having a viable choice, perhaps even the best choice, appear as a poor choice due to false negative reviews. They also are harmed by the opposite: businesses who find a way to get misleadingly positive reviews on the review sites.

    And the sites themselves also lose credibility if they are seen as inaccurate sources of information. If customers see news stories about businesses suing reviewers for putting (potentially) false reviews on the review sites, customers may go elsewhere for advice. The same is true if these sites are believed to allow unwarranted positive reviews. This problem has also been in the news lately.

    It’s not like Yelp and Angie’s List invented the idea of allowing customers to post reviews of businesses or products. Amazon and eBay do this by the millions, as do many other internet marketplaces. It’s true that Amazon and eBay have more information about the transaction to use to monitor the review patterns, but that is partly because they ask for the information in addition to having oversight over the transactions. eBay sends out periodic emails to sellers notifying them that eBay has removed negative information that it decided was most likely inaccurate based upon the overall patterns of a seller’s history or of the buyer’s history.

    Yelp and Angie’s List exist to provide accurate information to assist customers when choosing a business to patronize. Stepping back and saying “we don’t do anything to make sure what you see on our website is accurate” is not a great way to provide that type of service.

    It doesn’t take a rocket scientist to figure out that a business plan of “like Yelp or Angie’s List, but we have a system for making sure reviews are accurate” is the next step in providing this type of service. It might take a rocket scientist or a team of them to figure out how to do that, but the talent is available for the right amount of money.

    You might start by speaking with the researchers who measured the impact of the ratings changes. You might talk to people who worked for Amazon or eBay in their review quality groups. But I think that there are too many articles written about positive reviews for hire and about lawsuits claiming false negative reviews for the “we just host the forum for the reviews” business model to keep working much longer.

    • Thank you for your comment. I agree that inaccurate information (whether positive or negative) posted online should be a concern to all. I expect that as these issues work through the court systems, we will receive more guidance about how to better protect consumers from false reviews. In the meantime, more people should keep in mind that not everything posted on the internet is true!

  2. What about sites like the BBB, Yelp, Business Consumer Alliance, etc., that offer better ratings with a subscription or conversely lowering ratings when a subscription is cancelled?

Leave a Reply

Your email address will not be published. Required fields are marked *