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Yelp Faces Class Action for Alleged Unfair Business Practices

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Los Angeles, CA: A national class action lawsuit has been filed in Los Angeles federal court alleging unfair business practices against Yelp Inc, a San Francisco-based start-up. Yelp owns and operates a popular website (Yelp.com) enabling visitors to post and access user-generated reviews of business and services.

The lawsuit alleges that Yelp runs an extortion scheme in which the company's employees call businesses demanding monthly payments, in the guise of "advertising contracts," in exchange for removing or modifying negative reviews appearing on the website.

The plaintiff, a veterinary hospital in Long Beach, California, asked that Yelp remove a false and defamatory review from the website. In response, as set forth in the lawsuit, Yelp refused to take down the review. Instead, the company's sales representatives repeatedly contacted the hospital and demanded a roughly $300 per-month payment in exchange for hiding or removing the negative review.

Similar examples of Yelp's unscrupulous sales practices have been widely documented in the press, including in The Wall Street Journal, The San Jose Mercury, and a series of articles recently appearing in The East Bay Express.

The case was filed on February 23, 2010, and is pending in the U.S. District Court for the Central District of California.

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