Cry for Yelp

Atif Mehana came to the United States from Egypt 20 years ago. The short, clean-shaven 58-year-old spent more than a decade selling seafood to tourists on Miami's bay front. He saved enough to open a second eatery in 2008.

But now he's broke.

Who's to blame? He says Yelp.com, the megapopular San Francisco–based Web site that allows users to rate and discuss thousands of businesses from Los Angeles to London. According to Mehana, cult-like Yelp followers and insistent ad reps conspired to ruin him.

"I want them to fix the damage they did to my life," he says. "I'm out my entire life savings. I lost $185,000, and I have a mortgage to pay."

Mehana claims Yelp, which averages more than 30 million U.S. visitors every month, deleted positive reviews and highlighted negative ones in a behind-the-scenes campaign to force him to buy advertising. His story has been echoed around the nation since February 23, when a Long Beach animal hospital sued Yelp, charging extortion.

When a negative, anonymous review about Cats and Dogs Animal Hospital Inc. appeared on Yelp, the facility's Dr. Greg Perrault contacted Yelp. Instead of getting help, Perrault says, a salesman explained that if Perrault paid Yelp up to $1,000 a month, he could choose the information that Google searches of Yelp produced. "What I was told," says Perrault, "is I was paying for protection."

When Perrault refused, a second review, signed by the same anonymous poster, "Kay K," slammed his clinic, according to the vet's lawsuit. His experience is similar to what allegedly happened to Celibre Medical Corporation in Orange. A negative review of the firm appeared on Yelp, and the next day, a Yelp salesperson contacted its director, Kevin DiCerbo, and allegedly pushed DiCerbo to buy advertising.

"What they told me is that as advertisers, I could control which review would be shown first," DiCerbo says.

Since then, hundreds of firms nationwide have claimed the company tried to extort money for ads. Their complaints have drawn coverage across the English-speaking world, from The Wall Street Journal to the U.K.'s Guardian.

Yelp has vehemently denied those claims, noting ad reps have no power over placement of reviews. Yet on April 5, the company publicly acknowledged the issue. It added links to deleted comments and took away paying members' ability to place positive evaluations atop their profiles. "[There's] no connection between advertising and content," says Jeremy Stoppelman, one of the company's two überhip founders.

But those moves failed to placate Yelp haters — including scores who claim to have been victimized like Mehana. They say the changes are just window-dressing. What's more, the list of plaintiffs suing Yelp is growing, says Jared Beck, one of the four lawyers who filed the suit, initiated by Cats & Dogs in Long Beach. So far, 10 businesses have signed on. And more than 500 business owners have contacted the attorneys to report chicanery by Yelp.

"Now we hope we'll get wholesale changes to Yelp's business practices," Beck says.

Yelp was founded in 2004 by two ambitious PayPal employees: the Harvard-educated Stoppelman and Russell Simmons, a software whiz. They launched the site around the same time Facebook began sweeping through college campuses, and Yelp tapped into the hunger for user-generated content.

The company, which has yet to turn a profit despite its popularity, created profiles for businesses from restaurants to drugstores to car washes and then allowed users to post reviews and ratings. By 2008, it had expanded to more than a dozen U.S. cities, Canada and the British Isles. Last year, it topped $30 million in revenue. In December, Stoppelman and Simmons rejected a $500 million buyout offer from Google.

But in February 2009, East Bay Express, an alternative weekly newspaper in Oakland, California, reported six local business owners' complaints that Yelp sales reps tried to strong-arm them into "memberships" of $300 or more a month. Beck and Gregory Weston, a former Harvard Law School classmate from San Diego, filed suit against Yelp. They said it would become a class action, though at first there was only one client: Cats & Dogs Animal Hospital. But soon, Beck added nine more businesses, including a bakery in Chicago, an appliance-repair service near San Francisco and a restaurant in Washington, D.C.

"All these people who are running their own businesses are taking the time to call us up and tell us their stories," Beck says. "And they all line up."

When Stoppelman announced the changes to Yelp's business model earlier this month, many observers interpreted the response as throwing in the towel. "Yelp Surrenders Payola War, Loses Easiest Shot at Profit," Gawker crowed.

Across the country, in Somerville, Massachusetts, Grover Taylor first ran afoul of Yelp early last year, soon after he opened Eat at Jumbo's, an eatery catering to MIT students.

"They're the modern-day Mafia. Maybe they're not holding a gun to my head, but they're playing the same game," says Taylor, who is also a plaintiff in the lawsuit.

In San Mateo, just south of San Francisco, Mary Seaton parrots Taylor almost word for word. She has owned the Sofa Outlet furniture store for 14 years and says she'll be satisfied only if businesses can opt out of the site. Yelp should explain the algorithm that decides placement and deletion of reviews, says the Californian, who calls the recent changes by the firm a "nonsolution."