Restaurateurs know well that public perception is their greatest business drawing card, and that protecting their reputation is a fundamental component of overall business policy. Online forums play a major part in this. The review website, Yelp, has been under fire for allegedly manipulating online reviews for their own financial benefit. The case calls into question business owners' rights when it comes to defamation online.

Businesses that depend on positive ratings for successful business operations benefit greatly from the variety of ratings that websites make available to the consumer. Restaurants are a prime example of that. Yet some ratings websites are more popular than others, for multiple reasons, and some of those ratings forums have more power to impact a small business in a positive or negative manner.

The restaurant owners in the lawsuit against Yelp claimed that the corporate advertising management representatives would contact them requesting monthly payments of approximately $300 in return for positively managing their customer reviews. For those who did not comply, bad reviews became regular and positive reviews were removed (for the most part). The claim was that this was unethical and actually in violation of Federal Trade Commission (FTC) regulations, which forbid manipulated business reviews. Paid or fake reviews are outlawed by the FTC, but altered true reviews are apparently fair business practices according to the federal court system.

Understanding Defamation

The issue with this legal situation is primarily defamation, along with an obvious claim of coercion and attempted extortion. For those who actually paid up, the businesses apparently experienced positive reviews on the Yelp forums following compliance with the reputation management program. Those businesses who refused began experiencing reductions in business, while also experiencing an increase in bad or negatively manipulated reviews.

Retribution also included the complete removal of positive reviews in many cases. The problem with defamation is that it must be proven within a preponderance of the material case evidence, just like any other civil law claim. The standard is lower than the "reasonable doubt" burden of proof, but this can still be difficult within the application of the requirements for libel or slander to exist.

The Difference between Trade Libel and Slander

Spoken defamation is slander, while written defamation is primarily libelous. Private citizens only need transference of the statements to at least two individuals, and no actual malice need occur.

Public entities, such as businesses, can file trade libel claims, but are required to prove actual malice in court according to available documentation. The legal requirement of communicating the statement to two other individuals remains the same.

Truthful information is never defamatory in any manner, which is exactly where this legal tap dance is being performed. Proving falsehood can be difficult when reviews can also be vague, general and reasonably honest.

Businesses that have been contacted by review websites requesting participation in a business reputation management program should document all communications and be prepared to retain an experienced attorney who has handled cases involving online defamation and defamatory advertising.

So if online reviews are putting a damper on your business, it may be time to contact a trade or libel attorney.