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Businesses accused of paying for fake reviews settle lawsuit

Did you know that even an extra half-star rating on Yelp can increase a restaurant’s chances of bringing in extra customers by as much as 49 percent? That’s what researchers concluded recently after looking at online reviews for businesses across the nation. But during their research, they also discovered that many of these reviews were deemed bogus, leading to serious litigation for the businesses involved.

Readers here in California are seeing this very problem play out in New York this month after the state’s attorney general filed a lawsuit against several companies who were accused of paying Internet review sites, such as Yelp and CitySearch, to post fake reviews in an effort to boost business. According to the lawsuit, this constituted as deceptive business practices and delved into the realm of false advertising as well.

As some of our readers may know, accusations of false advertising can result in serious litigation. Cases can sometimes drag on for long periods of time, costing companies more than just money but their reputations as well. In the case out of New York, the lawsuit was finally settled this month, requiring the 19 companies accused of producing fake reviews to cease review activity, each paying $350,000 in penalties as well.

What readers here in California can take away from this case is that although business law can differ from state to state, the consequences of participating in unlawful business practices can be just as severe no matter where you are. It also highlights the importance of having a skilled attorney at your side in such circumstances as well.

Source: The Bloomberg, "Fake Online Review Firms Reach Settlement With New York," Christie Smythe, Sept. 23, 2013

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