A Virginia man is seeking $750,000 in damages from a woman he says defamed his business in negative reviews on Yelp (YELP).
The case went to trial yesterday, and is being watched by First Amendment advocates, online businesses, and YELP stock investors.
Christopher Dietz alleges a one-star review on the popular site and others were riddled with falsehoods and sent customers fleeing. Jane Perez stands by her claims that her home was damaged, she was billed for work that wasn’t done and jewelry went missing after she hired Dietz’s company to fix up her newly purchased Fairfax home.
In an increasingly online world, the business community is particularly having to defend against false claims online that go viral before the truth can be presented. With negative Yelp reviews, the issue becomes a focal point for online comments.
In many cases, a business is unable to get in front of a negative review until too late — the damage done before the business is aware it’s even out there.
For Yelp, the case is particularly interesting for obvious reasons: The site is ALL reviews.
For YELP stock, the case has not yet resonated — and is unlikely to change YELP’s upward trajectory in the short term at least.
As SeekingAlpha notes, the stock keeps moving up, even though it may be overvalued:
When Yelp (YELP) was trading for $50, everybody was talking about how overvalued the company is, how the growth expectations don’t really match-up with the high valuation and how a lot of future success was built in the company even though it as unjustified. Fast forward several months and Yelp is now trading at $78, even though there have been no changes to the fundamental story. Yelp continues to be one of these stocks getting pumped up by hype alone.
The outcome of the case is anyone’s guess, but online commentators may begin to feel their free reign is being slightly culled in.
Earlier this month a Virginia court ruled that Yelp had to reveal the identities of a number of anonymous users that posted negative reviews of Hadeed Carpet Cleaners.
