Illustration by Phil Foster

By June D. Bell

Since its founding in 2005, Yelp.com—a website where consumers review everything from cappuccinos to car mechanics—has published more than 5 million write-ups of local merchants. But in the past twelve months its online reviews have also triggered at least three defamation lawsuits.

Welcome to the Web 2.0 world of user-generated content, where positive reviews can attract new customers—but negative reviews may inspire the subjects to head to court. One suit, waged by a chiropractor who was poorly reviewed on Yelp, settled in mediation earlier this year, and a second suit, filed last year by a pediatric dentist, is pending on appeal. A third case, also involving a dentist, settled last year after a superior court judge in San Francisco, where Yelp is based, granted the defendant's anti-SLAPP (Strategic Lawsuits Against Public Participation) motion. California attorneys, meanwhile, say they're fielding an increasing number of calls from angry business owners seeking recourse.

"It shouldn't come as a surprise, due to the sheer increase in popularity of these sites in the past year," says Matt Zimmerman, a senior staff attorney at the Electronic Frontier Foundation, a nonprofit civil liberties law firm in San Francisco that specializes in high-tech legal issues.

Suing the host sites for their user-generated content is, of course, fruitless: Section 230 of the federal Communications Decency Act (CDA) shields the sites from defamation suits as long as they didn't create the objectionable materials.

The aggrieved parties, however, can and do go after the reviewers (known as posters) who publish their opinions online. Legally, posters have plenty of leeway—as long as they don't cross the line into defamation, says Karl Kronenberger, a partner at San Francisco's Kronenberger Burgoyne who represents businesses in such matters. And California's anti-SLAPP law shields people who speak out on issues of public interest—a protection that broadly extends to consumer matters.

In addition to being difficult to prove and win, allegations of online defamation can also backfire: A stray negative posting may fade into obscurity, but a lawsuit over it can provoke exactly the kind of negative publicity that business owners are desperate to avoid, notes Mark Lemley, who teaches Internet law at Stanford Law School and is a partner at Durie Tangri Lemley Roberts & Kent in San Francisco.

This is a key reason many experts advise that, whenever possible, attorneys should help their clients settle such matters. In fact, Yelp is among the sites that try to mediate between merchants and consumers by hooking them up to smooth out their differences. And in April, Yelp followed sites such as Trip Advisor and eBay by letting merchants respond online to negative feedback.

Another way to address the issue would be to update the CDA's section 230, says Michael Fertik, the CEO and founder of ReputationDefender in Redwood City. The regulation, after all, dates to 1996—which, as he says, is "the Jurassic Era for Internet law."

In the meantime, the smartest strategy for merchants who've suffered a withering critique may be to rally patrons to post rave reviews. "The answer to negative speech, especially online, isn't to try to silence people," Zimmerman says, "but to encourage more speech."