Yelp Inc. (NYSE:YELP) finally received a favorable court ruling stating that the San Francisco-based online review site is not liable for negative reviews on its platform.
This came after Douglas Kimzey, a locksmith business owner in Washington filed a libel lawsuit against the company for a negative review from a Yelp user back in 2011.
Kimzey who claims that he lost nearly 95% of his business after the Yelp rating is planning to make an appeal again. According to him, the negative review, which resulted in a one-star rating for his business was in fact for another business. He asserts that Yelp which is dependent on advertising dollars for its growth had intentionally attached that review to his business so as to coerce him to opt for paid advertisements on the platform.
According to the federal Communications Decency Act of 1996 an online business cannot be sued for any user-generated content posted on its platform. The 9th U.S. Circuit of Appeals Court had turned down this allegation saying that there is no proof that Yelp fabricated the fake review. Judge M. Margaret McKeown stated “We fail to see how Yelp’s rating system, which is based on rating inputs from third parties and which reduces this information into a single, aggregate metric, is anything other than user-generated data.”
On its part, Yelp is making an appeal to the state Supreme Court for a review on the ruling again.
Yelp is a Zacks Rank #3 (Hold) stock. Some better-ranked stocks in the broader tech space include Facebook, Inc. (NASDAQ:FB) , LinkedIn Corporation (NYSE:LNKD) and Changyou.com Limited (NASDAQ:CYOU) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
CHANGYOU.COM (CYOU): Free Stock Analysis Report
YELP INC (YELP): Free Stock Analysis Report
FACEBOOK INC-A (FB): Free Stock Analysis Report
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