Class Action Lawsuit Against Angie's List Alleging Manipulated Provider Reviews Allowed To Proceed

A federal district court in the Eastern District of Pennsylvania has allowed a class action lawsuit against Angie's List alleging the consumer subscriber-based review company committed fraud and breach of contract on its subscribers by manipulating the ratings of service providers which pay to advertise with the company. A Forbes story summarizes the Court's findings denying dismissal of the fraud counts:

Moore alleged that she submitted a negative review of her contractor on Angie’s List, at which point she saw for the first time that he had received other negative reviews, information which she contends would have forestalled her hiring the contractor. She also alleged that she had a reasonable expectation of access to all reviews for a given service provider. And she alleged that she confronted an Angie’s List representative about “the suppression of negative reviews” and spoke of her experience to an electrician of her acquaintance who allegedly told her that “he pays ‘to be at the top’ of search results” on Angie’s List. Moore also stated that until then she was unaware (and had no reason to know) that service providers could “pay to manipulate search results.” Indeed, she points in her complaint to the company’s representations that “businesses don’t pay” and that it always places “the interests of the consumer first.” . . .

The altered rankings that Moore alleges, and her acquaintance’s disclosure that he paid to alter his ranking, as well as the defendant’s nondisclosure of business practices that she claims, sufficiently allege a form of misrepresentation material to Moore’s use of the website. She also alleges her reliance on the defendant’s manifold utterances of its consumer-oriented ethos. And she has sufficiently pled Angie’s List’s non-disclosure or omission of its business practices with providers . . .

Here's a summary of the Court's decision allowing the breach of contract claims to proceed based on the following contract terms:

. . . . 1. ANGIE’S LIST SERVICE. Angie’s List provides reviews and ratings on a variety of Service Providers based upon the actual first-hand experiences other users have had with these Service Providers and also provides You with the opportunity to provide Your own reviews and ratings on the Service Providers You use….

13. PUBLICATION AND DISTRIBUTION OF CONTENT. Angie’s List does not guarantee the accuracy, integrity, quality or appropriateness of any Content transmitted to or through the Service. You acknowledge that Angie’s List simply acts as a passive conduit and an interactive computer service provider for the publication and distribution of Content….

14. SERVICE PROVIDERS. Angie’s List does not endorse and is not responsible or liable for any Content, Service Provider Content, data, advertising, products, goods or services available or unavailable from, or through, any Service Providers….

The court says that Moore’s contract breach allegations were sufficient:

These provisions unambiguously depict the website with which Moore contracted as a provider rating system based on “first-hand” consumer reviews, unshaped by input from any other source. She alleges a breach by averring that (1) an electrician of her acquaintance disclosed that he pays Angie’s List to alter his rating, and (2) she could not initially view all negative reviews of the provider she contracted with–both of which counter Angie’s List’s representation that it is simply a passive conduit for the publication of content about providers . . . 

The district court dismissed the plaintiffs' claims for unjust enrichment.  Angie's List insists it does not utilize a pay-to-play arrangement with service providers who advertise with it. The company released the following statement to Forbes:

Angie’s List’s policy is to not modify, suppress, or alter service provider ratings or member reviews, positive or negative. Angie’s List protects the integrity of its reviews, and strives to ensure we are fairly presenting our members’ reviews and ratings. A service provider’s decision whether or not to pay to advertise with Angie’s List has no influence on the service provider’s rating or the visibility or availability of reviews about that service provider. As fully disclosed on our website, Angie’s List allows providers who have earned an overall “A” or “B” rating to advertise in the form of exclusive discounts available to our members. Such highly rated providers are placed at the top of search results, but advertising does not affect either the provider’s rating or the content of member reviews of that provider.

A copy of the Court's decision can be viewed here.

Note that a recent WISH-TV investigative report uncovered the fact that some contractors which failed to perform work for which they had been paid did not have their rating lowered despite the negative reviews. Angie Hicks blamed the issue on a problem with their software, which she assured WISH-TV was being corrected by an update to it.