Trustpilot Deceptive Practices Action
Trustpilot Damages LLC et al. v. Trustpilot Inc. et al., No. 21-cv-432 (SDNY)
FRANK LLP has filed a class action lawsuit against Trustpilot Inc. and Trustpilot A/S (together, “Trustpilot” or "Defendants").
This class action, filed in the United States District Court for the Southern District of New York, is brought on behalf of: the Class of all persons or entities living in the United States to whom or which, within six years before the date of the commencement (Jan. 18, 2021), Trustpilot sent one of the Auto-Enroll Emails as defined below.**
Trustpilot.com earns billions of dollars a year posting consumer reviews of businesses by claiming to offer a platform internet users can trust, because its integrity is not for sale.
The complaint alleges that Trustpilot did sell its integrity, to companies reviewed on its site. Worse, while Trustpilot promised many paying companies it would help them game the reviews system, it actually helped only a handful of high-paying, large companies do this. Meanwhile, small and medium-sized companies with tight budgets got nothing for precious dollars they spent on annual “subscriptions” for Trustpilot’s services. And when media reports blew the lid off the scheme, and subscribers were eager to cancel, Trustpilot sent them “auto-enroll” emails designed to go straight to subscribers’ junk folders so the email went unread until it was too late to cancel.
This new class action lawsuit in federal court in Manhattan seeks compensation for this group of mainly small to mid-sized companies in the U.S. The suit alleges deceptive business practices, among other violations of the law.
Founded in Denmark in 2007, Trustpilot grew exponentially by filling a hole in the online-review market. Other sites like Yelp and TripAdvisor focus on online reviews of mainly bricks-and-mortar businesses like restaurants and hotels. Trustpilot focused on online reviews of businesses which themselves operated mainly online.
Trustpilot’s website was popular, but not profitable, as its content was free. To increase revenue, Trustpilot began selling annual “subscriptions” with benefits that would purportedly help companies reviewed on Trustpilot improve their online reputations. For example, a favorable Trustpilot star-ranking for a subscribing company would be embedded as an image in Google search results about that company. Trustpilot’s revenues grew, but profits remained elusive, as Trustpilot struggled to attract subscribers, especially in the U.S.
Critics of Trustpilot long wondered how the site could maintain integrity when it relied on reviewed companies for profit. Beginning in late 2018, investigations by top British media outlets confirmed Trustpilot was selling its integrity to the highest bidders—large, wealthy companies who got help gaming the reviews system to falsely boost their online reputations. Honest, negative reviews about these preferred subscribers were removed, while fake positive reviews about them were allowed to proliferate.
In the wake of this, Google in late 2019 announced changes in its relationship with Trustpilot—most painful for the majority of subscribers, restrictions on visibility of positive Trustpilot scores within search results. For countless honest businesses struggling to simply improve their online presence—an essential goal of any modern company—this erased what little value their Trustpilot subscriptions had.
The complaint alleges that Trustpilot prevented subscribers from ending their money-wasting connection to Trustpilot by sending renewal emails from two web domains that it owns. The primary Trustpilot domain, “Trustpilot.com,” is Trustpilot’s highly visible face. In addition to hosting the site, one of the internet’s most popular, Trustpilot uses this domain for nearly every email it ever sends, from addresses ending in “@trustpilot.com.”
But Trustpilot also owns “Trustpilot.net,” which hosts no website and is essentially a zombie domain. No Trustpilot subscriber would recognize an email from an address with “@trustpilot.net”—even if their email application didn’t block it as junk immediately. Yet, when Trustpilot faced a wave of subscriber cancellations on the back of its integrity scandal, it used “@trustpilot.net” addresses to send subscribers emails automatically re-enrolling them for another year’s subscription (and at higher rate). Subscribers did not see these “Auto-Enroll Emails” originating from the zombie “Trustpilot.net” domain, and did not realize until seeing a new charge on their credit account that Trustpilot had secretly locked them in for yet another year. If they did complain, Trustpilot said it was too late to cancel.
The complaint further alleges that the scheme worked out well for Trustpilot. It has recently crowned itself a “unicorn”—an online startup valued at $1 billion or more, a distinction relatively few European firms achieve. The complaint alleges that this valuation was largely supported by gains in revenues from U.S. subscribers deceived into new subscriptions they did not want and could not get out of. Building on its unicorn status, Trustpilot has begun plans to sell shares in an initial public offering, securing its financial future.
If you have any questions about this lawsuit, or wish to discuss your rights or interests with respect to it, please contact us.
Gregory A. Frank
** Excluded from the Class are Defendants, and their officers, directors, management, employees, subsidiaries, and affiliates, and all federal governmental entities. Certain Sub-Classes are set forth in the Complaint in reflection of various States’ law.