People have always asked around for recommendations before they do business. After all, they work hard for their money. They want to know they're spending it in a place that will give them what they expect at a fair price. Once upon a time, they might have approached a neighbor to ask where they should eat dinner or what contractor they should hire.
These days, they just hop on the internet and read the reviews on a business before they decide if they'll patronize an establishment. A business can live or die based on its internet reviews alone.
What happens, then, when someone leaves your business a particularly nasty review on Yelp or Angie's List? If it hurts your business, are you entitled to sue?
For the most part, reviews are part of free speech -- even if they're unfair.
However, that's only true as long as the reviews are clearly someone's opinion or actual facts. If the reviewer states something untrue as a fact, it may very well rise to the level of defamation.
For example, imagine that you operate a home-cleaning service. You spent several hours cleaning a woman's house and thought that everything was fine -- until you saw her review. She posted on Yelp that you charged too much for your services and that she thought you were unprofessional and lazy.
While certainly not flattering, those are merely her opinions. You can't sue her for them. On the other hand, if she writes a false review saying that you stole the silver from the kitchen, that's a factual statement -- and a lie. Since it would likely damage your business to be labeled a thief, you would have good reason to sue for defamation to your business.
There's one more important caution for business owners who are wading into these kinds of unfamiliar waters with internet reviews: Don't retaliate with a negative review of your own. You'll gain more positive reactions by being civil to the uncivil -- and avoid potentially sinking your own defamation case. Business owners who resort to "defamation in kind" by hurling online accusations back at their unruly customers have found themselves out of luck when it comes to their defamation lawsuits.