Review aggregation service TrustPilot is facing a federal class action lawsuit for deceptive business practices shortly after it received a valuation of $1.49 billion following its initial public stock offering on Tuesday.
The Danish company was created in 2007 and is designed to help small and large businesses track consumer opinion about their business for a subscription. TrustPilot allows users to leave reviews for free, then sells the data back to the businesses for their marketing purposes.
The class action complaint was filed on January 18 2021 and alleges that TrustPilot knowingly sent emails about subscription renewals to clients that were intended to end up in their junk folders. The suit alleges TrustPilot would send these emails after customers subscriptions had already renewed, making it impossible for them to ever cancel the service.
The suit also alleges that TrustPilot chose to remove negative reviews for certain businesses that were particularly wealthy in an attempt to shore up their business with the company. This resulted in unreliable review scores, prompting Google to remove TrustPoint review visibility from all their search queries.
According to the complaint, TrustPoint is in breach of good faith with its customers, has breached their contract with any company that they have done business with, and is in violation of unfair business practice law in 15 US states. The complaint asks that TrustPilot pay all of the plaintiffs damages in an effort to prevent further misconduct. The damages will be determined as part of the trial.
The news could not come at a worse time for TrustPilot, as they launch their IPO today, with a starting valuation of 265 pence per share. The company finally managed to reach revenues of $100 million and with help from investment banks is now valued at just under $1.5 billion.
© Fourth Estate® — All Rights Reserved.
This material may not be published, broadcast, rewritten or redistributed.