Businesses Continue To Bash Yelp As Investor Bets It’ll Be Dead In 2 Years

By: Chris Crum - August 25, 2013

It hasn’t been a great week of PR for Yelp. While the company made its own news by expanding into Brazil, much of the media coverage has been about businesses bashing the company and its alleged practices and even included an angel investor betting $5,000 that Yelp will be out of business in two years based on a “flawed” business model. And that made Fast Company. Ouch.

Will Yelp survive? Are its opponents off base? Is Yelp being misrepresented in the media? Or are these concerns and complaints valid? Share your thoughts.

For the duration of 2013, Yelp has been taking the Yelp Town Hall tour around to various cities around the nation. After a number of them, the company took to its blog to discuss what happens at them.

In April, Darnell from Yelp’s Business Outreach team wrote, “In the last four months, we visited nine major metros, from Honolulu to Philadelphia, with hundreds of local businesses participating in our interactive workshops designed to answer the burning question, ‘What do I need to know to thrive in the world of online reviews?’ Each event includes a live discussion with business owners who successfully use Yelp to market themselves, Yelp Elites (who are some of the most prolific reviewers in their local community) and members of Yelp’s Business Outreach team. Our goal is to create an open forum in each city we visit where business owners can network and learn directly from their peers.”

“According to attendees we surveyed, we’re achieving our goal with 72% of respondents saying they learned 1-3 new skills to manage their business listing and reputation on Yelp,” he added. “Beyond that, we asked what were the most useful takeaways from the events. 46% of attendees surveyed said that the tips on responding to negative reviews were useful, while 41% said that the discussion around Yelp’s automated review filter was useful.”

But from the sound of it, the events haven’t all been quite so rosy.

This week, Yelp held one of the events in Los Angeles, and according a report from the LA Times, business owners had a lot of outrage to share with the company. Here’s an excerpt:

Many slammed the company for allowing reviewers to post inflammatory comments — one restaurant manager said she cried for three days after a Yelper wrote that her restaurant was filled with Nazis. Others said they had been subjected to aggressive advertising calls from Yelp.

Vintage clothing shop owner Reiko Roberts said the advertising pressure amounted to extortion. She said that when she declined to buy ads, “the lower reviews go to the top and the higher reviews go to the bottom.”

This “extortion” claim has been a recurring theme throughout media coverage of Yelp and business owner opinion. A few months back, it got so bad that the company had to take to its blog to refute such accusations, but it didn’t do a lot to make such talk go away. A lot of businesses don’t seem to be buying it. The subject even came up on a recent episode of The People’s Court.

Judge Milian’s repsonse was, “Wow! I don’t know if what you’re saying is accurate or not, but if it is, it’s pretty outrageous,” later adding that she was “horrified.”

The LA Times report even quotes one business owner, who said that advertising on Yelp had helped his business, but still said we was skeptical of Yelp’s stance that advertising has no affect on review placement. It’s interesting that even business owners finding success on Yelp are saying such things.

CEO Jeremy Stoppelman actually talked about this briefly in an interview with AdWeek earlier this week. He brought it up when asked about his worst decision of the past decade.

“Early on, we analyzed data and looked for suspicious review patterns in order to filter out [phony] reviews,” he said. “That just fueled a lot of conspiracy theories like, ‘Oh, you’re selling advertising and my reviews disappeared so therefore if I would have paid you, you would have [kept] my reviews up. But now they’re gone.’ We ultimately compromised by setting aside the filtered reviews in an area that’s visible on the site. In retrospect, we should’ve been more willing to compromise [earlier] on that with hopes that more people would understand what we are trying to do.”

Stoppelman also defended Yelp on Charlie Rose, saying this about its rating system: “”I find it accurate. If you go and find, say, a four-and-a-half star business in New York [City] that has 70-plus reviews, you’re pretty much guaranteed a good experience.”

Last week, the company expanded its consumer alerts, designed to let people know about fake user reviews, openly talking about users’ ability to trust the reviews they see on sites.

Even since then, Yelp has launched the ability for users to leave reviews from their mobile devices, which is sure to greatly increase the frequency of reviews, as people (particularly those who have negative experiences) can easily whip out their phone while still at a business’ location, with their thoughts fresh in their minds, and leave a review.

“We’ve had it out to [a limited number of] hard-core users for a couple weeks, and the data back so far has been pretty sweet,” Stoppelman told AdWeek, when asked about mobile reviews contributing to a spike in Yelp activity.

Whatever your feeling of Yelp and its reviews, you can expect that a lot more of them will be pouring in.

This week, Peter Shankman, a well-known angel investor put out a public Facebook post (which he also promoted) making a bet that Yelp will be out of business in two years. If he loses, he’ll put five grand towards charity.

He went on to tell Fast Company, “it’ll die very, very hard. If both Facebook and Google both let me type in ‘Italian Food’ and the first thing I see are three reviews from people I trust, why the f*** would I use Yelp?”

Yelp certainly has some ideas beyond reviews from strangers. The company has been adding ecommerce and business transaction features, and we expect there are more to come.

Despite all the negative publicity the company has had to deal with, it seems to be in pretty good shape, and Shankman might find himself paying up in a couple years. Yelp beat Wall Street expectations with its quarterly earnings, announcing that reviews were up 41% year-over-year, and average monthly visitors were up 38%. Active local business accounts grew 62%. Oh, and revenue was up 69%.

Do you think Yelp is in any danger of not being around in two years? Let us know in the comments.

Image: Yelp

Chris Crum

About the Author

Chris CrumChris Crum has been a part of the WebProNews team and the iEntry Network of B2B Publications since 2003. Follow Chris on Twitter, on StumbleUpon, on Pinterest and/or on Google: +Chris Crum.

View all posts by Chris Crum
  • Jack Lombardi

    I’ve been doing Yelp reputation management for 2 years. In those two years I’ve done numerous case studies and I’ve never once seen Yelp manipulate reviews, ranking or anything scatchy.

    I personally think business owners feel powerless on the web and with Yelp being a business reputation website they’re scared sh*tless of it.

    We are opening up locations all over the world because of Yelp and 90% of our new business is from Yelp along with or cleints.
    Their advertisement works, but you have to know how to set your business up and when to pull the trigger.

    My best advice, manage the prospect’s expectations with a complete profile. Oh, and not this short answer, dry, over selling stuff I keep seeing in the Specialty area of the business profile .

    Sorry for any typos, Android really needs to get their keypads straighten out.

    • Marc T.

      Mmm… I looked up one of your clients: Google – “Jack Desmonds Chicago Yelp” and saw it has 2 1/2 stars for 12 reviews. Nice reputation management. I also noticed that a majority of the 5 star reviews were filtered. Mmm.. also at about the time you did his website a Jack L. review appeared (see filtered reviews) that Yelp deleted for violation of its policies. Quite a coincidence. Strange that a reputation manager who can’t post positive reviews for his own clients and all the recent positive reviews get filtered would defend Yelp as being objective.

  • Lauran Childs

    I’m very surprised at hearing this news, wondering if it’s a sabotage job? Why would Yelp get this reaction and not Angie’s list/

    Would help if there were more information on the issue immediately on the first page of the article instead of a scrullilous headline people will remember.

    • Jon Allen

      Probably because Angies do a lot more to verify the ID of people who leave reviews.


    Personally, I do not enlist sites as Yelp or any other to promote my business on a ratings scale, and have not advertised in over eleven years. Yet I still have 20-30 (or more) different vehicles in my storage yard awaiting repair at any given time. Having come in as the “New Kid On The Block” in 2000, I’ve watched my well established preexisting competitors fold since my arrival. The bottom line? Quality work, customer interaction and reasonable pricing equates to; “Word of Mouth!” As for the ranking order of reviews, they should simply be posted in the order of which they are posted. Period!

    • Jon Allen

      Robert, whilst I agree with you about quality and word of mouth, right now you are depending on your existing customers which is fine for as long as it lasts.

      Yet the lifeblood of any business is NEW business.

      The sad fact is that your online reputation is going to happen with or without you, it is the new word of mouth for the 21st century.

      A competitor or anyone could post bad reviews about your business and by the time you find out the damage could have been done.

      Yet if you have a tracking solution then we get notified as soon as a review is posted, that review can be challenged, the IP address checked and it can often be removed. But come to us a year down the road and we are in a much weaker position because the IP logs are gone.

      • Eric Hoslterman

        Actually, Jon, the lifeblood of any business is REPEAT business. Customer retention is what keeps a business going. Who cares if I have 5 new customers a month if ZERO return. Reviews are an essential component in creating client loyalty, but good business dealings beget those reviews.

        • Jon Allen

          Well it stands to reason that in order to get repeat business you have to have NEW business in the first place. This is not a chicken and egg situation. Actually the best thing you can do is get referrals from all those NEW customers so you get even more NEW customers and they all become REPEAT customers too.

  • Paul

    I think the reality for all these review sites is that once the big search engines and facebook integrate reviews effectively into their own system, review websites will be as outdated as the yellowpages websites.

    • Jon Allen

      Paul, it is because of online that Yellowpages is outdated, people no longer use them.

      Facebook is using its own form of reputation with graph search which allows people say looking for an Italian Restaurant in Texas to find ones that their friends like, problem is as much as Facebook would like it, people do not use Facebook to search…YET.

      Google already consolidates reviews from 3rd parties, we track over 30 mainstream sites and will monitor any specialist site if required by our client.

      The same issue arises for social networks though, it is easy for people to create fake accounts and post bad reviews.

      Clearly the viability of YELP is going to be about the income it generates, if people find they cannot trust the reviews there they will stop using it and if that traffic falls they are going to find it very difficult to justify an ad spend.

      The biggest issue they face is the Gorilla that makes $30bn of profit a year. Google has put reputation at the core of search for local businesses. We even find it affects the rankings, so why would a user go visit a 3rd party site like Yelp when all the reputation is right there in the listings, if a user moves the mouse over a listing the reputation summary comes up on the right.

      Google is not going out of business anytime soon!

  • Mike

    It should be out of business but probably won’t. There is an ignorant group of consumers who do not have any clue how manipulative and inaccurate the reviews are. Their “secret algo” is a joke. If you carefully read the reviews many are so obviously fake it’s obvious. The magical disappearing of good reviews makes Yelp the authority on what consumers should read? They should go under, in my opinion it is nothing but a boiler room ad selling scheme.

  • Jon Allen

    I work in reputation management helping companies trying to repair their online reputation after some vexatious employee, competitor or customer leaves unfair reviews.

    I also work with a network of other people in this industry and we have consistent anecdotal reports of Yelp refusing to engage with victims and even to suggest that if the Yelp Victim were to advertise with Yelp they may be able to do something.

    The fact that they have the “filtered” reviews is also unfair, on one hand you have good reviews being hidden and on the other hand this may be how Yelp may be able to “do something”.

    I suspect that the Yelp Angel had access to the facts of the matter.

    We NEVER post fake reviews, we encourage our clients to put reputation at the core of their business because these days you are just one customer away from a bad reputation.

    We have so many cases of employees leaving bad reviews, how is that a fair reflection of a business and Yelp does NOTHING when it is pointed out.

    Then we have competitors leaving bad reviews, we can spot a fake review very easily but again, Yelp will rarely engage (usually involving our lawyers). The fact that they benefit from bad reviews is something the FTC should be investigating.

    I would like to see an ID check required on every review, people have to be prepared to be identified and open up the risk of litigation if they lie or deceive.

    A few weeks ago I came across a bad review, a consumer was blaming a company for not allowing them to pull out of a transaction on eBay. They said that they were in special forces and had been called to serve abroad so would be unable to use the item.

    The truth of the matter was that they had long left the military and were now a serving police officer. They actually sold the item on their facebook page.

    Of course Yelp is not the only company doing this, people have no idea how much a bad online reputation can damage their business with 72% of people trusting online reviews. We monitor and track our clients reputation, we teach them how to respond (never engage the trolls) and we provide training to help them make every staff member realize that everything they do affects the reputation of the company.

    Google is putting reputation at the heart of the reviews, they recently dumped the confusing Zagat rating and reverted back to the stars.

    The new caroussel view (rolling out now) used for hospitality industry also shows the stars (just google a restaurant in your city to see).

    Businesses need to consider the lifetime value of a single customer to calculate how much losing just one customer. We have a number of patent pending tools that help monitor and identify our clients web presence, including the one at which shows what people are saying about your business.

  • Michele

    Yelp allows an unfair, biased platform to ANYONE (qualified or not) to express anything (fact or fiction) about any company. These statements are slanted, harmful, and slanderous. Further, Yelp claims that you can rebut the statement. Your rebuttal is hidden and only one or two sentences are shown. The ‘customer’ can post any type of headline, and the rebuttal cannot. In order to approach YELP, you have to email back and forth. They are the judge and jury and their opinion stands. And finally, when others post favorable opinions, often times, they are hidden on a page that is not easily accessible. I have many favorable comments for my business. One yelp has lied about many things. You cannot delete your account either. You need their ‘permission’ to do so. My company has an extremely high rating, and I would like to see Yelp go.

  • Marc T.

    I have three issues with Yelp. These are promoting competitors ads on nonadvertiser’s webpages, their alliance with ALEC and third, if you read through this comment, I will give you direct evidence that Yelp does manipulate access to negative reviews.

    1). You don’t have a choice to have a Yelp page. Either Yelp adds you or a consumer may add you and Yelp will refuse to remove your page even if you request. The search engine power of Yelp outranks any single small business and their listing appears first in search engine results. When a consumer searches for a business by name, the Yelp result comes up first. A business may think this is good, but on a Yelp page where the business does not advertise appear ads for their competitors. For example if a business is the most popular pizza restaurant, their results comes up first because people search for it by name, but on that business’s page are ads for pizza places that may have otherwise been on page 20 of Google search results because they pay Yelp for ads. Yelp uses the popularity and good reputation of businesses that do not need their help and generates revenue from competing businesses. Yelp does not compensate a business with profit sharing from the ads it runs on Yelp pages and benefits from business names it lists without the owner’s permission. Copyright violation and use of a company name for profit without the permission of the owner will probably be the basis of a lawsuit which will bring Yelp down.

    2). Yelp Alliance with ALEC, the reactionary right-wing group allied with the Koch brothers and the Tea Party, which writes most of the voter-suppression legislation being rammed through in many States. ALEC is responsible for voter ID legislation which excluded 5 million people from voting, “Stand your Ground” laws that were the foundation for the defense in the George Zimmerman/Trayvon Martin case and other laws to use public money to privatize schools. Read section 3 for how Yelp dealt with the negative publicity.

    3). If you read this, you will see that Yelp can manipulate the outcome of user reviews. Using the ALEC case as an example, check out the following: Go to the review of Yelp page at

    3,000 negative reviews were placed on yelp this week and many were filtered in spite of the fact that they were from legitimate users and they did not conflict with Yelp policies. Scroll to the bottom of the page and look at the number of filtered reviews (5,136) as of 8/25/13 it was 3,296 earlier in the week. Click on the word filtered, enter the capcha code and see the results (tell me the results are an accident).

    Next, go the Alex Yelp page here.

    On 8/23 there were 769 negative reviews and 100% of them were filtered, on 8/25 the top of the page shows 386 negative reviews, 100% filtered. In addition, you can not view any of the negative reviews. So all reviews were filtered and in 3 days nearly 400 reviews were deleted.

    One way of restricting freedom of speech is to restrict access. Try this exercise and see if you don’t agree. Go to any page and put these entries in the search field.

    Alec (name)
    Washington, DC 20036

    and view the results. The search results exclude the Alec Yelp page for Alec in Washington, DC. So if you wanted to place a negative review on the Alec Yelp page, the Yelp search option does not allow you to even find it. If Yelp can filter reviews of it’s own page and the pages of it’s alliances as well as change the search results for finding a business, then the question of review management objectivity comes into question.

    If you feel that Yelp is deceiving the public, place this image on your Yelp, Facebook or webpage.

    • Sandy Smith

      Gee, don’t hold back Marc, tell us what your real slanted political views are!

  • VizFactimus Maximus

    I always thought yelp was trash as I ran across it on a few occasions while surfing the webs.

    The idea that they would have the audacity to think they couldn’t be challenged in the serps is beyond wisdom by far.

    Even before seeing this article, I never considered listing my business or my clients in Yelp. I always felt it would tarnish your image.

  • Peter

    Here is proof that Yelp is filtering out positive reviews. We have a filtered 5 star review from a client who has bought a Yelp deal. This is a person who has given Yelp all their personal information and then allowed Yelp to charge their credit card. How could this type of review being anything but honest. But still Yelp has chosen to filter this out. Either they are lying or their filter is so broken they should stop using it.



  • John

    The only businesses that don’t like reviews are the ones that don’t want to provide good service. I go by reviews, I want to know from other people if there are any problems with a company, if a company is no good then I want to know who to stay away from.

    Yelp and other reviews aren’t going anywhere and I don’t think any buyer wants to see review sites go away, if no review sites then us consumers will just get ripped off more.

    Review sites help a company to care about the customer and if you don’t care about the customer, you will get bad reviews and you shouldn’t be in business.

    • Marc T.

      I couldn’t agree more; businesses should earn their reviews. Conversely, Yelp readers should also know that star ratings are sometimes not what they seem. Yelp often filters out first time reviewers (and they don’t contribute to the star rating), particularly if the review is 5 stars. So there are Yelp pages with 10 bad reviews shown and 20 good reviews hidden. Your statement also doesn’t address bad Yelpers who say, “If you don’t give me something, I am going trash your business.” Very commonly, businesses get bad reviews from competitors. This week I saw a reviewer give 1 star to every business in a single category (18 businesses). Do you think that person bought insurance from 18 businesses? The reviews were not filtered by Yelp and so when you visited one of the insurance companies you would think they were doing bad things. Lastly, what about reviewers who have never even been into a business that review it? Recently, there was a bad review of a business here by a women who showed up a week before the grand opening and was pissed she made the trip and the business hadn’t opened up yet.

  • Chris Clark

    My results from Yelp’s advertising program have been less than desirable. Although the sales rep never directly mislead me, I feel the program is less than what was presented.

  • Lorel

    Yelp does manipulate reviews. It hid 4 positive reviews from clients of my site just because people searched for my domain and left a review. If people search for my business focus & city, then the reviews aren’t hidden. I’m not using Yelp any more as the reviews can’t be trusted.

  • Kevin

    Never use Yelp dont like their attitude.

    I am still trying to work out with some of these companies why they think its ok not to have customer service. Some companies mostly rely on volunteers to the Help desk looking for a little bit of Google love.

  • Jucator

    Interesting article, I liked

  • Eve

    I like DinnerWire better.

  • Larry Kelp

    My business was effected that way. When we get good reviews, Yelp moves them to the hidden “filtered” areas. I had sales reps calling me and angry if I did not buy an ad on yelp. This was a while ago, but every since, anytime I get a good yelp review, it gets filtered.

  • Sarkis

    Yelp was not the best resource for businesses from the begining where it caused to effect a business of a great reputation of over 30 years be turned down by the negative comment of a young lady who never even been a customer of my store, besides, the legitomacy of such company stops right where you need to discuss a missunderstanding and they have no employees to dicuss matters by phone calls.At last I think it may be that YELP hires people to effect on businesses, they’re not wise with their decisions for knowing in fact that some of the most reputable businesses that are known in communities are turned down by yelp’s reports.Yelp can not beat the word of mouth advertisng.

  • J

    Why can’t we kill off a bad thing NOW?!? Why do we have to wait two years?!?

  • Tom

    We have been in business for 44 years, we have over 960 dealer/installers and have enjoyed a stellar reputation.
    Several years ago one of our installers (Not part of our company) had a client for a solar install on their second home. The husband wanted the solar. During the install they got divorced, and the wife shut down the job and demanded all the mony spent be returned, including shipping. The installer who paid in advance for the equipment didn’t have it to return as it was already spent.
    After she got nowhere whth the small installer, she tried to sue us (unsucessfully). I’m not even sure if we were the only supplier
    We’re always fair and honest so, to help out the poor installer we agreed to refund him her money less the shipping cost incurred to ship the equipment to her from New Mexico to California.
    She then went on yelp and lied saying we ripped her off and would not return anything. She was returned all the equipment cost.
    Now bear in mind she wasn’t even our customer, and we had no business relationship with her at all, but she pretended she did on Yelp and they allowed it with no proof whatsoever.
    If you look us up on Yelp (The Solar Biz) her’s is the only posting visable.
    We have had a number of good reviews from legiitmate customers on Yelp but ALL, yes ALL are hidden. This is not fair and impartial screening.
    But as I read about these guys it seems to be the norm.
    And this norm is outragous.Portraying them selves as fair and inpartial? Why are all these businesses mad at them?
    By thier fruits you will know them.

  • Localwebpartner

    Looks like business owners start to wake up.

    If Yelp is tweaking the results is something nobody can proof, but the evidences speak for themselves.

    This is a multi million dollar business and they have to fuel their funnel with new revenue each month. There is NO LAW which obey them to treat and display all reviews the way they are. It’s their website, their property, their rules.

    Fair? Off course not as consumers mistakenly think that they see the real picture of a business, what is unfortunately not the case.

    I draw a line to Google’s organic rankings after the Panda and Penguin updates. Are those first page listings make sense to you? In many cases not but check out the rankings of an Adwords Advertiser against the one which do not advertise? Google rules their website and not the search feature users.

    People many times forget that those sites are BUSINESSES, online to make money for their owners.

    Those directories are not made to be totally open, honest, showing all the way it is etc…their business model is designed to get the most out of a customer (business), even if they have to be aggressive in their methods and manipulate the review section for that business owners start to get worried and go look out for help at Yelp (kinda rimes), obviously a help which will be charged.

    Yelp, as a high ranking directory, has a very powerful position to attract new businesses into their listings each and every day automatically.

    What those businesses don’t understand is that their web presence and REPUTATION MANAGEMENT shouldn’t stop at a Yelp listing.

    Aside your own company website with a testimonial/review section, you should have a maintained profile at Facebook, Google+, Twitter, Pinterest and maybe at some other sites like Tumblr etc, depending on your business and location. All has to make sense or you spend money for no results.

    Yelp rankings can be beaten in Google when you have a good marketing strategy in place, so when a consumer searches for your business they will find all kind of sites with reviews, including your site.

    When they find a lot of good reviews on different sites, but only bad ones at Yelp, consumers will understand that something is wrong.

    Lastly, if your business depends on a great reputation (which doesn’t)like a restaurant, then you should hire someone to do reputation management.

    That doesn’t mean to fake reviews. It means to monitor what’s going on online, to get in touch with unhappy clients looking to settle claims, and to get honest, positive reviews from satisfied clients which, once published online, will take over the bad ones.

    In my agency Local Web Partner LLC, I offer reputation management only after analyzing why a business has been hit by bad reviews. Some deserve it.

    Guido Mueller

  • Jhosehp

    First time I saw Yelp I found it really interesting. For me it was an innovative platform and a very useful tool for merchants to market their businesses. However, after I read few articles, including this one, I noticed the “mafia” business they could be doing with the platform. There are lots of cases that claim they have been threatened by Yelp, making them pay to maintain their positive reviews and on the other side Yelp claim they never do that. Who to believe? I am just sure that their system is open to do that and they will never admit what they are really doing. Just relocating reviews: positive to the top if you pay or negative if you dont is a very dirty move.
    I dont know what kind of super algorithm they use to filter reviews and comments but I can easily talk bull sh..t about a mercahnt just because I am the competition or simply I dont like them. Plus their business model relies on reviews, thats why it makes sense that they manipulate reviews to make money.

    I am working on a new location-based product discovery app in which user could find great products and good deals available in the market, all posted by the community. It will be very useful for merchants since they will have their products on a single platform. No reviews, no bad reputation, if you have it you will be found by an interested consumer. Check it out and sign up on our site

  • Aaron

    Loved the article it’s spot on.. I have the same experience as others I’ve received the advertisement calls as well from yelp and noticed all my good company reviews have been “filtered” out..only the few bad ones appear. I think by only showing negative reviews they have leverage against these businesses to encourage users to use yelp to help build up their reviews which only benefits yelp by creating traffic for their site.. In my opinion it’s incredibly deceptive..I hope they go out of business they are not an accurate vehicle to represent products and services but a scheme that is deceptive and contrived.. Just my opinion

  • Robert

    I am Business owner and a yelp user. I believe that yelp has created a very perfect site for extortion by many consumers. The yelp business model is very strange and there are many businesses that some of their Good reviews get filtered and the bad reviews stay on.
    However there are many businesses that have their relative and or friends write reviews and non get filtered.

    My person business experience has been such that I have been extorted several times by consumers.

    I only hope that either yelp model changes allow for a true mediation process to filter out the reviews by ill informed or ill intention consumers.

    Or better I wish their entire model would fail and their CEO placed in Jail for Facilitating extortion.