More Unproven Yelp ‘Extortion’ Accusations Publicized

    January 24, 2014
    Chris Crum

The story has been going on for quite some time. Businesses accuse Yelp of “extortion” or holding their positive reviews hostage unless they spend advertising money, and Yelp denies it vehemently, citing a lack of evidence and research appearing to contradict it.

But the story isn’t going away, as more accusations make their way to the public eye.

Has Yelp sufficiently proven that such accusations are unsubstantiated? Tell us what you think.

Last week, the Seattle Times ran a guest column by Terry Thomas, a small business owner who has taught business ethics at Seattle University and the University of Washington.

“Shortly after our company began receiving positive reviews on Yelp, an energetic Yelp salesman called me, congratulating me on our company’s online reviews, and offering to help boost our Internet presence with one of several of Yelp’s marketing programs,” he wrote. “Once I was finally able to get him to answer my question about what the price would be, I was staggered: $8,400 per year for their midlevel program. I politely declined.”

After that, Thomas claimed his positive reviews began to be filtered or “buried deep” within the site and “difficult to access.” Only positive reviews had been moved, he said. The more negative reviews moved up the page and were featured more prominently.

It’s pretty much the same story we’ve been hearing for a long time. One business owner even shared it with Judge Milian on The People’s Court:

Last May, Yelp defended itself after similar accusations from various business owners were reported by The Washington Post and the Los Angeles Times.

“Some business owners have even gone so far as to take these accusations to court, but their claims keep getting dismissed for lack of any fact-based evidence,” blogged Yelp’s VP Communications & Public Affairs, Vince Sollitto, at the time.

He pointed to research finding no connection between advertising and Yelp’s automated filtering.

With the data set employed, a Harvard Business School study found that “none of the advertise interaction effects are statistically significant,” and that “neither 1- nor 5-star reviews were significantly more or less likely to be filtered for businesses that were advertising on Yelp at the time we collected our dataset.”

It went on to conclude, “Yelp’s current implementation of the filtering algorithm does not treat advertisers’ reviews in a manner different to non-advertisers’ reviews. While we have no direct knowledge of how Yelp’s filtering algorithm works, the lack of filtering biases associated with advertising increases our confidence in using filtered reviews as an unbiased, albeit imperfect, proxy for fake reviews.”

You can find the report in its entirety here. Find section 3.4 for more details on the methodology.

“A simple Google search debunks the conspiracy,” Sollitto wrote. “Want to see if businesses that advertise on Yelp really do get ‘special treatment?’ Feel free to do your own version of a simple Google test like this [ ‘Yelp sponsor’ AND ‘rude staff’] by inserting your own negative phrases in the last set of quotation marks. The words ‘Yelp Sponsor’ only appear on pages of advertisers, which begs the question: if these Yelp advertisers get a special ‘Delete’ button for negative reviews, why in the world aren’t they using it? (Hint: because it doesn’t exist.) Nor is there any rational incentive for a Yelp sales team member to jeopardize his or her career by pitching a product that can’t be delivered because it doesn’t exist.”

Thomas says he’s not buying Yelp’s defense, and notes that many other small business owners who have filed a class-action lawsuit against the company don’t either. The case was dismissed, but is awaiting a decision in appeals court.

His article points to an NBC report from November about a dentist who claimed his negative reviews had been removed when he paid to advertise with the company, but reappeared when he told the company he no longer wanted to advertise.

Following Thomas’ article, The Seattle Times posted a letter to the editor from someone named Nete Olsen, who claimed, “I’ve also been extorted by the online reviews site,” and that the article “puts into words the exact experience that our business has gone through with the online review website.”

This week, the Times published another letter to the editor from Sollitto saying that both Thomas’ piece and Olsen’s letter “rehash a conspiracy theory that lacks evidence (see: Woozle effect).” He noted the Harvard study again.

“Yelp does not extort small businesses,” he continued. “We have been transparent with the fact that we do not recommend every review that is submitted. Why might a review not be recommended? It might be a fake, an unhelpful rant or rave, a review that the business owner asked a customer to write, or, simply, a review that was posted by someone we don’t know much about.”

“Let’s spend a moment on that last one,” he added. “We feel the most useful reviews come from active members of the Yelp community — those who regularly return to the site to share their opinions, who engage with other members of the community and share more information about themselves. After all, whose opinion would you trust more: a friend who you know is an expert in that given area, or a faceless stranger just shouting out a drive-by suggestion?”

Jeremy Stoppelman

Image via Jeremy Stoppelman (Twitter)

Yelp CEO Jeremy Stoppelman addressed the topic in a reddit AMA in November, saying, “Despite the ‘Yelp extorts’ conspiracy meme, there’s never been a shred of actual ‘smoking gun’ evidence (phone call recording, email, etc.) to back up the claims.”

As far as we know, he’s right. We’ve not seen any real hard evidence. Still, the accusations continue to fly, and businesses even go to Yelp events to voice their frustration.

Yelp and the U.S. Small Business Administration (SBA) have a new online reviews initiative, which will see even more events in various cities throughout the country this year, leading up to Small Business Week in May. We’d imagine that Yelp will face a few more unhappy businesses.

In a couple weeks, Yelp will release its Q4 and full year 2013 financial results, and will no doubt provide some stats on reviews and users. On the last one, they announced a 68% year-over-year increase in revenue and 42% year-over-year growth in cumulative reviews.

The extortion accusations are only one of the controversies Yelp continues to face. It also continues to battle fake reviews with “sting operations.” The company recently revealed that it has caught nearly 300 businesses engaging in fake reviews, resulting in their business pages displaying Yelp’s consumer alert messages.

Do you believe the “extortion meme” is a baseless conspiracy theory or do you think there’s a legitimate reason these accusations continue to fly? Share your thoughts in the comments.

Lead image via Yelp