Yelp: We Don’t Extort Small Businesses

    May 28, 2013
    Chris Crum

Yelp has been accused of extorting businesses by burying positive reviews for businesses who won’t advertise with them, and surfacing those reviews if they do advertise. The company staunchly denies that this is happening, but there have been multiple reports and lawsuits alleging that this has been going on.

Do you think Yelp is extorting businesses or are businesses allegations simply false? Have you had negative experiences with Yelp? Let us know in the comments.

This is not a new story. Businesses have been accusing Yelp of extortion for quite some time. Back in September, for example, a restaurant in Connecticut told a local news station that Yelp had been taking down their positive reviews because they refused to buy advertising. Here’s that report:

WFSB Channel 3

Fast forward to this week, and similar stories are appearing. Here’s a report from Brook Silva-Braga at The Washington Post:

“A lot of business owners say what Yelp is really doing is extorting them for advertising money,” says Silva-Braga.

The piece discusses a business who lost all of its customers, and attributed this to a one-star rating and bad reviews on Yelp. Interestingly, it claims deals services like Groupon and LivingSocial will no longer work with the business either, due to the poor rating.

“I signed a contract with Groupon about a month ago to run a deal, and they’re not running a deal because of the reviews,” the business owner says in the interview.

Silva-Braga says in the piece that many business owners say Yelp wields its power unfairly. He goes on to point to the paid Yelp ads for competitors that appear above actual reviews on listings for specific businesses. He notes that when he clicks on a listing for one of the paid advertisers, there are no competitor ads.

“But that’s just a small example – one Yelp doesn’t debate,” he says. “It’s something else much harder to prove that gets business owners really upset with Yelp.”

The basic story, according to the report, is that a business gets a bunch of new customers because of the reviews, Yelp reaches out to the business to advertise, then after it doesn’t advertise, the positive reviews start disappearing, and only negative or indifferent reviews stay. The other reviews appear in the filtered section, which is accessed when a user clicks and enteres a CAPTCHA.

Yelp strongly denies that any of this is going on, which the report also mentions. It even includes footage of Yelp’s VP Communications & Public Affairs, Vince Sollitto, discussing how the filtering algorithm works. The review filter, he says, does not take into account advertiser status. The report then goes on, however to showcase a business owner claiming that a Yelp salesperson said they would unfilter filtered reviews if they advertised. The business reportedly did start some “small scale” advertising, and “magically,” five or six of the filtered reviews became unfiltered. Finally, the report notes that all “evidence” of the allegations at hand are circumstantial.

Sollitto took to the Yelp blog to discuss Yelp’s side of the story further, calling out the Washington Post report and an LA Times article as stories that rehash “sensational” allegations, which he says are not, and have never been true.

Sollitto points to research from Harvard Business School and Yale professors finding no connection between advertising and Yelp’s automated filtering, though the claim in the Washington Post piece indicates there was human intervention in the automated process. He then notes that courts have “rejected the conspiracy”.

“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,” he writes.

“A simple Google search debunks the conspiracy,” he adds. “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.”

I’m not sure what that says about the possibility that reviews could be hidden on Yelp in the “filtered” section rather than actually being deleted.

Sollitto goes on to note that you can also find many non-advertisers with good ratings.

“So why does this misbelief exist?” he asks. “Ironically, it stems from Yelp’s efforts to protect consumers from those who are constantly trying to game the system. Yelp uses automated software to showcase the most helpful and reliable reviews from among the millions submitted. Those that don’t make the grade — about 20 percent — are posted to a separate ‘Filtered Review’ page. So, in trying to prevent unethical wrongdoing on Yelp, Yelp gets accused of the same.”

Earlier this month, Yelp revealed that its average monthly unique visitors grew 43% year over year to 102 million, and revenue was up 68% year-over-year. Cumulative reviews grew 42% year over year to more than 39 million.

Do you think Yelp is wronging businesses? Let us know in the comments.