Yelp: FTC Closes Investigation, Takes No Action

Chris CrumBusiness

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Yelp announced on Tuesday that the U.S. Federal Trade Commission has closed an investigation into the company's business practices without taking any action against it.

Last spring, the FTC published a letter stating that it had received over 2,000 complaints filed against Yelp since 2008. This was made available in response to a Freedom of Information Act request made by The Wall Street Journal. The news caused Yelp's stock to tank at the time.

"Yelp strives to provide trustworthy content to consumers," writes Yelp VP Communications & Public Affairs Vince Sollitto. "For this reason, businesses can’t pay to change their ratings or reviews and our salespeople don’t tell businesses otherwise. We also take aggressive steps to weed out potentially unreliable content, including through our recommendation software."

In rather unfortunate timing, we were just tipped to research from Strategy Response finding that Yelp's review filter is not very good at eliminating biased reviews that appear to violate its own conflict of interest guidelines.

Sollitto writes, "The FTC looked into our recommendation software, what we say to businesses about it, what our salespeople say about our advertising programs, and how we ensure that our employees are not able to manipulate the ratings and reviews that we display on our platform. After nearly a year of scrutiny, the FTC decided to close its investigation without taking further action. This marked the second time that the FTC had looked at our advertising practices and ended its inquiry without further action."

However, little has changed with the narrative told by business owners in Internet comments accusing Yelp of holding positive reviews hostage with advertising as the ransom. As Yelp points out time and time again (because for some reason it keeps having to do so), such allegations have never been proven, and there has never been a successful lawsuit against the company alleging such actions.

It remains Yelp's word versus that of angry business owners. It's rare that we publish an article about Yelp without getting some amount of comments talking about this.

Just before the holidays one reader commented, "I kept seeing the articles about Yelp and it's biz practices on WebProNews, but wasn't affected or sure what to think. Low and behold - Yelp reached out and asked our business to advertise with them. Once we did not, they pinned a poor review that is several months old towards the top of our page. Newer, better reviews are constantly written, yet the older, poorer one doesn't drop down."

Again, it's Yelp's word versus theirs, and we have no way of verifying the legitimacy of such a comment, but these kinds of comments have just not shown any sign of letting up. Either way, it looks like the government is on Yelp's side on this one.

The FTC did fine the company $450,000 in September for violating the Children's Online Privacy Protection Act.

Image via Yelp

Chris Crum
Chris 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.