How Online Reviews are Affecting Local Businesses - Is Yelp Committing Extortion?

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According to the East Bay Express, a Bay Area weekly newspaper, Stoppelman’s response to allegations such as Pierre’s are too convenient, and what’s going on at Yelp is actually much more troublesome. Early last year the paper published an explosive piece , which asserts that Yelp customer service representatives routinely call business owners and attempt to persuade them to pay $299 a month in exchange for Yelp’s service of removing all negative ads from their business’s listing.

According to the article, entitled “Yelp and the Business of Extortion 2.0,” some business owners were getting calls almost daily from Yelp. One restaurateur, who chose to remain anonymous out of fear of Yelp further damaging the reputation of his business, said Yelp employees would call informing him of how many visitors he’d had to his site in the past month and then would offer to remove some of the bad reviews that had recently popped up for a fee of $299 a month.

According to the Bay Area restaurateur, something seemed shady about his restaurant's negative reviews. "When you do get a call from Yelp, and you go to the site, it looks like they have been moved," he said. "You don't know if they happen to be at the top legitimately or if the rep moved them to the top. You don't even know if this is someone who legitimately doesn't like your restaurant. ... Almost all the time when they call you, the bad ones will be at the top."

This was something that was echoed by dozens of business owners the paper interviewed, with six saying Yelp sales representatives promised to move or remove bad reviews if they advertised on the site. Other business owners claimed that positive reviews disappeared and negative ones almost magically appeared just after they declined to advertise on the site.

According to the article, “because they were often asked to advertise soon after receiving negative reviews, many of these business owners believe Yelp employees use such reviews as sales leads. Several even suspect Yelp employees of writing them.” Yelp admits to paying some employees to write reviews of businesses that are solicited for advertising and has admitted to one case in which a business owner who refused to advertise received a negative review from a Yelp employee, but beyond that the company denies all allegations brought forth in the East Bay Express article, though these aren’t new allegations by any means.

In fact, Yelp has received similar allegations so frequently that it’s even been addressed in the company’s Frequently Asked Questions page, and according to Chief Operating Officer Geoff Donaker, “Advertisers and sales representatives don't have the ability to move or remove negative reviews." He notes that “We wouldn't be in business very long if we started duping customers.”

Despite their denial, many business owners aren’t giving up and have even filed lawsuits against Yelp. Several small businesses recently filed a class action lawsuit accusing the site of extortion. According to the New York Times, “The suit claims that Yelp will remove negative reviews and reinstate positive reviews for paying advertisers and says that business listings on Yelp.com are in fact biased in favor of businesses that buy Yelp advertising.”

In order to make some of the bad publicity go away and to alleviate some of the concerns these business owners have, the company has decided to make two significant changes as of April of this year. According to the Times, from now on “readers will be able to click on a link to see reviews that Yelp filtered out and advertisers on Yelp will no longer be able to post their favorite review at the top of the page.” Whether or not this will help Yelp and its soiled reputation remains to be seen.

The Trend Continues

Yelp certainly isn’t the first user-generated review site, and it won’t be the last. Chances are that when people are allowed to write reviews completely anonymously online, trouble will follow, as it has for Yelp.

The increasingly popular Foursquare game and phone app now enables users to review and recommend local establishments and sites such as Angie's List, which enables its users to review and find doctors, search for a contractor, and locate other service professionals are part of an increasing number of review sites that give the power to the people. Let’s just hope that power doesn’t get abused.

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