FTC Subpoena Revelations, Thousands Of Complaints Send Yelp's Stock Price Tumbling

The Federal Trade Commission has exposed thousands of consumer complaints they've received about the company.

Yelp is facing one of its biggest challenges yet: The Federal Trade Commission says thousands of business owners have filed complaints against Yelp (PDF) between 2008 and 2014—and the company's stock dipped 12% a few hours later. In total, consumers made 2,045 complaints against Yelp to the federal government. The disclosure was made in response to an investigation by the Wall Street Journal into whether Yelp gives preferential treatment to companies who advertise on the service. The FCC disclosed that Yelp receives six federal subpoenas monthly, some of which request the names of anonymous users. It's bad news for the massive review database company—and great news for competitors like Foursquare, Facebook, and even Google's review efforts.

The WSJ story comes at a bad time for Yelp, which disclosed in its most recent annual report that the company lost more than $10 million in 2013. Late last year, Fast Company spoke with Peter Shankman, a prominent New York-based tech investor and social media consultant who made a cash bet that Yelp would go out of business within two years due to an alleged practice of making positive reviews for companies who don't pay Yelp harder to see. In a comment thread on the article, multiple Fast Company readers alleged Yelp hid positive reviews for their business after they refused to spend additional advertising money with them.

A steady stream of business owners have gone on record, including in the Los Angeles Times, claiming that Yelp threatened to display negative reviews more prominently if they didn't pay for advertising. Yelp also deals with constant posting of fake reviews by business owners or companies, a practice called "astroturfing," that have created additional controversy.

[Image: Flickr user thisisbossi]

Add New Comment

19 Comments

  • 2009.horses

    I have a small business in Canada and my summer volunteer staff placed my business on Yelp. As soon as that was done I received harassing phone calls day after day from Yelp trying to sell advertising. This went on every day on my business phone number. Finally, I tried to appeal to a particularly brusque salesman from Yelp that my business is small and doesn't have the advertising budget to afford Yelp at this time. He told me that he would make some changes to my account at Yelp and I didn't hear from them again. However, the good reviews from two students suddenly disappeared. Then three more positive reviews were written. Then a negative which was featured while the others were in the 'not recommended' section. Then another negative and really defamatory review was posted by a former customer who took the opportunity to really get low and dirty. My business is slowly evaporating because of the unethical practices of Yelp.

  • Thomas Phillip Ryan

    I am not a business owner, so my experience with Yelp is a bit different. I got ripped off by two companies and I am having to go after both of them. At the moment, one of the companies has 3 "recommended" reviews on Yelp and 61 that are "not recommended". Of course almost all of the reviews in the latter category are reviews in which the reviewer trashed the company, pointing out its wrongdoings. I am trying to contact other people who have been ripped off by the first of the two companies, but even though I am registered at yelp.com, Yelp is making it very difficult for me to do so. Obviously something is wrong when there is a huge imbalance between the two types of reviews.

    Tom

  • Allen Codie Evans

    Yelp will post very negative reviews that have not been verified and are false.. If try to have it removed there is no response from Yelp but I have had customers that have posted positive reviews and they are never posted. Its like they try and force you to pay to advertise with they. They do NOT filter the negative reviews but only filter the positive review unless you are paying them I guess. Big Scam

  • 2009.horses

    Yes that has also been my experience. I am seeking other businesses in Canada who want to start a class action claim against Yelp. So many who are trying to run a small business in this economy is fed up with that Stoppelmann CEO at Yelp. I wish that company would collapse just like they are forcing many small businesses to with their phony and like one judge said "Mafia" ways. They deserve to go bust.

  • Scott Reilly

    Yelp shuffles my positive reviews from the filter to being posted. Funny thing is they never filter my negative reviews. Some of the negative reviews I am ok with, it is the erroneous false reviews that I object to. Yelps customer service department are useless. They all give you the same scripted answer the algorithm system decides what is true and what is false. I really hope the real truth comes out in court and Yelp finally learns it's lesson.

  • Chris Barnes

    You pay Yelp to keep your closest competitors ads off your yelp page! I know they got me for 6 months at $300 a pop. I dont think they did anything good for my business!

  • 2009.horses

    Not for mine either and I didn't pay them a dime so they double-whammied my small business. Where is a list of Yelp's investors? Small businesses like mine really need to make these investors aware that things are not going to get better at Yelp. The Stoppelmann CEO was really dumb in my view not to take Google's offer. Now no one in their right mind should go near Yelp. Yelp should be called on the way to belly up Stumbleman!

  • I've been dealing with Yelp as a business owner for years. Yelp has never hinted at the possibility of manipulating reviews. I turned down their initial advertising offer years ago. I built my online reputation, received hundreds of thousands in business through them, and paid them nothing for years.

    Having said that, Yelp set themselves up for this. All reviews show for a short time. Then, if the reviewer doesn't pass muster with Yelp's filtering algorithm, the review gets filtered. Years ago my first good reviews popped up. A Yelp ad rep called. I said no. My good reviews got filtered. I was mad. Then I got more reviews. Some of them stuck. Then more and more stuck.

    Correlation is not causation. The filtering mechanism is automated. The Yelp ad reps should have waited to see if my first few reviews were going to stick before calling. Instead they jumped too quickly and made it look like my refusal to pay caused my good reviews to disappear - but it wasn't so.

  • 2009.horses

    Something sounds too good to be true in what you write. A CBC Marketplace television show just revealed how easily businesses can pay to have good reviews written. Let me tell you, I have seen how Yelp works firsthand and how corrupt they are. There is no way that any business can keep good reviews without buying into something there. You might not have bought from Yelp, but you bought from somewhere I think because who goes to Yelp and writes a bunch of reviews for the fun of it? A lot of people don't even know what Yelp is and hang out on Facebook not Yelp!

  • Jason Hanleybrown

    I run a regional business that wins awards for service. We have a terrible time with Yelp. Yelp's screening mechanism gives preference to users of Yelp that provide a lot of free content. It does not screen for whether a review is "real" or accurate. Increasingly, we see "Elite Yelpers" use their status to strong arm discounts. And, we have at this point hundreds of real reviews screened by real customers who are not "Elite" Yelpers. We've literally have had people publish that we abused them because "they are blind" (and then ask us for payment to remove the review...) and we find the same Elite has given a terrible review to a driving school (...how can a blind man be a customer of a driving school?) You inform Yelp and they just shrug. We believe this is actually part of their content strategy. "Elite" status means their reviews always stick. And, people that have a lot of time to write hundreds of Yelp reviews are not by definition an honest consumer.

  • theupel2

    I am a small business owner and an elite member has pushed her Yelp status on me for some freebie and I refused. No I am operating my business without a home. Yes I am now homeless because of one person and her lies.

  • 2009.horses

    Hey, if you're in Canada, email me at unite.small.businesses@activist.com because it's time for small businesses to unite and become one voice.

  • I am on elite member of Yelp. I do write reviews as I can and remember. It doesn't always happen because life can get busy but when I have some down time, I will write as many as I can. My reviews are opinions of my own and no one elses. They're honest and based on observation and comparison to other establishments of the same type/category. Not everyone is the same and so your note above will definitely not hold water.

  • How they're shown, or if they're shown at all, had nothing to do with you, and is all about the company trying to blackmail small businesses. Here's a tip: work for a better company, one with ethics.

  • Jason Hanleybrown

    I run a regional business that wins awards for service. We have a terrible time with Yelp. Yelp's screening mechanism gives preference to users of Yelp that provide a lot of free content. It does not screen for whether a review is "real" or accurate. Increasingly, we see "Elite Yelpers" use their status to strong arm discounts. And, we have at this point hundreds of real reviews screened by people who are not "Elite" Yelpers. We've literally have had people publish that we abused them because "they are blind" (and then ask us for payment to remove the review...) and we find the same Elite has given a terrible review to a driving school (...how can a blind man be a customer of a driving school?) You inform Yelp and they just shrug. We believe this is actually part of their content strategy. "Elites" status means their reviews ALWAYS stick. And, people that have a lot of time to write hundreds of Yelp reviews are not by definition an honest consumer.