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Yelp Accused of Shaking Down Restaurants

A few months ago, I wrote about the travails of user-submitted review site Yelp. Now there are new accusations that the site is running a protection racket to try to sell advertising.

A few months ago, I wrote about the travails of user-submitted review site Yelp. Now there are new accusations that the site is running a protection racket to try to sell advertising. Small business owners in the Bay Area have reported that soon after they got a couple of negative reviews on the site, a Yelp sales rep would call and offer to eliminate the one-star ratings–in exchange for a $299 a month sponsorship. Several owners didn’t want to talk on the record because they were afraid of Yelp’s power to make or break their business. “In at least one documented instance, a business owner who refused to advertise subsequently received a negative review from a Yelp employee.”

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I heard similar allegations when I was reporting the story. Village Voice restaurant critic Robert Sietsema checked out the site and he thought the reviews smelled a little funny:

Singa’s Famous Pizza Inc. appeared right at the top of the list, before many, much finer restaurants, and the enthusiastic string of reviews really was unbelievable. It’s just a pizza parlor after all, and one that doesn’t even make the radar at sites like chowhound.com.”

Yelp won’t disclose its algorithms for ranking and displaying reviews. The site has a legal right to do whatever it wants with the reviews and ratings on its site, whether user-submitted or written by employees. But if the company wants to reach profitability it better figure out a way to get more transparent and trusted–fast.

Update: Yelp CEO Jeremy Stoppelman responds in this blog post.

He says the article was based on some anonymous sources and another with credibility issues. He denies the charge of moving or removing bad reviews from advertisers, but he doesn’t address the charge of whether their ad salespeople use bad reviews as sales leads.

If you are a business owner and a Yelp salesperson calls you up and says “You have some one-star reviews there, how about buying a sponsored four-star review for the top of your page,” is that extortion? No. Could it be seen as an unfair pressure tactic? Maybe, especially considering the promotional power that Yelp has and the dicey climate for small businesses these days. Once again, the onus is on Yelp to provide the appearance of transparency and fair play.

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About the author

She’s the author of Generation Debt (Riverhead, 2006) and DIY U: Edupunks, Edupreneurs, and the Coming Transformation of Higher Education, (Chelsea Green, 2010). Her next book, The Test, about standardized testing, will be published by Public Affairs in 2015.

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