Digital Insights
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Why Yelp is the Review Site Local Businesses Love to Hate

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Published: November 25, 2014

The problem with circumstantial evidence is that it’s so…. circumstantial. Take the case of Yelp, for example. One restaurant owner complains that the mega-popular review site offered to bury his negative reviews for a price, then somehow “lost” his positive reviews when he failed to pay up.

Okay, what’s one disgruntled restaurateur? – He’s probably just upset that someone didn’t like the lasagna. Then another business owner steps forward with a similar story. And another. Before you know it, you have hundreds of angry, frustrated, and sometimes downright scared businesspeople all telling basically the same story.

Yelp is extorting money from local businesses to sugarcoat their online reputation.You have to wonder why all of these business owners are bad-mouthing Yelp. And why are they all describing a similar story? Is it a sinister plot designed to destroy a guiltless company? Or has Yelp simply been lucky so far in concealing the smoking gun?

Is Yelp Guilty of Extortion or Just Overly Aggressive Sales Tactics?
Here’s how a typical story unfolds. I’m not going to name names because most of the businesspeople reporting their experience with Yelp have requested anonymity for fear of retaliation.

The business owner receives a phone call from someone who says he is calling from Yelp. “I’ve been looking over your account and I see that you’ve had almost 200 visitors to your site last month. Most of your reviews have been good, but you have a few really bad ones at the top. I can fix that for you. We can get them moved if your buy our basic advertising package for only $299 per month.”

If the business owner declines the sales pitch, negative reviews start replacing positive reviews at the top of Yelp’s results. Some of the positive reviews vanish altogether due to Yelp’s mysterious “review algorithm filter.” But if the businessperson signs an advertising contract, those damaging negative reviews start to drop off the radar screen, replaced by glowing reviews. Can you say “smells fishy?”

Yelp’s Standard Response
Whenever Yelp has been confronted with a complaint like this, and they easily number in the hundreds, the response is pretty much the same and it goes something like this.“Our advertising representatives would never say anything like that. Any changes in the positioning of your reviews are due to an automated action by our review algorithm. We couldn’t change your review profile even if we wanted to. Besides, our standard terms and conditions policy clearly states that we reserve the right to remove any posted review in your profile for any reason, or for no reason at all.”

How Can Yelp Get Away with This?
Yelp has so far managed to dodge the bullet of justice in disposing of the many complaints lodged against them by angry business owners, but that streak of good luck may be about to change. A class action lawsuit has been filed in Federal court on the behalf of Yelp stockholders alleging that Yelp’s review algorithms did not work as claimed, and that the company hid the fact from shareholders that it required businesses to pay to have negative reviews suppressed. As a result of that deception, the lawsuit claims that company insiders were able to earn more than $80 million dollars in insider trading profits.