Yelp Gets Bad Reviews Over Its Business Practices

(Image credit: pichet_w)

Yelp has long been accused of acting like the Tony Soprano of online reviews. Companies claim that Yelp favors advertisers by emphasizing their search results and reviews. Some businesses say Yelp has tried to persuade them to buy ads by offering to make negative reviews disappear — or tried to strong-arm them by threatening to delete positive comments. A few companies banded together in 2010 to sue the firm over such practices. And some Yelp shareholders have sued, too, claiming the company inflated its revenues by coercing businesses to advertise. More than 2,000 complaints about Yelp have also piled up at the Federal Trade Commission, which has scrutinized Yelp’s ad-sales tactics and “recommendation” software, used to highlight reviews deemed the most useful to consumers.

Why You Can't Trust Online Reviews

So far, Yelp has batted down all these claims. A federal judge dismissed the shareholder lawsuit last year, finding scant signs of “allegedly extortionate practices.” Judges also tossed the local-business lawsuit in 2014, writing that Yelp’s threats of “economic harm” were, “at most, hard bargaining.” The FTC decided last year to close its inquiry without taking any action. For its part, Yelp says it takes “many steps to prevent gaming of our system and to protect consumers and business owners alike.”

Yelp’s successes haven’t stymied its critics, though. On sites such as Yelp-sucks.com, business owners and consumers continue to rant about the firm. An upcoming documentary, Billion Dollar Bully, takes aim at Yelp’s tactics. On TV, Yelp’s hefty influence in the ratings world has made it the target of biting satire. On an episode of the animated series South Park last year, elite (and insufferable) Yelpers try to extract special treatment from restaurants, which exact some unsavory revenge.

From just $107.88 $24.99 for Kiplinger Personal Finance

Become a smarter, better informed investor. Subscribe from just ~~$107.88~~ $24.99, plus get up to 4 Special Issues

CLICK FOR FREE ISSUE

https://cdn.mos.cms.futurecdn.net/flexiimages/y99mlvgqmn1763972420.png

Sign up for Kiplinger’s Free Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

TOPICS

Daren joined Kiplinger in July 2015 after spending more than 20 years in New York City as a business and financial writer. He spent seven years at Time magazine and joined SmartMoney in 2007, where he wrote about investing and contributed car reviews to the magazine. Daren also worked as a writer in the fund industry for Janus Capital and Fidelity Investments and has been licensed as a Series 7 securities representative.