FTC Closes Yelp “Review Manipulation” Investigation Without Taking Action

Yelp reported on its blog that the US Federal Trade Commission has concluded a “deep inquiry into [Yelp’s] business practices” and decided not to take any action. Yelp says this is the second such inquiry into its advertising practices that has cleared the company of any alleged deception or other wrongdoing.

Previously Yelp agreed to pay $450,000 to settle an FTC investigation brought for alleged violations of the Children’s Online Privacy Protection Act (COPPA). The inquiry involved improper collection of registration information from minors under the age of 13.

For years Yelp has been dogged by complaints and perceptions that it manipulates reviews to benefit or punish businesses that advertise or decline to advertise on the site accordingly. It has been sued numerous times without a judgment against the company.

Chiefly because of Yelp’s screening algorithm (formerly “review filter”), seeking to weed out suspect reviews, many business owners think company is manipulating reviews to get them to advertise. This widespread perception continues to exist despite a lack of solid evidence.

In the recent past Yelp has stepped up communication to dispel perceptions that reviews are manipulated through notices on its site and in its mobile app: “Remember, businesses can’t pay to alter or remove their reviews.”

In a September appellate court ruling from the Ninth Circuit, the court seems to say it’s OK for Yelp to “manipulate” the presentation of reviews however it likes. It also appears to say that “within the meaning of the extortion statutes” it’s not wrongful for Yelp to imply that it will “remove positive reviews” for non-advertisers.

Despite this apparent permission from the court, Yelp says it does not and will not manipulate reviews to sell advertising.