FTC Discloses Small Business Complaints Against Yelp

Many small businesses continue to feel that Yelp is unfair or complain that Yelp salespeople are using strong-arm tactics to get them to buy advertising on the site. Claims of “extortion” against Yelp have persisted though never been proven with evidence and the company has successfully defended a number of lawsuits on those grounds.

These “extortion” claims again resurfaced in two articles published this week. One in the Wall Street Journal, focused on a lawsuit brought by Hadeed Carpet in Virginia over anonymous, critical reviews on Yelp. The business owner claims that the reviewers were not actual customers and sued to get their identities.

Yelp intervened in the case to protect the First Amendment rights of its users to anonymity. Yelp cannot be sued for the content posted by its users (e.g., for libel). The Virginia state court of appeal ruled that Yelp must disclose the identities of the seven individuals who posted the anonymous reviews on the Hadeed profile. Yelp has appealed to the Virginia Supreme Court.

Another article, more anecdotal in nature, appeared in the LA Times. It characterizes Yelp sales practices as a small business “shakedown.” In particular the article objects to the practice of asking business owners to advertise as a way to remove competing ads on their profiles.

Beyond this the Wall Street Journal reported on FTC disclosure of complaints filed by business owners against Yelp. The disclosures were made in response to WSJ Freedom of  Information Act requests. Most pertain to Do Not Call requests made by the business owners. I’ve embedded the letter below.

In essence the letter says there have been 2,046 complaints against the site. Most of the disclosed complaints report that Yelp sales reps continue to call after they’ve been asked not to by the involved businesses. One complaint invokes the “extortion” concept but others do not:

Yelp continues to call our business trying to extort us for advertising dollars. They call, solicit us, and when we decline, they tarnish our small business’ image on their website.  I’ve repeatedly demanded for Yelp to stop calling us, however they still call about every 2 months.  From now on, I will log their call as a complaint.

For context and comparison, Google also has numerous FTC complaints on file.

Yelp’s algorithm flagging questionable or dubious reviews has long been the subject of confusion and controversy among business owners. The uncertainty surrounding its operation and the “filtering” of positive reviews by Yelp has sparked frustration and fueled various conspiracy theories. However Yelp has a critical interest in protecting against fraudulent or fake reviews.

Yelp has made numerous efforts to explain what it used to call its “review filter” to SMBs. However it appears the site needs to also do a better job of this and of sales training (and/or prospecting) to prevent the kinds of complaints disclosed by the FTC.