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March 18, 2009 News & Opinion » News

Yelp Extortion Allegations Stack Up

More business owners come forward with tales of unethical behavior by the popular San Francisco-based web site.

By Kathleen Richards @KathORichards After my story "Yelp and the Business of Extortion 2.0" was published last month, Yelp CEO Jeremy Stoppelman promptly launched into damage-control mode — and for good reason. The story, which was picked up by national news outlets including The New York Times and The Wall Street Journal, detailed the accounts of local business owners who said that sales reps at the popular user-generated review site offered to move negative reviews of their businesses if they advertised. Stoppelman immediately denied the allegations on Yelp's official blog, criticizing my use of anonymous sources and the credibility of one on-the-record source. A few days later, he posted another response, optimistically titled "East Bay Express Story Starts to Unravel." But the reality was just the opposite.

Since then, many business owners from around the country have come forward — via e-mails or comments on the Express' web site — alleging similar tales of extortionist tactics by Yelp sales reps. To make matters worse, Stoppelman's handling of the allegations exposed the company's blaring hypocrisy. For example, he rebutted the story on Yelp's blog, which, ironically, doesn't allow comments. Business owners contend that they just want the same opportunity to respond to negative, false, or damaging information about their businesses. Instead, the only way for them to salvage their businesses' reputation is by paying Yelp — regardless of whether the reviews are true or false.

Secondly, Stoppelman criticized my use of anonymous sources, calling it "fraught with hazards and ... strongly discouraged by most editors." Yet Yelp is a review site based entirely on anonymous sources. Stoppelman claims Yelp's reviews are reasonably trustworthy because of the web site's review filter, and because reviews may be suppressed if they're not written by frequent Yelpers. However, only the first name and last initial of the reviewer is posted, in some cases just initials, and in some cases fake names with no photos. Frequently posting anonymously does not make one any less anonymous.

Because Stoppelman's chief criticism of my article was that many of my sources were anonymous, for this follow-up I decided only to interview people who were willing to go on the record. Their stories are no less damaging: several said that the reps would offer to move negative reviews if they advertised; and in some cases positive reviews disappeared when they refused, or negative ones appeared. In one case, a nightclub owner said Yelp offered positive reviews of his business in exchange for free drinks.

Barry Hyde, owner of M&M Auto Werkes in Campbell (eleven reviews, 3.5 star rating), said that about a year ago, Yelp sales rep Jacqueline Fitzhugh called him to let him know that his business had a lot of positive reviews on Yelp. "You can accentuate that with advertising," he recalled Fitzhugh telling him. Hyde declined, saying that he didn't want to spend the money. This scenario, he says, went on for a few months.

Fitzhugh's response unsettled Hyde. So he said he contacted Stoppelman and told him, "What you're doing is unethical" because Yelp doesn't allow business owners to post their responses to negative reviews. "We stopped talking for a while," Hyde said. "Then I notice some of my five-star posts are disappearing. They said we have a spam filter like Google." Hyde tracked his reviews, printing them daily to monitor which ones would disappear. Some stayed up for as short as 31 days and as long as 131 days — all were five-star reviews, he said. Hyde said that Yelp told him that if he advertised, some of those five-star reviews would come back. But that wouldn't make sense if they were truly being suppressed because of Yelp's anti-spam algorithm. "If these are bad people as you stated, why would I want them to come back?" he wondered. Hyde says he agreed to finally advertise with Yelp, but was then told his business wasn't eligible for reasons they wouldn't disclose.

Calvin Gee of Haight Street Dental in San Francisco (twenty reviews, 3.5-star rating) said he had five five-star reviews on Yelp when sales reps contacted him starting around the end of 2007. "They were kind of aggressive," Gee recalled. "I said no a couple times. After I said no a bunch of times ... then I got negative reviews. ... All of a sudden it dropped to 3.5 stars." Gee said one of the negative reviews was clearly written by a former employee he had fired. He alerted his sales rep, who then removed it. "They say they have an algorithm — that's total bullshit," he said.

According to Gee, Yelp sales reps told him that if he advertised, "they would remove the sponsored search of other dental offices on my page, and then they would let me choose my favorite review, and then they would move the negative reviews to the bottom of the page," he said, noting that the last two options were distinctly different. "And then they definitely said when I talked to them about the negative reviews, they said they would remove that — which they did."

Exploring the issue further, Gee noticed that one of his competitors and an advertiser with Yelp, CitiDent, had two separate business listings on Yelp. In what Gee believes is proof that Yelp kowtows to its advertisers, the business had more positive reviews and a higher star rating on the page that was marked as a Yelp sponsor, and more negative (though different) reviews and a lower star rating on the page that was not marked. Gee printed up both pages, dated August 2008, which he shared with this newspaper. Today, CitiDent is no longer a Yelp advertiser and only has one page, on which both the positive and negative reviews from the two listings are combined.


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Tags: News, Yelp, Yelp and the Business of Extortion 2.0, Jeremy Stoppelman, The New York Times, The Wall Street Journal, Barry Hyde, M&M Auto Werkes, Jacqueline Fitzhugh, Calvin Gee, Haight Street Dental, CitiDent, Larry Trujillo, Uptown Nightclub, Sarah Lippman, Debbie Leonardo, Ruby Hill Golf Club, Bob Kurtz, Collector's Realm 3, Nicholas Paul, Jo-Ellen Pozner, Organizational Behavior and Industrial Relations Group, UC Berkeley, Haas School of Business

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