Institute For The Future

Yelp and the Business of Extortion 2.0 [East Bay Express]

One evening a few months ago, I had a conversation with a local San Francisco business owner about Yelp, the online business directory that lets users write reviews—both useful and completely irrelevant—of local business. We'll call said business owner "Robert." Robert mentioned that he received a call from a Yelp sales rep who said that for a monthly fee, Robert could have control over the reviews posted to his business's profile on Yelp. Robert told the sales rep to take a hike and never call him again.

 

Yesterday, the East Bay Express featured an article about the same phenomenon: "Yelp and the Business of Extortion 2.0." From the article:

During interviews with dozens of business owners over a span of several months, six people told this newspaper that Yelp sales representatives promised to move or remove negative reviews if their business would advertise. In another six instances, positive reviews disappeared — or negative ones appeared — after owners declined to advertise.

 

Because they were often asked to advertise soon after receiving negative reviews, many of these business owners believe Yelp employees use such reviews as sales leads. Several, including John, even suspect Yelp employees of writing them. Indeed, Yelp does pay some employees to write reviews of businesses that are solicited for advertising. And in at least one documented instance, a business owner who refused to advertise subsequently received a negative review from a Yelp employee.

 

Many business owners, like John, feel so threatened by Yelp's power to harm their business that they declined to be interviewed unless their identities were concealed. (John is not the restaurant owner's real name.) Several business owners likened Yelp to the Mafia, and one said she feared its retaliation. "Every time I had a sales person call me and I said, 'Sorry, it doesn't make sense for me to do this,' ... then all of a sudden reviews start disappearing." To these mom-and-pop business owners, Yelp's sales tactics are coercive, unethical, and, possibly, illegal.

 

"That's the biggest scam in the Bay Area," John said. "It totally felt like a blackmail deal. I think they're doing anything to make a sale."

While the alleged practice isn't extortion under the law, it is a great example of a service that gives the illusion of being user-controlled when in reality the corporate owners have the final say in what information is displayed when and where. The information users create and provide on good faith can potentially be manipulated by Yelp in order to squeeze sponsorship and subscription dollars out of business owners. The article is great and spends six pages looking at Yelp's history and business practices. Definitely worth reading.