How Yelp Uses Phony Reviews To Bolster Their Revenues

Yelp's business concept, in theory, is not a bad one. It gives consumers a forum where they can write reviews of businesses that they have used in the past, and it doubles as a search engine for which businesses can get further exposure.

In reality (and I really hate disabusing you of your utopian idealism), Yelp's system for calculating the validity of reviews, is flawed. Yelp even admits to this. Eventually, enough people will be disappointed, after acting on Yelp reviewer's recommendations, and Yelp will slowly fade into the sunset. I imagine that the general public will decide as to when this happens.

Unfortunately, Yelp has found a way to combine these services into a reckless mix of extortion and strong-arm tactics. They offer free listings and sponsored listings. Sponsored listings are basically the same as free listings, except that your business would be placed in a higher position on their website and, of course, you would have to pay for that privilege.
After your business has been on their free listings search engine for a month or two, their salespeople call, and try to convince you that you would get better exposure if you joined their sponsored listings.

Here is where it turns ugly. If you decline to sign up for their sponsored listings, Yelp creates phony negative reviews and posts them on your free listing ads. If you challenge the authenticity of the review, Yelp's support team says that their automated system decides whether a review is or isn't valid, and no one can override the system. Even if you supply them with proof that the review is fake, (e.g. your business was closed for renovation on the date that the consumer claimed to use your service, etc.), they maintain that there is no way to delete the fallacious review.

As if this weren't bad enough, if your business happens to receive a legitimate positive review, but you still have not agreed to join their sponsored ads listing, they remove the review and place it in their "reviews that are not currently recommended" section. Again, even if you provide Yelp with invoices and tax returns that prove that you actually did business with this customer, and that their review was indeed valid, they continue to say that there is no way that they can override their automated review-filtering system.

The screen shot to the right is a classic example of the preferential treatment that Yelp gives paid advertisers versus free listings. If the picture is not sharp enough for you see clearly, just click on it, and HubPage's photo window should help you. The names and content of the businesses are totally irrelevant, and the ratings are Yelp ratings, so they're basically meaningless. This screen shot is neither an attempt to discredit one company nor praise another. I cannot stress this enough. It is solely an illustration of Yelp's dubious nature. The top listing is a paid advertisement. You can see "Yelp Ad" in the upper right corner. The third listing is the free listing for the same company at the same location. The free listing shows a somewhat unfavorable rating (less than 3 stars), yet the paid advertisement, which will always have higher position than any free listing, shows no rating. In addition, the content below the free listing is an excerpt of the unfavorable review, whereas the content below the paid advertisement is merely an excerpt of the company's description, which was initially submitted by the company. Draw your own conclusion, but this is a simple case of "a picture is worth a thousand words." It was a fluke that I was able to capture a company's paid advertisement and free listing on the same page, but I got lucky.

Being an investigator of sorts, I called a Yelp sales representative, explained the allegations pointed toward Yelp, and asked if he/she had any comment. The initial response was that Yelp treats their free listing clients in the same manner as their sponsored ad clients. I brought up an example of a specific reviewer who had not written a review in over a year, which challenges Yelp's guidelines that all reviewers must remain active in order for their reviews to remain current. The salesperson said that this particular reviewer is responsible for generating income for Yelp in various other ways, so his/her reviews would never be removed. "Aha!" An admission of preferential treatment for paying customers, regarding reviews. Since this discovery, I have made a complaint to the Federal Trade Commission and I have found that there are current multiple complaints towards Yelp and multiple class action lawsuits against them.

Here is an excerpt of an email correspondence from a disgruntled small business owner to a Yelp support member:
"...In simple terms, Yelp relies on a computer program to judge whether a
review is or isn't legitimate and stands by that judgment no matter what
evidence to the contrary is presented to them. In fact, I sincerely believe
that if I showed Yelp a death certificate of one of their reviewers dated
11/30/10, and a review written by that same reviewer dated 4/12/11, Yelp would
still stand by their computer's judgment and not remove the review.
I admit that I do not handle millions of businesses as Yelp does, but
I am proud to admit that I give equal weight to all of my customers'
opinions, and if a customer of mine has a problem with my system, I discuss
it with them and we come to a mutual understanding. I don't hide behind
policy and computer generated judgments. I also don't dehumanize my
customers by only accepting email communication, and then try to convince
them that a computer's output carries more weight than their opinion, without
exception.

"It seems to me that Yelp's problem is the fact that it handles millions
of businesses and, therefore, doesn't have the manpower to handle them
correctly. I own 14 businesses, and I get phone calls on a regular basis
from Yelp's sales department trying to get me to use Yelp as a sponsored
search engine. I explain to them quite diplomatically that I would never
consider giving money to a company that treats people like machines and
admits freely that, '...because it's an automated system, no one can manually
override which reviews it does or doesn't validate...'" (that was a direct quote from the support representative's prior email). "I would give up all of my businesses before following a misguided credo such as yours.
"I truly feel sorry for businesses like Yelp, but I feel more sorry for
their customers who have not yet come to realize just how much of a
disservice Yelp provides to the working class..."

I couldn't have said it better myself.