The Yelp Mafia: Internet Giant Extorting Small Businesses For Good Reviews

STORY BY Roy Klabin

Published: April 29, 2013

In the last few years, Yelp has come under increased fire for its sordid business practices. Accusations from hundreds of small businesses have been pouring in, which claim that Yelp filters out positive reviews to skew online reputations, harasses business owners to buy upgraded advertising packages to salvage their damaged status, and even generates libelous negative reviews to cause further detriment for those who won't play ball.

"I am very afraid of this company because they have the power to make any restaurant go out of business."

For a site that should be protecting the public trust, aggregating actual customer reviews, and helping consumers make informed decisions, this mobster-like behavior is the equivalent of saying: "Hey, nice business you got there … be a real shame if something bad happened to it." 

Moreover, businesses don't even have the option to be removed from the site, much like they can't be removed from Google indexes. Their reputations are suffering needlessly, so that Yelp's massive sales force can keep generating advertising accounts by manipulating the reviews. Ironic, considering the company's very motto is: "Real Reviews. Real People." This has caused a backlash from several restaurants and businesses that now proudly display the sticker "People Hate us on Yelp":

"Online reputation management" companies often seek to clear Google search results of slander for small businesses. As Yelp's popularity grew, they would get increased phone calls from restaurants, doctors, and contractors alike, begging them to address their reputations on Yelp. People with several 5 star reviews one day would suddenly have most of them disappear after they refused to buy an expensive promotional package from Yelp's incessant call service.

Yelp's defense is to claim that they "noticed unusual activity" with the reviewers who leave positive feedback, suggesting that businesses were buying or faking their good reviews. This "he said, she said" back and forth between parties over whose reviews are manufactured and whose are real only adds to the disillusionment of Yelp users.

To some degree, this practice was common with the old Yellow Pages dynamic as well. Even the Better Business Bureau has had accusations hurled against it for "pay for play" schemes. But Yelp has a distinctly large sales staff counting in the hundreds, a massive burden for an Internet company. They are constantly looking to extract money from their few paying clients, and have begun to leap over ethical boundaries in the pursuit of that profit. 

Most of the small business owners are mechanics, hairdressers, etc., and have no idea what a reasonable rate for digital advertising should be. Here are some of Yelp's ad buy rates:

$540/mo - 1200 targeted ads per month

$825/mo - 2100 targeted ads per month

$1100/mo - 3000 targeted ads per month

In the world of digital advertising, prices are usually factored around "Cost per Thousand Impressions" – CPM. To offer a perspective on how insanely exploitative Yelp’s rates are, ads on Facebook have a CPM well below $1. Yelp is taking advantage of people who don't know any better by forcing them to pay for what essentially amounts to a protection racket.

Advertising online has fast become the decisive platform for businesses to raise awareness. On the Internet superhighway, getting to the top of a Google search results page is the equivalent of having a neon billboard in Times Square.

People don't walk by restaurants, look at their menu, and smell the aromas nearly as often as they check what their supposed peers say online. If the negative reviews are punishment from Yelp for not buying subscription services, and the positive reviews are purchased by restaurants to promote their business, then the whole platform becomes a meaningless soup of manufactured publicity. On top of which, new competition like the Facebook graph search will keep eating into Yelp's market share aggressively. 

In theory, aggregated consumer reviews were a great way for all of us to come together and promote the businesses that really treated their customers well. Instead, we're seeing the promotion of companies that were too afraid or unaware to fight Yelp's predatory practices.

Other Stories by Roy Klabin
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