The US Federal Trade Commission (FTC) has pulled the plug on its second inquiry into how Yelp manages consumer reviews.
As with the first investigation, the FTC has decided not to take any action against the company, Yelp said on Tuesday.
Yelp Vice President Vince Sollitto wrote on Yelp’s official blog that the FTC looked into the company’s recommendation software, what Yelp says to businesses, what salespeople say about its advertising programs, and how the company ensures that employees don’t tinker with ratings and reviews.
After a year of scrutiny, the FTC recently closed its investigation without taking further action, Yelp says.
This is yet another victory for Yelp, which for years has fought off claims that businesses that fork over money receive better treatment on the site: namely, higher placement and better reviews.
A dentist in a recent case was one of multiple California businesses that made such claims.
The suit accused Yelp of extorting small businesses.
The dentist testified that she finally relented to Yelp sales pitches and signed up with Yelp advertising. Within days of doing so, she said her overall rating surged to 4 stars, while Yelp reinstated some 5-star reviews.
Yelp has steadfastly denied that it alters business ratings, and courts and regulators have agreed.
The case was dismissed in September by the US 9th Circuit Court of Appeals in San Francisco.
The court found that as far as placement on the site goes, Yelp has the right to arrange its reviews as it sees fit. It also has the right to engage in what it called “hard bargaining”.
The court further said that plaintiffs had no pre-existing rights to positive reviews and failed to prove that Yelp wrote concocted critiques.
Understandably, Yelp is treating the FTC’s decision not to take action as yet more vindication of the fairness of its review processes.
As it is, Yelp points out, the investigation’s conclusions have been backed up by an independent study conducted by the Harvard Business School which found that Yelp’s recommendation software treats advertisers’ and non-advertisers’ reviews the same.
All this has very little to do with how reliable the reviews themselves are, of course.
Just because Yelp’s software doesn’t discriminate among ad buyers and non-buyers doesn’t mean that all reviews are honest and written by consumers who’ve actually visited the places they trash or praise, as opposed to being fabricated for revenge or purchased by a business for its own self-aggrandizement.
We won’t get there until Yelp gives us something like what a reader suggested a while ago: a means of verifying purchases via unique QR code printed on receipts that could be sold to businesses and which could serve to filter out fake reviews, similar to what Amazon accomplished with its verified purchase tag on reviews.
carlindenton
The simple fact is that consumers should look elsewhere for honest reviews. Hopefully they’ll move on. The well-informed user will, but the average schmoe won’t, unfortunately.
herzco
I don’t think people are complaining about a lack of positive reviews.
They are complaining that yelp acts as sort of the mafia asking small businesses to advertise, and then if they do not advertise burying the positive reviews that they already have, and then claiming that it was a simple algorithm. I really don’t think that this is just thousands of dishonest small business owners. It does seem like yelp is hiding behind the curtain here.
It just happens far too consistently.
David B
Can you at least provide some suggestion as to where “honest reviews” are, as opposed to what you consider to be dishonest reviews on Yelp? Can you also help us to understand how it is that you happen to personally know HOW “elsewhere” these other reviews are in fact honest? And I do NOT work for Yelp, btw.
David B
I thought I was responding immediately after carlindenton – my reply was aimed at hers.
Paul Ducklin
If you click the [Reply] button under a comment, then your words will be displayed under it and indented slightly, thus making the thread more obvious.
Just posting a comment right after someone else’s comment doesn’t do that. Firstly, your comment won’t be linked visually with theirs. Secondly, a third person (for all you know) might have already posted a new comment that hasn’t been approved yet.
That means if both new comments are subsequently approved, yours will be in third place, not second. (Comments are ordered by when they were originally posted, not by the time when we approve them.)
carlindenton
I certainly can’t. All I can say is who I wouldn’t trust, not who I do, unfortunately. Payola is the worst.
ejhonda
I find Trip Advisor a better guide for restaurants. It seems to be more genuine in its ratings, likely because it isn’t as popular as Yelp and doesn’t attract the need to game it.
Laurence Marks
Yes, but you have to use certain social media in order to post on Trip Advisor.
1) The only social media I use is LinkedIn, so Trip Advisor readers don’t benefit from my excellent advice.
2) Trip Advisor posters are all Facebook users which casts doubt on their credibility.
L. Hedrick
I use Trip Advisor at their website, not on Facebook. I suspect that the majority of reviewers are not rating via Facebook, as that is a relatively new platform for Trip Advisor.
Don
Much attention has been given to claims that Yelp manipulates reviews in a manner favoring advertisers. But whether you are an advertiser or not, Yelp will print negative reviews ahead of positive ones that were submitted after the positive. Apparently Yelp believes the negative reviews are more interesting and pull in more users. You can choose to view the reviews in the order of their posting but the default page has them in the order chosen by Yelp’s “logarithm”, and if you complain about it they will use the logarithm excuse as though it is out of their hands.