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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

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.

Then, Hyde said he received a negative review from a legitimate customer. He tried to rectify the situation with her, but to no avail. Seven months later, Hyde said the customer’s boyfriend posted a negative review based on his girlfriend’s experience. “I have an issue with that,” said Hyde, noting that third parties aren’t allowed to post reviews as outlined by Yelp’s Terms of Service. When he complained to Fitzhugh, he said she replied, “‘We can’t control that, but if you advertise you can control the order that they’re in.’ So I could move those negative ones down to the bottom of my listing.”

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.

Larry Trujillo, co-owner of the Uptown Nightclub in Oakland (78 reviews, four-star average), said that shortly after he opened the club in November 2007, a Yelp salesperson harassed him almost daily about advertising. “He would call up and the first thing he would say is, ‘I notice you have a lot of positive reviews,’” Trujillo recalled. “‘We could make sure that those reviews stay positive.’”

One of the ways Trujillo could accentuate his positive reviews, apparently, was by giving Yelpers free drinks. Separate from the ad pitch, Trujillo said Yelp executives contacted him about throwing a party at the venue.

He recalled the scenario in an e-mail: “After numerous tours of the Uptown and rounds of free drinks given to the so-called brass of the Bay Area ‘Yelpers’ who were offering to throw a Yelp party at the Uptown, when I was finally contacted by a Sarah Lippman, I learned their real motive. … After several phone meetings, she finally came to the point and pitched me on what she really wanted: free use of the club with staff and alcohol expenses covered by the Uptown in exchange for positive reviews.”

When he questioned Lippman on how free alcohol would translate into positive reviews of his business, he said Lippmann responded, “because the party would be made up of Yelp bloggers/posters.” Trujillo questioned her further: “But if they truly loved the Uptown, wouldn’t they be posting these positive reviews anyway?” “Well not necessarily,” he recalled her saying. “Well this party would be a little incentive to crow about the Uptown.”

Trujillo likened her pitch to extortion, and then told her she could rent the Uptown and he’d risk bad reviews. “Well that’s not how we do things,” he said she had responded. “We never pay for stuff like this and other businesses have responded positively to these types of offers.” Trujillo said he expressed his skepticism of whether his business’ positive reviews were “posted merely to warm us up for your pitch” and ended the discussion: “Thanks but no thanks.”

Debbie Leonardo, director of membership at Ruby Hill Golf Club in Pleasanton (ten reviews, 4.5 star rating), said she received a sales call from Yelp about a year ago. The saleswoman, whose name Leonardo could not recall, explained what Leonardo could control if she bought an ad, such as her business’ photos, and that no competitor’s ad would show up on their page. “And that’s when she told us we could get rid of our worst review,” Leonardo said. “The other people have said ‘bury’ — she said we could remove our worst review. She was the only one. Everyone else indicated that we could bury them, move them around.” Leonardo declined the offer.

Bob Kurtz, owner of adult and collectibles store Collector’s Realm 3 in Oakland (four reviews, four-star average), said that Yelp sales reps contacted him about advertising after he received a negative review. “We asked about our very negative review and we were told that as paid advertisers that review would be dealt with,” he recalled in an e-mail. “While not said, there was the implication in my mind that the review would be buried in some manner or perhaps even removed.” Kurtz said he wrote a negative review about Yelp on Yelp, but that it was suppressed. “Clearly they are hypocrites,” he said.

Nicholas Paul, an instructor at an art studio in Chicago (which did not want to be named for fear of retribution) and who handles the studio’s advertising, said that Yelp approached him to advertise starting in July of 2008. After he turned them down, “then all of a sudden three of our positives disappeared and then we got two negative ones,” he said. Of the original thirteen reviews they had, only eight now remain, four of which are negative. Paul says the sales rep told him he could control that. “We could basically adjust the way our reviews are read,” Paul said the rep told him. “We could highlight the ones we wanted and put the ones we didn’t want on the backburner.”

Stoppelman has proclaimed such stories as impossible: not only are changes of this type forbidden by the company, he says, but sales reps are not technically able to make such changes. But continuing to deny the stories — which are now adding up thanks to reporting by other news outlets — further damages Yelp’s image as an objective, unbiased, user-generated review site. It also hurts their relationship with business owners, upon whom they rely for revenue.

Jo-Ellen Pozner, an assistant professor in the Organizational Behavior and Industrial Relations Group at UC Berkeley’s Haas School of Business, believes the best thing for Yelp to do in the wake of this controversy is to increase its transparency. In other words, Stoppelman should publicly apologize for any potential wrongdoing, explain how the behavior might have occurred, and then outline the steps the company will make to avoid future wrongdoing. “That would be easy for Yelp to do,” she said. But given Stoppelman’s response so far, that scenario seems unlikely.

If the Express was to follow Yelp’s model, we would ensure that positive information about Yelp will appear higher up in our next story — if they advertise.

Audra

East Bay hipsters are a sub group that can’t be replicated.