Yelp, the San Francisco-based tech giant that has grown into a $3.4 billion company on the strength of its business-review service, has a little problem. The customers for Yelp’s advertising services are the businesses getting reviewed on Yelp. Yet more and more small business owners loathe Yelp, and consider it a technologically-advanced version of the time-tested protection racket. “Nice little business ya got here…be a shame if something happened to it.”
According to many small businesses, they are being extorted; either they use Yelp’s advertising services, or face reputational ruin that will force their businesses to close. The accusations are not new. Yelp has been under investigation by the Federal Trade Commission, and also faced a class-action lawsuit. Yelp’s PR has been quick to tout that the FTC closed the investigation without taking action, and that the class action, Levitt v. Yelp, was dismissed by the Ninth Circuit Court of Appeals.
What they’ve not been so quick to point out is exactly why it was dismissed. According to the summary of the court’s opinion, “The panel held that the business owners failed to state a claim for extortionate, and therefore unlawful, business practices in violation of California’s Unfair Competition Law because, under the Hobbs Act and California law, unless a person has a pre-existing right to be free of the threatened economic harm, threatening economic harm to induce a person to pay for a legitimate service is not extortion.“
For readers not versed in legalese, the panel essentially said “We’re not saying businesses aren’t being extorted, but there isn’t currently a law that says someone has a right NOT to be extorted.” That’s hardly a vindication of Yelp’s business practices.
Despite the dismissal of the class-action suit, Yelp still faces a legion of small business owners hungering for it’s demise.
A Filmmaker Takes On the “Billion Dollar Bully”
When Kaylie Milliken heard from her doctor that Yelp was pressuring the doctor to buy Yelp ads, she decided to investigate. At first, she found Yelp’s explanations credible.
“But as I looked into it,” she told The Technoskeptic, “I realized it was a complete smoke screen.” Finding story after story of small businesses being abused by Yelp, Milliken started a Kickstarter campaign to make a documentary. “Our campaign met 150% of its funding goals within two weeks.” Asked who donated the money to fund the film, Billion Dollar Bully, Milliken replied, “Small business owners.”
The first-time filmmaker says Billion Dollar Bully will refute Yelp’s claims that the lack of an active FTC investigation and dismissal of the class-action suit means Yelp has clean hands. She declined to share the specific refutations which she says are in her documentary, possibly because she didn’t want to give out spoilers before release, but she did urge The Technoskeptic to read the language of the Ninth Circuit court ruling and draw our own conclusions.
To Milliken, Yelp’s tactics are not excesses by a few over-zealous sales associates, but institutionalized bullying that follows the same pattern all across the country. “Over and over, I heard, ‘I declined to advertise, within a few days my good reviews disappeared, my negative reviews came to fore.’”
Rod Brant, host of the “What’s Working Now” podcast about restaurant marketing, crafts marketing plans for independent restaurants throughout the Midwest. He agrees with Milliken that Yelp has a terrible reputation among the independent restaurants that comprise his clientele.
“They hate it because they don’t trust Yelp. Yelp has a really serious reputation problem among the independents. They think that Yelp changes the position of reviews, and doesn’t feature good reviews, and instead features bad reviews if restaurants aren’t advertising with them. 80 percent of the restaurant guys that I talk to have that opinion.”
When asked if any of his clients are using Yelp currently, Brant said none are, none felt it was cost effective, and the one restaurateur who tried advertising with Yelp recently found it so ineffective they were willing to pay the early termination penalty to get out of their contract with Yelp.
Brant explained, “Their advertising rates, I would call them confiscatory. The only reason it is worth advertising is if the rumors are true: that if you don’t advertise with them, your star ratings go way down and your good reviews are hidden.”
None of Brant’s clients were willing to speak with The Technoskeptic about their experiences with Yelp on the record.
Janie Gilarde, a digital media consultant to restaurants in New York and New Jersey, dispensed with Brant’s Midwestern politeness and was far more direct about why every one of her clients hates Yelp, and unlike Brant, she was willing to share names: Bill’s Townhouse, Printers Alley, Galli, and Lucy’s Cantina Royale. “Yelp is a major player and oftentimes my biggest nemesis…. 100% of restaurateurs that I work with feel very negatively about Yelp. Most see it as the digital version of the gang you are forced to pay fees to for protection. It has an autonomous grip on consumers and is used as a tool for the majority of tourists seeking dining destinations on their visits, so particularly for restaurants that I work with in densely populated areas with lots of competition (for example, Printers Alley in Times Square), you are forced to pay up just to be seen….
“I get about three calls a day from Yelp sales recruiters at the start of every quarter regarding advertising if we are not enrolled. Calls, voicemails, repeat emails. It does not stop and borders on harassment. Until you pay, your page is subject to other advertising placements on your listing and you have no control over the images attributed. You can upload your desired photos, but they will be automatically sorted to the back unless you pay. Yelp does sort your reviews more favorably if you pay for advertising.”
Filtered Reviews Equal Suppressed Reviews
And how does Yelp sort reviews? Yelp calls it “filtering” and “recommending.” In a two-minute video about how reviews get filtered, Yelp says it will filter out reviews if it doubts their reliability. What it means in practice is that no matter how good or bad the filtered reviews are, they do not count towards the rating of the business. Only reviews “recommended” by Yelp actually count towards a rating. Yelp also stated in the video that currently, “about 75 percent of all reviews are recommended.”
Commenting on Yelp’s filtering practices, Bully director Milliken noted, “Yelp users often have no idea their reviews are being filtered out and have no effect. But most people who write a review on Yelp do it either because they loved a business, and want to help it, or hated their experience, and wanted to warn others. A lot of those reviews get filtered, which means ignored.”
Marketer Gilarde was clear that even those of her clients that use Yelp use it only grudgingly, but none of her clients were made available to The Technoskeptic to directly comment on why they so disliked Yelp.
“Not Going Down Like That”
Milliken likewise found legions of business owners willing to talk off the record about why they hated Yelp, but finding those who would go on the record was much tougher, as almost every business owner feared retaliation.
Yet occasionally, a business owner feels that Yelp has already done everything it can to extort them, and becomes willing to rage against the machine. One of them is Alia Meddeb, executive chef and co-owner of Baraka Café in Cambridge, Massachusetts, which offers the North African cuisine of Tunisia and Morocco.
She explained that Yelp had been after her restaurant for years to advertise, but things took a serious turn for the worse in 2016, when she was forced to suddenly move to a new location following the death of her landlord and the subsequent termination of the restaurant’s lease.
The indignant chef, who has been at the helm of Baraka Café since 1997 explained, “I was doing very, very, very well before Yelp came on the scene. From four stars they brought me down to 3.5 (at our previous location) but they couldn’t do more, because I had so many positive reviews. When I move[d] to the new location last August, they called me up and started harassing me again. They removed my 350 reviews from my old location, plus 100 reviews from the new location, and started me from scratch.”
Meddeb explained, “I don’t want to use advertisement[s]. It is not just Yelp. I only rely on word of mouth. I’ve never needed to advertise, we have a really good reputation.”
Baraka Café’s current Yelp listing shows no Yelp reviews of the new location until late April 2017. The notion that a restaurant at a new location garnered not a single Yelp review for their first six months seems…improbable. But the lack of reviews was no accident, according to Meddeb.
“They wanted to crush us completely. By the time they came to me, suggesting indirectly, either I advertise with them, or they’d ruin my life, at the time I had too many positive reviews…then it went really bad. I think her name is Allison, she was a Yelp manager. She harassed me so much I hung up on her. Two days later, they removed me. They said the restaurant had moved to my personal address, not the new location…. They made people think that I was closed. And then the biggest thing was removing all my five-star reviews. They know if they remove all the good reviews and leave the bad reviews, this is like a cancer.”
We could not confirm Meddeb’s claim that almost 100 reviews of Baraka Café at the new location disappeared, but did find strong circumstantial evidence to suggest that she has been deliberately targeted with tactics that suppressed or outright removed positive reviews, while “recommending” bad reviews.
Since The Technoskeptic began monitoring Baraka Café’s Yelp listing, the number of “recommended” reviews, i.e. those Yelp does not filter out, hovered between a low of 16 and a current high of 22. When Yelp was “recommending” only 16 reviews, Baraka Café had a rating of 2.5 stars. When Baraka Café suddenly came back onto Yelp after the mysterious six-month absence with a 2.5-star review, Meddeb claimed her revenue dropped over $10,000 from previous months. With 22 reviews now recommended, the restaurant has clawed its way back up to three stars.
If you do a little math, and add back in the 30 recent reviews that Yelp has suppressed—one four-star review and 29 five-star reviews—Baraka’s overall rating jumps to 4.2 stars. That 4.2-star rating is roughly comparable to what the restaurant gets from Google Reviews: an average of 4.4 stars from a total of 107 reviews.
The Google reviews of Baraka Café stretch back 12 years, and include 20 reviews posted during the time the Café seemed to mysteriously disappear off of Yelp, before suddenly popping back into existence in May 2017. This is the time frame where Meddeb claims almost 100 positive reviews had accumulated at the new location, before suddenly vanishing. Whether or not this is accurate may never be established, short of a court compelling Yelp to release their computer logs.
But while monitoring Baraka Café’s Yelp listing for the last two months, The Technoskeptic did notice two reviews that went missing. They were not moved from “recommended” reviews to “filtered,” reviews, or vice versa. They just disappeared.
And what is indisputably clear is that Yelp’s claim that 75 percent of the reviews that get posted by Yelp users become recommended reviews is wildly inaccurate in the case of Baraka Café. When Yelp was only displaying 16 reviews and filtering out 30, it was displaying roughly 35% of all the reviews of Baraka Café, and suppressing 65% of them. It recommended less than half the claimed figure of 75%. Most importantly, none of the suppressed views were negative, only positive reviews were suppressed.
After losing so much money and suffering such aggravation, why has Chef Meddeb been willing to go on the record against Yelp, when so many others have been intimidated into silence?
Meddeb heatedly explained, “Pardon my language, but these people are scum. Go to [the] Better Business Bureau and you will see. Yelp has people crying, crying! They are closing businesses and they don’t care…. I’m 62 years old, all this lifetime I’ve spent in this business. They want me to just shove it and shut my mouth and walk away with my tail between my legs and lose everything. I invested my life savings in this business. I am not going down like that.”
While it was clear the fired-up Meddeb would hold a big party if Yelp disappeared tomorrow, this was somewhat surprisingly not a sentiment completely shared by Billion Dollar Bully director Milliken, despite the many business owners she’s personally talked to who have been harmed by Yelp’s tactics.
Asked what she’d like to see happen at Yelp in response to her film, she explained, “The advertising they are selling is not good, not effective, it wastes a lot of money. I’d like for them maybe to make a public apology, but that is not going to happen with this CEO. Yelp has lot of arrogance in their C suite. If they could listen to and digest feedback—what they tell all the small business owners they need to do to get better ratings—Yelp could have a good business.” But Milliken believes that won’t happen unless Yelp is forced to.
Yelp has lately been on a spree to buy back its outstanding stock. The buyback not only boosts the stock price, it makes Yelp’s board less vulnerable to the kind of activist investors that recently ousted infamous CEO Travis Kalanick from Uber’s board. So the prospects of forced changed happening at Yelp anytime soon are dim.
Unless, of course, Milliken’s timing is just right, and Billion Dollar Bully finally ignites a firestorm that Yelp can’t suppress, no matter how many small business owners it leans on.