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.