In a 2017 piece “For Yelp, Extortion Has a Starring Role,” The Technoskeptic explored Yelp’s shady business practices, mentioning a forthcoming documentary exposé titled Billion Dollar Bully. That film has now been released. We wanted to examine its case against Yelp, the film’s impact, and how Yelp’s practices have evolved since the filmmaker, Kaylie Milliken, started seeking distribution, which turned out to be a multi-year ordeal.
A quick sampling of reviews from those most likely to receive the film’s message most positively―members of the online social media forum “Yelp Exposed”―were mixed. Everyone approached for comment agreed with the main contentions of the film, that Yelp uses extortionate tactics. Some, like Wini Stopf, were quite enthusiastic, saying, “I thought it was great. I was a backer on Kickstarter and Indiegogo and was very happy with the film.” Lloyd Swartz was less happy, saying “Outdated info, took too long, not enough exposure,”―not so much a denial of the film’s points, as a complaint that the delay in release and lack of attention undermined its goals.
Even South Park Hates Yelp
Stand in the downtown of any city in America, and odds are you are within a stone’s throw of a business furious at Yelp. Negative reviews are posted with no accountability for the reviewers, including a complete lack of consideration for how they might game Yelp’s system to create petty tyranny over business owners. This has become such a cultural phenomenon it was satirically immortalized in an episode of South Park, “You’re Not Yelping,” excerpted in Billion Dollar Bully, in which Yelp reviewers multiply endlessly and begin extorting local restaurateurs for special treatment, lest the restaurants be given bad reviews.
Then there are the calls by Yelp sales staff, which are almost universally characterized as annoying by small business owners, but then often graduate to relentlessly harassing once a business owner has made the mistake of advertising with Yelp, often simply to get the calls to stop.
This was a tale I heard repeatedly when researching the 2017 article, a narrative extensively revisited in Bully. In the film, Bay Area restaurateur Davide Cerretini claimed Yelp’s salespeople were calling him 20 times a week before he finally gave in and agreed to a six-month contract, which he did not renew. At that point, his positive reviews were hidden, and calls from Yelp sales people became so relentless they crossed the line into harassment. Cerretini responded by getting his customers engaged, begging them to post only one-star reviews, a not-so-subtle middle finger to Yelp. In his case, it paid off; Cerretini received a flood of new business and press coverage, and was contacted by businesses from all over the world cheering him on.
Billion Dollar Bully goes on to examine the claims Yelp keeps trotting out as proof that the legion of allegations of harassment and extortion are groundless. Yelp’s talking points, frequently delivered by Yelp Communications Vice President Vince Sollitto, are that the Federal Trade Commission (FTC) closed their investigations of Yelp, Yelp has won the key court cases lodged against it, and a Harvard Business Review study exonerated Yelp from accusations that it was manipulating reviews based on who advertised with them.
The documentary faced a high bar to make its case compellingly, not least because Yelp is a master at purveying half-truths and hiding in technicalities that obscure that their business model is based in part on extortion. Connecting the dots of all those technicalities is a struggle for the big screen, in the same way The Big Short tried, but did not always succeed, in making complex Wall Street financial instruments comprehensible to the average movie-goer.
But There’s This Harvard Study
The film excerpts an interview of Sollitto claiming that Yelp has been cleared of accusations that it manipulates reviews by an “exhaustive Harvard Business Review study.” Only three words of that phrase are true: Harvard Business Review. The film points out what Sollitto was referring to wasn’t a study; it was a working paper.
Before a working paper can become a study, it has to go through layers of peer review, i.e. experts in the field examine it to point out flaws, so they can be fixed. At the time Sollitto was making his claims, it was still only a working paper. A peer-reviewed version of the paper, “Fake It Till You Make It: Reputation, Competition, and Yelp Review Fraud,” was published in December 2016, but it was published in the journal Management Science, not Harvard Business Review.
The word exhaustive is also a stretch. That implies extensive research in a variety of settings. “Fake It Till You Make It,” looked at Yelp reviews of restaurants in Boston from 2004 to 2012. It was not extended to other cities or other kinds of businesses. I asked Professor Michael Luca, one of the study’s authors, via email what he thought of Yelp’s characterization of “Fake It Till You Make It” as exhaustive, given that it was limited only to Boston and only to restaurants; he did not respond.
More important is that the study did not even examine the question of extortion. The chief subject of “Fake It Till You Make It” is why and how restaurants themselves write or solicit fake reviews (either positive for themselves or negative for their competitors) in order to boost their relative standing. It also attempts to gauge how accurate Yelp’s filtering mechanism might be in discovering review fraud. What it does not address is the legion of accusations that, for years now, Yelp has been manipulating reviews by hiding good reviews and bringing bad reviews to the fore in order to punish or coerce business owners. That question was not examined, so any claim by Yelp that that “Fake It Till You Make It” proved it isn’t manipulating reviews to extort businesses is unadulterated fiction.
We Won in Court
Yelp also keeps portraying legal victories, such as the decision in Levitt v. Yelp, as vindication, rather than very narrow interpretations of obscure technicalities. Yelp has not so much “won in court,” as received favorable legal rulings that denied plaintiffs their day in court, not the same thing at all. Yelp has not had to face the process of “discovery,” which would have allowed plaintiffs to subpoena Yelp’s internal records. The legal challenges against Yelp have been dismissed on technicalities which weren’t explained in detail in Billion Dollar Bully, for reasons which will probably become clear as I struggle to.
The relevant part of the legal code governing what Yelp does, as dissected in the Levitt v. Yelp decision, is section 230 of the Communications Decency Act, which has long protected online media platforms’ liability from the posts of users, and their rights to suppress posts. In part, it reads:
“(c) Protection for ‘Good Samaritan’ blocking and screening of offensive material.
(1) Treatment of publisher or speaker. No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.
(2) Civil liability. No provider or user of an interactive computer service shall be held liable on account of―
(A) any action voluntarily taken in good faith to restrict access to or availability of material that the provider or user considers to be obscene, lewd, lascivious, filthy, excessively violent, harassing, or otherwise objectionable, whether or not such material is constitutionally protected.”
The legal arguments against Yelp accuse it of manipulating reviews (suppressing good reviews and promoting bad ones) to artificially force businesses’ “star rating” down unless they agree to advertise on Yelp. This is very important: The Levitt ruling does not say Yelp does not do that. It does not even address whether Yelp is extorting businesses. It only says, as the law is currently written, Yelp is allowed to do it: “Plaintiffs’ allegations of extortion based on Yelp’s alleged manipulation of their review pages – by removing certain reviews and publishing others or changing their order of appearance – falls within the conduct immunized by § 230(c)(1).”
Santa Clara University Law professor Eric Goldman explained the ruling in Yelp’s favor on his blog:
“Judge Chen responds [to the notion that Yelp is extorting people] that ‘§ 230(c)(1) contains no explicit exception for impermissible editorial motive.’ He contrasts 230(c)(2)’s ‘good faith’ requirement, saying that the absence of a parallel ‘good faith’ requirement in 230(c)(2) means editorial intent is irrelevant to 230(c)(1)…. Making the point that 230(c)(1) does not permit an inquiry into the defendant’s motivation, Judge Chen continues: traditional editorial functions often include subjective judgments informed by political and financial considerations.… Determining what motives are permissible and what are not could prove problematic.”
In other words, the judge’s legal interpretation of good faith is the opposite of what the term means in common usage. It seems obvious that knowingly magnifying bad reviews and minimizing good reviews is operating in bad faith. Judge Chen’s interpretation is that it doesn’t matter if Yelp is making editorial decisions with ill intent for financial benefit, because editorial motive isn’t explicitly addressed in the statute, and in any case, the legal hassle of establishing that Yelp is operating with bad motive would be time-consuming and expensive for Yelp, therefore plaintiffs are barred from trying.
The case was appealed, and Ninth Circuit judges found, as Goldman wrote in Forbes, “…removing positive reviews wasn’t extortion because Yelp didn’t have to publish those reviews at all [and] publishing or showcasing negative reviews wasn’t extortion because Yelp has the legal right ‘to post and sequence the reviews.’”
The rulings do not vindicate Yelp from accusations of extorting businesses. The rulings skip over those accusations and say businesses simply aren’t allowed to bring extortion claims as a cause of legal action.
What is Good Faith?
The legal rulings interpret “good faith” in a radically different way than common sense suggests. If a company was responsibly curating customer reviews, for example, it would provide a way to reliably dispute reviews that have been posted in bad faith, particularly for small businesses whose hands may be tied by legal restrictions, like doctors and lawyers. Lawyers are bound by client confidentiality, and doctors by the strict privacy guidelines mandated by the Health Insurance Portability and Accountability Act (HIPAA).
Nancy Landry is an RN that runs a medical practice in Massachusetts. She explained the problem: “If patients are engaging in drug-seeking behavior, they want antibiotics or opiates, and we refuse to prescribe them, we get ripped a new one on Yelp. When we refuse to make a diagnosis on the phone, and insist a patient come in so we can see them, the same thing. One patient was demanding more high radiology diagnostics, even though that was not safe, because he’d already had a lot of imaging. He winds up at the practice, yelling, screaming, breaks the front window, and we can’t even write a simple rebuttal to a bad review.”
When I contacted Yelp for guidance on how health care providers in Landry’s position were supposed to handle bad-faith reviews from patients, Yelp spokesperson Kathleen Liu directed me to two posts on Yelp’s site, “An Expert’s Guide to Patient Privacy and Online Reviews,” and “To what extent can regulated businesses use consumer review sites like Yelp?”
After reading the articles, in follow up questions to Yelp, I noted that the posts suggest that the health care provider could contact the patient leaving the negative review via Yelp’s private messaging system although that system is not HIPAA compliant (meaning using the system that way would be illegal). Also, in the “Expert’s Guide,” Yelp’s HIPAA compliance expert said the only response to a bad review a medical provider might make is a general post to the effect of, “We strive to give good care to all patients.” For the health care provider to even acknowledge that a patient got treatment at a medical facility is a HIPAA violation.
What remedy is available for doctors to respond to malicious reviews, given their legal constraints? When I put that question to Yelp, they did not respond.
Yelp’s attitude to the plight of doctors is summed up in some of the canned language Liu forwarded to me in our initial exchange, “We believe there is far more value for consumers in transparency of information to ensure the healthcare industry has their best interests in mind than there is risk for healthcare professionals of consumers’ voices being too powerful.”
This kind of logic further highlights the perversity of rulings like Levitt v. Yelp, because such responses make crystal clear Yelp is fine with allowing patients to post false claims while giving health care providers literally no avenue of redress, which seems the very opposite of operating “in good faith.”
The FTC Says it’s All Good
In the film, the third piece of evidence Yelp consistently points to as vindication of their business practices is that they’ve been investigated twice by the Federal Trade Commission but not charged. David Balto, the former policy director of the FTC, explained on camera that Yelp had more than 2,000 complaints filed against it, which he called an “astronomical” number.
That “astronomical” number is now very out of date.
According to a Freedom of Information Act document obtained by Douglas Kimzey, a plaintiff against Yelp, the Federal Trade Commission reports that as of July 2016, the number of complaints against Yelp was 5,392. It is probably safe to assume that thousands more FTC complaints against Yelp have accrued since then.
The Technoskeptic spoke to Balto, and he confirmed that to his knowledge, the problems raised in Billion Dollar Bully all remain active issues, of which the thousands of additional complaints that accrued since his interview for BDB are indicative. Balto noted, “Most businesses give up without filing a complaint, so what we see is probably just the tip of the iceberg.”
In the film, he cautions against the assumption closing FTC cases means Yelp is not guilty of anything. “We bring a small number of cases every year…. There are many cases where [the FTC] failed to take action where I thought it appropriate.”
Balto also confirmed to The Technoskeptic that the FTC could still take action against Yelp, should it choose to do so, regardless of the Levitt decision. He explained, “The FTC could use its authority under Section 5 of the FTC Act, which gives the power to examine ‘unfair or deceptive acts and unfair methods of competition.’”
As to why the FTC has so far failed to act, Bully makes a point worth considering. The law firm that successfully represented Yelp in Levitt v. Yelp was Gibson, Dunn, and Crutcher, LLP. Edith Ramirez, Chairperson of FTC at the time Levitt was under consideration, used to work for that firm. While there is no proof of impropriety on Ramirez’s part, the fact remains that the person in control of the FTC’s decisions of what cases to bring, or not to bring, used to work for Yelp’s legal defenders. That merits raised eyebrows and additional scrutiny, if nothing else.
Documentary, What Documentary?
Yelp’s sleazy tactics for dealing with the release of Billion Dollar Bully are telling. Milliken told The Technoskeptic, “When the film was first released (May 2019), Yelp bought up a bunch of Google adspace, and made very misleading claims, like ‘Billion Dollar Bully, See the Truth,’ and it would link to [Yelp], so it would look like it was official to the film, and it wasn’t. Google, once we complained, quickly removed it, but Yelp knew they were breaking [Google’s] terms of service.
“My website domain is ProstFilms.com and I also owned BillionDollarBully.com, and I would have it redirect to Prost Films. As soon as BillionDollarBully.com expired, Yelp snagged it before I could renew it, which I found out only on the day I released the film…. They had BillionDollarBully.com direct to their website to a page stating Yelp does not extort business owners. I think if you have to have an entire page dedicated to claiming you don’t extort, that’s a red flag in itself. It shows they’re being accused of it all the time…. It shows their level of integrity, which is none.”
What’s Next With Yelp
BillionDollarBully.com still directs to Yelp, and Yelp did not respond to inquiries about the Google ad campaigns or why it hijacked Milliken’s website. Billion Dollar Bully, though it tries hard, suffers from a time limitation, because it took years for Milliken to get distribution for the film. This means Yelp’s newest tactics for squeezing money out of small business aren’t addressed in it. And there are some doozies.
A recent Vice article, “Yelp is Screwing Over Restaurants by Quietly Replacing Their Phone Number,” summarizes one of Yelp’s fun new ploys. Now users of the Yelp app, when they search on area restaurants, will be presented two phone options: “Delivery or Takeout,” or “General Questions.” Only if the user selects “General Questions” will they get the restaurant’s actual telephone number. If a user selects the “Delivery or Takeout,” option, they don’t get connected to the restaurant, but rather to a number controlled by Yelp’s business pal, GrubHub. That allows GrubHub to charge the restaurant a fee as if it brought new business to the restaurant, when Yelp is really just inserting GrubHub into the routing of a phone call to allow it to skim a percentage of the meal cost.
Another new tactic that started approximately four months ago was Yelp adjusting their search algorithm. One Los Angeles business owner complained to The Technoskeptic, but refused to be identified by name in the article because he revealed, “I’m terrified of those people.”
The business owner described how Yelp’s new tactic forced him to advertise with them, or face the collapse of his business. “For years I was number one in my category. One of the reasons was, if any customer was ever dissatisfied, I refunded them their money, so I just didn’t get bad Yelp reviews. Yelp brought me a lot of business and made me a lot of money. Then a few months ago, instead of showing up at the top of my category, which I have for years, all the people who are paying to advertise with Yelp are now above me. Even though I have the best reviews, I’m down to seventh position. My business goes from about $40,000 a month to $15,000 a month, for two months in a row. I have to fire my office manager. So, I agree to advertise with Yelp, and I’m back at the top of the listings.”
Except that the businessman confided his monthly business revenue hasn’t bounced all the way back to his earlier monthly average of $40,000, which he got for free. And he is now out $2,100 a month for Yelp’s top-of-the line advertising package.
Spending thousands of dollars a month to get you almost-but-not-quite back to where your business was before Yelp came calling suggests that whatever your opinion of the impact of the film, Billion Dollar Bully was very aptly named.
With the federal courts ruling for Yelp, lawsuits in state courts claiming that Yelp extorts companies will be thrown out, under the established principle that federal law preempts state law. Short of FTC taking up the cause of the small businesses harmed by Yelp, it seems Yelp will be allowed to continue to operate with no accountability.
The Technoskeptic reached out to members of the Yelp Exposed forum, to ask what they wish could happen next. Danny Eremian wants Yelp to get rid of anonymous reviews: “Upload proof of actually being at the business with a receipt, dated and with description of services rendered. The haters will always hate, but not so much if they have to expose who they are.”
S. H. (who asked that her full name not be used) agreed with Eremian, and also added, “Yelp will continue their anti-business practices for as long as they continue to see their revenue increase from advertisers. The only way to make them stop or change their ways is to get businesses to stop advertising.”
S. H. may be on to something. When the money stops flowing, that’s when the people running a publicly traded company can be forced out. Yelp’s stock peaked at just over $100 a share in 2014, but it has never returned to those heights, and recently has languished at a third of that valuation. Not coincidentally, under pressure from activist investors, Yelp replaced three board members in early 2019. It could be that Yelp will stay in the basement until they get board members in place that figure out one way to increase advertising revenues might be to stop alienating their prime source of revenue: small businesses.
You can follow Art Keller on Twitter @artkeller.