Is Yelp Committing Extortion?

Brian Solis got involved in a controversy about Yelp possibly strong-arming small businesses to have bad reviews moved down in their ratings, but he backs off from the basic extortion and focuses on the marketing aspects too much.

The initial impetus was a story in the East Bay Express by Kathleen Richards:

[via Yelp and the Business of Extortion 2.0]

[…]

John [a restaurant owner that was approached to pay $299 to minimize the placement of negative reviews] may sound paranoid, but he’s got company. During interviews with dozens of business owners over a span of several months, six people told this newspaper that Yelp sales representatives promised to move or remove negative reviews if their business would advertise. In another six instances, positive reviews disappeared — or negative ones appeared — after owners declined to advertise.

Because they were often asked to advertise soon after receiving negative reviews, many of these business owners believe Yelp employees use such reviews as sales leads. Several, including John, even suspect Yelp employees of writing them. Indeed, Yelp does pay some employees to write reviews of businesses that are solicited for advertising. And in at least one documented instance, a business owner who refused to advertise subsequently received a negative review from a Yelp employee.

Many business owners, like John, feel so threatened by Yelp’s power to harm their business that they declined to be interviewed unless their identities were concealed. (John is not the restaurant owner’s real name.) Several business owners likened Yelp to the Mafia, and one said she feared its retaliation. “Every time I had a sales person call me and I said, ‘Sorry, it doesn’t make sense for me to do this,’ … then all of a sudden reviews start disappearing.” To these mom-and-pop business owners, Yelp’s sales tactics are coercive, unethical, and, possibly, illegal.

Brian zooms in on Yelp’s response, as a case study in dealing with bad news:

[via Yelp Gets a Bad Review: Embracing a Crisis to Shape Perception]

As a practitioner of total transparency and just good business, Jeremy Stoppelman, CEO of Yelp, responded with an impressive blog post.



If the story ended there, we’d have a textbook case of what to do when confronted with bad PR.

[Uh, no Brian, we’d still be left with the extortion, since that claim hasn’t been proven one way or the other.]

However, The East Bay Express’ detailed six page article didn’t just accuse a highly popular company of unethical behavior, it humanized the alleged victims through their fearful narration of Yelp’s purported blackmail attempts over time. It engendered empathy.

And, Jeremy didn’t just write a blog post in defense of his company, he also fired back with a defense worthy of a legal drama, at one point, insinuating that Kathleen’s use of anonymous sources was beneath the standards of journalism and therefore less credible.

So let’s back up a bit and analyze this scenario from a communications and crisis response viewpoint.

Whether or not you agree with the practice of referencing anonymous sources, The East Bay Express still published a piece that references several businesses who came forward, but were literally afraid of any potential acts of retribution from Yelp.com.

[Use of anonymous sources is commonplace in journalism, Brian, as you know. Why should this journalist be forced to reveal her sources to the man whose company is being accused?]

The article states, “During interviews with dozens of business owners over a span of several months, six people told this newspaper that Yelp sales representatives promised to move or remove negative reviews if their business would advertise. In another six instances, positive reviews disappeared — or negative ones appeared — after owners declined to advertise.”

The case was reinforced with a condemning statement, “Several business owners likened Yelp to the Mafia, and one said she feared its retaliation. “

The themes are reiterated throughout the verbose feature and actually serve as the foundation for Yelp to develop a strategic and meaningful response.

- Many business owners believe Yelp employees use such reviews as sales leads.

- Several suspect Yelp employees of writing them.

- Yelp does pay some employees to write reviews of businesses that are solicited for advertising. In fact, the publication uncovered one documented instance where a business owner who refused to advertise received a negative review from a Yelp employee.

Whether these accusations are right or wrong, they’re incredibly defamatory. And, if the reporter indeed interviewed dozens of fearful companies who shared this sentiment, perhaps there’s credence in the experiences. Either way, there’s a perception that certain Yelp salespersons are crossing the line. And, in the world of online social influence, perception can be reality.

Even more important, reality can be reality. If Yelp is in fact — directly or indirectly — using strongarm tactics they should deal with the consequences, which may include legal action. I hope there is a DA out there somewhere willing to look into these allegations.

And we, the social media technorati, should treat this on a much more serious level than the PR fallout. If a company like Yelp acts in the way that has been alleged, we should call for a boycott of the company, and an investigation to get to the bottom of this.

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