7 ms·

Yelp's Legal Troubles Mount

13 points by newsit 17y ago

ghshephard 17y ago
I'll pay attention to this story when someone provides either: A) An email B) A recorded phone call that suggests there is inappropriate behavior taking place on behalf of Yelp. Ever since that East Oakland story, where they became not only high profile, but transitioned into being a hundred million dollar plus company that has a chance to _own their market_, I have a very hard time believing they would screw it up by making these types of mistakes. This isn't a case of classmates.com which demonstrated almost complete incompetence, and never left the bottom-feeding stage. Yelp really gets it, and their "Elite" reviewers make the site a phenomenal resource when trying to get a sense of how good something like a restaurant is.
jrockway 17y ago
The problem is that the businesses are trying to hold Yelp responsible for its user's behaviors. The fact that nobody clicks through when the business has a 3-star rating is not Yelp's fault, it's the collective-userbase's fault. Yelp is being sued because it's an easy target for angry business owners, not because they did anything wrong. (If they didn't exist, they wouldn't push any traffic to the restaurant. The problem is that they do exist and that users trust them.)
- sjsivak 17y ago
  That is not it at all. The lawsuit claims (from what I read in the article) that the issue is before turning down an offer to advertise on the site for $300 a month, the company had a 4.5 star rating. Two days after the refusal, the company claims that six out of seven 5 star reviews were removed (by Yelp). This is about being forced to pay to keep your good reviews, not about page views. The company is just saying that with a reduced rating they saw less traffic, which is to be expected.
  - jrockway 17y ago
    Why is Yelp obliged to publish favorable reviews? If a newspaper critic said "I hate this place", that would be fine. But if Yelp does it, it's not fine? Why is that?
    - cynicalkane 17y ago
      If a newspaper critic wrote reviews in exchange for money, while lying about it, this sounds to me like extortion. It might be fraud, too. IANAL.
      - jrockway 17y ago
        Following the legal definition of extortion, I don't see a case. It's unethical, certainly, but the action you take against unethical journalists or their publications is to stop reading them. The legal system does not provide a remedy.
        dschobel 17y ago
        If you can convince a jury that you lost business because of someone else's action, then you can get damages. Welcome to civil court.
    - sjsivak 17y ago
      1. I have no idea what obligations Yelp has, legally or otherwise. 2. Legal definition of extortion (IANAL): The use, or the express or implicit threat of the use, of violence or other criminal means to cause harm to person, reputation, or property as a means to obtain property from someone else with his consent. Seems like (to my untrained and uneducated self) that this would be Yelp damaging the Company's reputation because the Company refused to pay Yelp.
      - jrockway 17y ago
        "criminal means" is the key word. Removing comments from a website that you operate is not criminal. I hope.
- chaosprophet 17y ago
  IMHO, the businesses are suing Yelp because it appears that not buying advertising results in negative effects. While that may not really be true and it could indeed be Yelp's ranking algorithm automatically removing the reviews, the fact that most of Yelp's salespeople apparently seem to be parroting the "buy advertising and you'll get good reviews" line makes this look all the more suspicious in the eyes of the business owners.
  - jrockway 17y ago
    Doesn't Google do the same thing? Don't buy ads, you are on page 5 of the search results. Buy an ad, and you are right at the top. Extortion!!!!
    - rcoder 17y ago
      Google has studiously avoided ranking search results according to sites' ad spending. Placement in an AdWords block outside of the normal search results is an obvious compromise that allowed them to "sell" placement without destroying the value of their core search product. Where Yelp has allegedly crossed a line is in manipulating the user-generated reviews of a site according to whether they pay for advertising, while claiming that no manual intervention is happening. The truth is likely more murky than either party's depiction, of course; I wouldn't be at all surprised to hear that their "automated filter" does take the "ad partner" status of a business into account when deciding how many reviews to flag for moderation or removal. Of course, you're right to suggest that at a certain level, Yelp can do whatever they want. They just shouldn't misrepresent what you're buying with your ad dollars.
    - theli0nheart 17y ago
      No, it's not the same at all. Let me illustrate in what scenario they would be the same. Say I'm #1 for a Google Search. A Google sales rep then contacts me and says that for $300 a month, I can maintain that position. But I have great SEO and don't need to pay Google anything. After I decline to pay, Google's ranking algorithm destroys my pagerank and I am now on page 5 of search results. That doesn't seem right.
- gojomo 17y ago
  But if Yelp differentially applies policies to nudge a business down to 3 stars -- then what? Anecdotal evidence continues to emerge that Yelp's black-box filters against 'suspicious' reviews have a strictness dial controlled by ad payments.
  - jrockway 17y ago
    Is there a law that says that you have to follow policies if you are a user-driven site that asks for advertising money? Not that I know of. I used to delete comments from my blog all the time, and now I don't allow them at all. If I had advertising, would I be violating some rule? Then how is Yelp any different, except that people blindly trust it?
    - gojomo 17y ago
      I'd agree Yelp has no obligation to carry any particular review, and good reasons to keep their algorithms and policies somewhat obscured. But traditional journalism and review outlets keep a clear separation between advertising and editorial decisions. Similarly, in finance, a 'Chinese wall' prevents information and revenue from some clients from influencing investment recommendations. And on the internet, Google got more respect than Go/Overture and other competitors by clearly marking advertising, and committing in no uncertain terms to the principle that 'organic' results were uninfluenced by ad-spending. If Yelp wants to blaze a new trail, where review placements and ratings are for sale, I'm sure they can legally do so -- but then Yelp needs to make the proper disclosures, and take the reputational hit that entails. Otherwise they're deceiving people -- which invites lawsuits for unfair trade practices and the attention of regulatory agencies like the FTC. (Facebook is likely to face the same disclosure issues if they ever let companies pay to highlight or bury comments on 'Fan' pages.)
roboneal 17y ago
261 Yelp page views to 158... The article infers these are monthly page views (July to August)? The furniture store claims a drop of 25% of revenue - that's a lot of revenue for 103 pageviews. He must "convert" very well.
- awa 17y ago
  The rating drop from 4.5 to 3ish could easily mean that of from 200 people out of 261 visited his store that dropped to 25-30 (I never personally pick a place which is 3ish on yelp)
- hkuo 17y ago
  I would actually say that yes, Yelp converts very well for small businesses. Recently, when I was looking for a printing shop to print my wedding invitations, I was very highly intent on giving someone my business. Out of the 4 printers I researched on Yelp, I picked one and paid for that company's services. Generally, people browsing Yelp have a very specific goal. They're searching for a business to use and ready to choose and pay.
mdasen 17y ago
It's just a murky place. To be honest, I think I believe Yelp. SPAM is hard to figure out - especially when it's shill reviews - and it's easy to imagine an outsourced sales staff (working on commission) making all sorts of demands/promises to boost their next paycheck. The issue is that Yelp has the incentive to be evil here. That doesn't mean they are being evil, but incentive + coincidence == evidence? It does to many people. From what we've seen: Yelp is important to business since it's a site that creates a reputation for you. Good reviews help you, bad ones hurt. Yelp does some sort of SPAM protection to remove vindictive/shill reviews. Yelp has the ability to manipulate all their data. Yelp has the ability to ruin your reputation or create a good reputation for you through that manipulation. Some businesses are complaining that Yelp is using that power and asking for money to keep a good reputation. But there's hardly evidence. There are no emails being posted showing someone asking for money and no recorded phone calls. Reviews are disappearing and appearing, but we always change around data and sometimes algorithms are complex enough that you can immediately see why when you don't know the intent. I mean, a week or so ago I saw an article posted 4 hours ago with 30 votes showing up lower than an article posted 6 hours ago with 24 votes. OMG! PG is manipulating HN for articles he likes! Maybe. But maybe it's more complicated than votes and time. Maybe the age of each vote is used rather than the age of the article. Maybe some of the votes were from SPAM accounts. Maybe it uses karma to determine vote weight. I could look up most of that in the source (SPAM stuff being absent there), but I just wanted to bring a relatable scenario into the mix. If Yelp is manipulating reputation for profit, it borders on blackmail and they should be sued out of existence. But I have yet to see anything conclusive that would indicate that. To me, it looks like blundering mistakes - hiring a bad sales staff that lies; not making SPAM prevention and algorithmic changes transparent and understandable; etc. Those are problems. Being blundering and causing problems is something that one needs to address and it might be that Yelp is derelict in their duty (morally, legally, otherwise - I'll leave those bikeshed arguments for others). And maybe part of it is hiring humans to read reviews and make determinations about shill level - we can all imagine sending out an email blast to 100 people asking them to rate us as 5-star on Yelp and then a deluge of reviews that were very short over a small period of time all being 5-star (and how that would look suspicious). I think transparency is the key here. Yelp needs to open the conversation up a bit and explain a bit better than "algorithms do it". I know, once you tell people how SPAM prevention works, it ceases to be prevention. Still, it's the reputation of businesses. As for now, I'm willing to give Yelp the benefit of the doubt, but I hope the whole truth will come out in the future.
hkuo 17y ago
So does this make it 3 companies so far filing suit? If I do the math (well, do I really need to?), if this were a regular business practice Yelp was involved in, wouldn't you think that there would be wayyyyyyyyyyyyyyy more businesses chiming in? I actually can't fathom the number of businesses there are in their database. Couldn't even venture a guess. Even if what these businesses are saying is true, I would regard them as extremely isolated incidents that could have been done by individuals within the company with a vendetta. But again, I would more likely consider the chain of events coincedences. I'll need to see way more companies accusing Yelp of this before I would even consider Yelp at any fault.
nycticorax 17y ago
After reading this article, and the Yelp blog posts about the issue, it sounds to me like Yelp is doing exactly what they claim to be doing, and what they should be doing. Yelp says that there's a "Chinese wall" between the people selling ads on Yelp and the people managing reviews. Former Yelp employees seem to vouch for this. The people suing them don't seem to have any evidence that the ad-sellers are manipulating the reviews. Furthermore, some of the people suing Yelp admit that they solicited reviews from happy customers, which Yelp considers a no-no (and they've made this clear in public). The only thing the people suing Yelp seem to have going for them is that some of the positive reviews for their businesses (some of which were admittedly solicited) got removed not long after they declined to buy advertising on Yelp. Yelp essentially says that this was a coincidence: Their automatic filters try to eliminate solicited (and vindictive) reviews, and the filters happened to do their thing shortly after these businesses were approached by Yelp's ad-sellers. But there's really no solid evidence of causality. Given the number of businesses covered by Yelp, you'd expect this sort of thing to happen occasionally. Furthermore, there are a lot of businesses that _do_ buy ads that still have negative reviews on Yelp. So. Also, did anyone else think of PG's essay "The Submarine" when reading that Inc. article? To me, it really seemed like the article was biased against Yelp, to the extent that I wondered whether some of the lawyers suing Yelp have hired a PR firm...

13 points by newsit 17y ago

I'll pay attention to this story when someone provides either: A) An email B) A recorded phone call that suggests there is inappropriate behavior taking place on behalf of Yelp. Ever since that East Oakland story, where they became not only high profile, but transitioned into being a hundred million dollar plus company that has a chance to _own their market_, I have a very hard time believing they would screw it up by making these types of mistakes. This isn't a case of classmates.com which demonstrated almost complete incompetence, and never left the bottom-feeding stage. Yelp really gets it, and their "Elite" reviewers make the site a phenomenal resource when trying to get a sense of how good something like a restaurant is.

jrockway 17y ago

The problem is that the businesses are trying to hold Yelp responsible for its user's behaviors. The fact that nobody clicks through when the business has a 3-star rating is not Yelp's fault, it's the collective-userbase's fault. Yelp is being sued because it's an easy target for angry business owners, not because they did anything wrong. (If they didn't exist, they wouldn't push any traffic to the restaurant. The problem is that they do exist and that users trust them.)

sjsivak 17y ago
That is not it at all. The lawsuit claims (from what I read in the article) that the issue is before turning down an offer to advertise on the site for $300 a month, the company had a 4.5 star rating. Two days after the refusal, the company claims that six out of seven 5 star reviews were removed (by Yelp). This is about being forced to pay to keep your good reviews, not about page views. The company is just saying that with a reduced rating they saw less traffic, which is to be expected.
- jrockway 17y ago
  Why is Yelp obliged to publish favorable reviews? If a newspaper critic said "I hate this place", that would be fine. But if Yelp does it, it's not fine? Why is that?
  - cynicalkane 17y ago
    If a newspaper critic wrote reviews in exchange for money, while lying about it, this sounds to me like extortion. It might be fraud, too. IANAL.
    - jrockway 17y ago
      Following the legal definition of extortion, I don't see a case. It's unethical, certainly, but the action you take against unethical journalists or their publications is to stop reading them. The legal system does not provide a remedy.
      - dschobel 17y ago
        If you can convince a jury that you lost business because of someone else's action, then you can get damages. Welcome to civil court.
  - sjsivak 17y ago
    1. I have no idea what obligations Yelp has, legally or otherwise. 2. Legal definition of extortion (IANAL): The use, or the express or implicit threat of the use, of violence or other criminal means to cause harm to person, reputation, or property as a means to obtain property from someone else with his consent. Seems like (to my untrained and uneducated self) that this would be Yelp damaging the Company's reputation because the Company refused to pay Yelp.
    - jrockway 17y ago
      "criminal means" is the key word. Removing comments from a website that you operate is not criminal. I hope.
chaosprophet 17y ago
IMHO, the businesses are suing Yelp because it appears that not buying advertising results in negative effects. While that may not really be true and it could indeed be Yelp's ranking algorithm automatically removing the reviews, the fact that most of Yelp's salespeople apparently seem to be parroting the "buy advertising and you'll get good reviews" line makes this look all the more suspicious in the eyes of the business owners.
- jrockway 17y ago
  Doesn't Google do the same thing? Don't buy ads, you are on page 5 of the search results. Buy an ad, and you are right at the top. Extortion!!!!
  - rcoder 17y ago
    Google has studiously avoided ranking search results according to sites' ad spending. Placement in an AdWords block outside of the normal search results is an obvious compromise that allowed them to "sell" placement without destroying the value of their core search product. Where Yelp has allegedly crossed a line is in manipulating the user-generated reviews of a site according to whether they pay for advertising, while claiming that no manual intervention is happening. The truth is likely more murky than either party's depiction, of course; I wouldn't be at all surprised to hear that their "automated filter" does take the "ad partner" status of a business into account when deciding how many reviews to flag for moderation or removal. Of course, you're right to suggest that at a certain level, Yelp can do whatever they want. They just shouldn't misrepresent what you're buying with your ad dollars.
  - theli0nheart 17y ago
    No, it's not the same at all. Let me illustrate in what scenario they would be the same. Say I'm #1 for a Google Search. A Google sales rep then contacts me and says that for $300 a month, I can maintain that position. But I have great SEO and don't need to pay Google anything. After I decline to pay, Google's ranking algorithm destroys my pagerank and I am now on page 5 of search results. That doesn't seem right.
gojomo 17y ago
But if Yelp differentially applies policies to nudge a business down to 3 stars -- then what? Anecdotal evidence continues to emerge that Yelp's black-box filters against 'suspicious' reviews have a strictness dial controlled by ad payments.
- jrockway 17y ago
  Is there a law that says that you have to follow policies if you are a user-driven site that asks for advertising money? Not that I know of. I used to delete comments from my blog all the time, and now I don't allow them at all. If I had advertising, would I be violating some rule? Then how is Yelp any different, except that people blindly trust it?
  - gojomo 17y ago
    I'd agree Yelp has no obligation to carry any particular review, and good reasons to keep their algorithms and policies somewhat obscured. But traditional journalism and review outlets keep a clear separation between advertising and editorial decisions. Similarly, in finance, a 'Chinese wall' prevents information and revenue from some clients from influencing investment recommendations. And on the internet, Google got more respect than Go/Overture and other competitors by clearly marking advertising, and committing in no uncertain terms to the principle that 'organic' results were uninfluenced by ad-spending. If Yelp wants to blaze a new trail, where review placements and ratings are for sale, I'm sure they can legally do so -- but then Yelp needs to make the proper disclosures, and take the reputational hit that entails. Otherwise they're deceiving people -- which invites lawsuits for unfair trade practices and the attention of regulatory agencies like the FTC. (Facebook is likely to face the same disclosure issues if they ever let companies pay to highlight or bury comments on 'Fan' pages.)

roboneal 17y ago

261 Yelp page views to 158... The article infers these are monthly page views (July to August)? The furniture store claims a drop of 25% of revenue - that's a lot of revenue for 103 pageviews. He must "convert" very well.

awa 17y ago
The rating drop from 4.5 to 3ish could easily mean that of from 200 people out of 261 visited his store that dropped to 25-30 (I never personally pick a place which is 3ish on yelp)
hkuo 17y ago
I would actually say that yes, Yelp converts very well for small businesses. Recently, when I was looking for a printing shop to print my wedding invitations, I was very highly intent on giving someone my business. Out of the 4 printers I researched on Yelp, I picked one and paid for that company's services. Generally, people browsing Yelp have a very specific goal. They're searching for a business to use and ready to choose and pay.

mdasen 17y ago

It's just a murky place. To be honest, I think I believe Yelp. SPAM is hard to figure out - especially when it's shill reviews - and it's easy to imagine an outsourced sales staff (working on commission) making all sorts of demands/promises to boost their next paycheck. The issue is that Yelp has the incentive to be evil here. That doesn't mean they are being evil, but incentive + coincidence == evidence? It does to many people. From what we've seen: Yelp is important to business since it's a site that creates a reputation for you. Good reviews help you, bad ones hurt. Yelp does some sort of SPAM protection to remove vindictive/shill reviews. Yelp has the ability to manipulate all their data. Yelp has the ability to ruin your reputation or create a good reputation for you through that manipulation. Some businesses are complaining that Yelp is using that power and asking for money to keep a good reputation. But there's hardly evidence. There are no emails being posted showing someone asking for money and no recorded phone calls. Reviews are disappearing and appearing, but we always change around data and sometimes algorithms are complex enough that you can immediately see why when you don't know the intent. I mean, a week or so ago I saw an article posted 4 hours ago with 30 votes showing up lower than an article posted 6 hours ago with 24 votes. OMG! PG is manipulating HN for articles he likes! Maybe. But maybe it's more complicated than votes and time. Maybe the age of each vote is used rather than the age of the article. Maybe some of the votes were from SPAM accounts. Maybe it uses karma to determine vote weight. I could look up most of that in the source (SPAM stuff being absent there), but I just wanted to bring a relatable scenario into the mix. If Yelp is manipulating reputation for profit, it borders on blackmail and they should be sued out of existence. But I have yet to see anything conclusive that would indicate that. To me, it looks like blundering mistakes - hiring a bad sales staff that lies; not making SPAM prevention and algorithmic changes transparent and understandable; etc. Those are problems. Being blundering and causing problems is something that one needs to address and it might be that Yelp is derelict in their duty (morally, legally, otherwise - I'll leave those bikeshed arguments for others). And maybe part of it is hiring humans to read reviews and make determinations about shill level - we can all imagine sending out an email blast to 100 people asking them to rate us as 5-star on Yelp and then a deluge of reviews that were very short over a small period of time all being 5-star (and how that would look suspicious). I think transparency is the key here. Yelp needs to open the conversation up a bit and explain a bit better than "algorithms do it". I know, once you tell people how SPAM prevention works, it ceases to be prevention. Still, it's the reputation of businesses. As for now, I'm willing to give Yelp the benefit of the doubt, but I hope the whole truth will come out in the future.

hkuo 17y ago

So does this make it 3 companies so far filing suit? If I do the math (well, do I really need to?), if this were a regular business practice Yelp was involved in, wouldn't you think that there would be wayyyyyyyyyyyyyyy more businesses chiming in? I actually can't fathom the number of businesses there are in their database. Couldn't even venture a guess. Even if what these businesses are saying is true, I would regard them as extremely isolated incidents that could have been done by individuals within the company with a vendetta. But again, I would more likely consider the chain of events coincedences. I'll need to see way more companies accusing Yelp of this before I would even consider Yelp at any fault.

nycticorax 17y ago

After reading this article, and the Yelp blog posts about the issue, it sounds to me like Yelp is doing exactly what they claim to be doing, and what they should be doing. Yelp says that there's a "Chinese wall" between the people selling ads on Yelp and the people managing reviews. Former Yelp employees seem to vouch for this. The people suing them don't seem to have any evidence that the ad-sellers are manipulating the reviews. Furthermore, some of the people suing Yelp admit that they solicited reviews from happy customers, which Yelp considers a no-no (and they've made this clear in public). The only thing the people suing Yelp seem to have going for them is that some of the positive reviews for their businesses (some of which were admittedly solicited) got removed not long after they declined to buy advertising on Yelp. Yelp essentially says that this was a coincidence: Their automatic filters try to eliminate solicited (and vindictive) reviews, and the filters happened to do their thing shortly after these businesses were approached by Yelp's ad-sellers. But there's really no solid evidence of causality. Given the number of businesses covered by Yelp, you'd expect this sort of thing to happen occasionally. Furthermore, there are a lot of businesses that _do_ buy ads that still have negative reviews on Yelp. So. Also, did anyone else think of PG's essay "The Submarine" when reading that Inc. article? To me, it really seemed like the article was biased against Yelp, to the extent that I wondered whether some of the lawyers suing Yelp have hired a PR firm...