Online review site Yelp kind of had a weird year last 2014. The Jeremy Stoppelman-founded company celebrated its 10th anniversary; at the same time, the site also became the subject of several controversies, including lawsuits, extortion charges, and accusations by local business owners who contended that Yelp had failed to prevent fake online reviews.
Yelp seems to be off to a much smoother start this 2015. This week, the US Federal Trade Commission (FTC) ended a year-long investigation into the online review site’s business practices.
In a company blog post, Vince Sollitto, Yelp VP of Communications and Public Affairs, said, “The FTC recently concluded a deep inquiry into our business practices and informed us that it will not be taking any action against Yelp.
“The FTC looked into our recommendation software, what we say to businesses about it, what our salespeople say about our advertising programs, and how we ensure that our employees are not able to manipulate the ratings and reviews that we display on our platform. After nearly a year of scrutiny, the FTC decided to close its investigation without taking further action. This marked the second time that the FTC had looked at our advertising practices and ended its inquiry without further action.”
As Sollitto mentioned, this is the second time that the FTC investigated Yelp’s practices without taking any subsequent action against the review site. The investigation began after a total of 2,045 complaints were filed against Yelp.
Last September, Yelp also escaped extortion charges, whereby the US Court of Appeals for the Ninth Circuit affirmed the district court’s dismissal of small business owners’ allegations that the review site attempted to extort advertising money from them by manipulating online reviews. The court said that Yelp had a right to arrange its reviews as it sees fit.
“The reason millions of people around the world use Yelp every day to find great local businesses is because they trust the content,” added Sollitto. “That’s why we take so many steps to prevent gaming of our system and to protect consumers and business owners alike, and why we would never do anything to jeopardize that trust.”
As a means of battling the growing problem of fake online reviews, Yelp has, in the last several years, introduced review management tools and anti-fraud measures such as the Yelp Review Filter and consumer alerts posted on Yelp business pages. The company even created a page on its site to dispel certain Yelp myths. However, the site continued to be accused by many of improving the visibility of businesses that pay for advertising, while manipulating the reviews or extorting the businesses that don’t.
Said Sollitto: “Some businesses decided to test these claims in court and brought a number of legal cases against Yelp, alleging that we played favorites with advertisers or harmed non-advertisers. None of these cases have been successful.”