The Wild Wild Web

Did Yelp lie to the SEC?

Says who? (Photo: Barnabyjones / flickr)

Prior to their recent IPO, Yelp was questioned by attorneys at the Securities and Exchange Commission on whether employees should be allowed to write reviews about advertisers, asking if such reviews violated the Federal Trade Commission’s truth-in-advertising standards. Yelp answered that it didn’t violate those standards because it doesn’t tell reviewers which businesses to review or how to rate them. It’s long been the consensus of small businesses that Yelp is an extortion scheme. Many local business owners have told me about phone conversations with aggressive, desperate salespeople promising special treatment, including help removing negative reviews, if they advertise. Yelp, of course, denies this, but I’ve heard the identical story from dozens of businesses, so it seems unlikely they’re all making it up. A few months ago, I received e-mail correspondence between the chef of a well-known restaurant and an “Elite Yelper” that appears to indicate that Yelp also might have lied to the SEC.

On their website, Yelp describes their “Elite Squad” as a way of “recognizing and rewarding Yelpers who are active evangelists and role models, both on and off the site.” (How they know they’re role models off the site is a bit of a mystery.) In the e-mail I received, the chef apologizes to the Elite Yelper – we’ll call her “Sandy” – for a bad experience and invites her back. Sandy responds that her two-star review (in which she says the restaurant “sucks”) wasn’t really because she hated the restaurant – in fact, she thinks they have “a great thing going” – but because in order to keep her “Elite” status, she must write reviews with every level of Yelp ratings. This directly conflicts with Yelp’s assurance to the SEC that it doesn’t tell its reviewers how to rate businesses, but more important it lends credence to the hundreds of business owners who insist that Yelp manipulates the review system. I decided to give Sandy a call and get her side of the story. (I also reached out to Yelp for comment, but my request went unanswered.)

Sandy’s profile page says she has written 123 reviews since 2009, and her current crush is “Justin Bieber and a girl crush on Guliana Rancic” (though she misspells the first name of her girl crush). Her answer to “Why You Should Read My Reviews?” is, “Eating out is a hobby for me, I do fine dinning to ghetto mexican hot dogs.” (And yes, she misspells dining and doesn’t capitalize Mexican).

When we spoke by phone, I asked her if she thought it was fair to write a review stating simply that a restaurant “sucked.” Her voice grew a bit shaky, and then she said, “No, I guess not. I’m going to change that part.” The reason she thought it sucked was because the prime rib was too fatty. “It was like 30 percent fat,” she said. I informed her that prime rib is supposed to be fatty – in fact, three ounces contain 300 calories, more than half from fat. “Oh,” she said meekly, “I didn’t know that.”

I asked her if, perhaps, she thought she should do a little research about unfamiliar ingredients before saying that a restaurant sucks. At first I heard crickets chirping, and then Sandy said, “I’m just a college student who writes Yelp reviews when I’m bored. I do it so I can go to the Elite Yelper events the restaurants throw for us to get free food and booze. I’m not a writer and I really don’t know anything about food, so I don’t even know why anyone pays attention to what I say.”

When confronted with her e-mail assertion that she was required to write negative reviews to keep her Elite status, Sandy again got very quiet. “I made that up to make the chef feel better,” she finally said. But after my hour-long conversation with the Bieber/Rancic-crushing college student, I doubted she was clever enough to come up with something like that on her own.

I have a feeling a lot of Yelpers are just like Sandy – college students and average folks who enjoy the special events and free food and booze. Ironically, by treating those Yelpers as VIPs, the business owners have created the very monster they so despise. If they want Yelpers to have less power, they need to take the power away. That means no more special events or apologetic e-mails; it means ignoring the nasty reviews written by ex-employees or ex-lovers or the competition masquerading as customers; and it means turning a blind eye to the occasional review that says, “You suck.”

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