Yelp and the feds
An investigation by the Federal Trade Commission (FTC) was launched in early 2014 after 2,045 complaints were filed again Yelp. The complaints alleged Yelp manipulated their reviews so their advertisers were given higher ratings than their competitors. Yesterday, Yelp announced on their blog that the FTC has closed their investigation and decided against taking any action.
The Yelp blog states that the FTC conducted a “deep inquiry into [their] business practices and informed [them] that it will not be taking any action against Yelp. The FTC looked into [their] recommendation software…and after nearly a year of scrutiny, the FTC decided to close its investigation.”
When the FTC looked at Yelp’s recommendation software, they also investigated what they said to other businesses about the software, what their salespeople say about the advertising programs, and how Yelp ensures that their employees are unable to manipulate the ratings and reviews that are displayed online. In short, they tried to look at the possibility the ratings were manipulated from all sides. Yelp also states the Harvard School of Business conducted and independent study which found that Yelp’s recommendation software “does not treat advertisers’ reviews in a manner different to non-advertisers’ reviews.”
The legal investigation does not stop there, however
A few businesses filed claims in court, alleging Yelp played favorites with advertisers, but none of the cases have been successful. The Ninth Circuit Court of Appeals ruled that the plaintiffs “lacked facts” necessary to back up their claims. Many of the original complaints “appeared to be from businesses that simply weren’t happy with their rating or reviews on Yelp.”
This is the second FTC investigation into Yelp’s practices; the first investigation was closed without any action as well. It seems, for now, Yelp is doing what it say it is doing. However, keep in mind, a federal appeals court ruled in September that even if Yelp was doing what the allegations claim and giving preferential placement to businesses that purchase ads on the platform, this would not be against the law.
Bottom line: as with most things on the Internet, do your own research; question the veracity, but use what is available as a guide post.
