Reviews from customers may seem like the domain of merchants and marketplaces, but cases involving Yelp offer a reminder that regulators and lawyers may get involved when things get messy.
This week, reviews site Yelp announced that the Federal Trade Commission recently concluded an inquiry into its business practices and informed the company it would not be taking any action against its service. The heart of the issue was whether Yelp’s recommendation software treated the reviews from its advertisers any differently than non-advertisers’ reviews.
“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,” spokesperson Vince Sollitto wrote on Yelp’s blog post on Tuesday. (Sollitto used to head PayPal’s PR department prior to its acquisition by eBay.)
“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.”
“Additionally,” he continued, “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. Most recently, the Ninth Circuit Court of Appeals found that the plaintiffs involved lacked facts to back up their claims.”
Sometimes it’s the reviewed and reviewer that get involved in disputes. In 2012, a housing contractor sued a former customer for $750,000 in defamation charges for her scathing review of his business on Yelp. This blog post from 2 years ago looked at the lawsuit’s implications for online sellers.
And of course lawyers have also gotten involved in disputes between buyers and sellers on eBay, as this blog post from last June discusses.
In reporting on Yelp’s blog post this week, the Wall Street Journal said owners of small businesses have complained of Yelp’s practices who say “Yelp is slow to remove fake reviews or promotes negative reviews of businesses that don’t advertise.” But, the newspaper noted, “Yelp has pointed out that many businesses will fabricate positive reviews in order to boost their Yelp ratings and the site has to weed these out as well to make sure ratings are an accurate reflection of consumer opinions.”
Whether you’re reviewing a merchant or service or you are on the receiving end, remember there can be serious consequences to how you handle reviews.