FTC ends inquiry into manipulated reviews on Yelp

Some businesses claimed Yelp strong-armed them into buying ads.

Yelp's landing page on the desktop.

Yelp's landing page on the desktop.

The U.S. Federal Trade Commission has ended a nearly year-long inquiry into Yelp's businesses practices, after some companies claimed they received unfair or fraudulent reviews after turning down pitches to advertise.

"After nearly a year of scrutiny, the FTC decided to close its investigation without taking further action," Yelp said Tuesday in a blog post.

For its review, the FTC looked at Yelp's recommendation software, what Yelp employees say to businesses about it, what Yelp's salespeople say about its advertising programs, and how Yelp ensures that employees are not able to manipulate ratings and reviews, the company said. Yelp's recommendation software is what the company uses to determine how it ranks and presents reviews to users.

The FTC received more than 2,000 complaints filed about Yelp between 2008 and 2014, the Wall Street Journal reported last year after a Freedom of Information Act request. Many of the complaints came from small businesses who said that Yelp played favorites with those who paid to advertise, while hurting those who did not. Some brought their claims to court.

In one suit, an animal hospital in Santa Barbara, California, said a Yelp sales rep offered to hide their negative reviews if they purchased ads.

Yelp said Tuesday, however, that "businesses can't pay to change their ratings or reviews and our salespeople don't tell businesses otherwise." Also, the company takes steps to weed out potentially unreliable user reviews, Yelp said.

A spokesman for the FTC declined to comment.

None of the cases brought against Yelp over manipulated reviews have been successful, Yelp said. This past September, for instance, a federal appeals court said plaintiffs lacked sufficient evidence to support their claims of extortion against Yelp.

The closure of the FTC's investigation is surely welcome news for Yelp, as the company faced a separate challenge last year with regulators. In that case, the company paid a US$450,000 civil penalty to settle charges with the FTC that it improperly collected children's information.

The FTC began a previous inquiry in 2010 into Yelp's ad offerings and software; no action was taken after that inquiry either.

Zach Miners covers social networking, search and general technology news for IDG News Service. Follow Zach on Twitter at @zachminers. Zach's e-mail address is zach_miners@idg.com

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Tags social mediainternetadvertisinglegalsocial networkingyelpInternet-based applications and services

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Zach Miners

IDG News Service
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