Thousands Complained to FTC About Fake Yelp Reviews

I have to admit, I’m skeptical of the whole concept of the wisdom of crowds. Not that I think crowds are full of dumb people – some are, some aren’t – but when someone posts a review online there’s almost never any way to know if it’s legit or if someone with an ax to grind wrote it. Nothing illustrates that point better than the long-running controversy around Yelp, one of the most important consumer-review sites on the Web.

Yelp has been sued a number of times by businesses that claims Yelp reviews from competitors falsely put them in a bad light. There have also been accusations (never proven) alleging that businesses that don’t advertise on Yelp face retaliation in the form of bad reviews planted by the company. Similar accusations surfaced earlier this month in The Los Angeles Times, when a local jeweler said after he canceled his Yelp ad, a sales woman for the site contacted him to warn that competitors’ ads would now appear with his listing.

Now we’ve learned that the Federal Trade Commission received exactly 2046 complaints about Yelp since 2008, according to a document posted on the agency’s website. (That information only came to light because The Wall Street Journal demanded it via a Freedom of Information Act filing. The specifics of the complaints are not available.)

Yelp consistently denies that it bullies businesses into advertising and says that the way ads and reviews are posted (a common source of complaint) is controlled by an unprejudiced computer algorithm. But investors are worried; Yelp’s stock took a 12 percent hit after the letter was published.

Yelp’s business practices aside, there’s another area that makes me skeptical of its value: What’s to stop a business from planting, and even paying for, false reviews? Last year, an investigation by New York’s Attorney General found that 19 companies faked positive Yelp reviews. Some of those companies were outsourcing the job to Bangladesh and other poor countries, and paying up to $10 for the faked reviews.

Even respected organizations like Samsung – my colleague Tom Kaneshige wrote about this last year – have been caught posting fake reviews. (Samsung later apologized and said it stopped the practice.)

Finally, there’s another device to watch out for called native content. Simply put, native content is pretty similar to what used to be called an “advertorial,” or a post written at the behest of an advertiser, but made to look like news, a feature story or a blog. Reputable publications that use sponsored content (CIO.com is one) label it clearly. But outfits with less integrity either don’t disclose it, or disclose in such a way that a casual reader could be misled.

I mention these examples to show that Yelp is far from the only culprit – and to repeat the very obvious advice that the savvy consumer will take online user reviews and even some online content with a good deal of salt.

Image: REDKEN