FTC Closes Investigation of Yelp, Takes No Action

As the influence of online reviews continues to grow, there is increasing interest from consumers, business owners, and regulatory bodies in how sites like Yelp operate and screen content.

Yelp strives to provide trustworthy content to consumers. For this reason, businesses can’t pay to change their ratings or reviews and our salespeople don’t tell businesses otherwise. We also take aggressive steps to weed out potentially unreliable content, including through our recommendation software.

In early 2014, the media reported that the U.S. Federal Trade Commission had received complaints regarding our business practices over the years. We first learned about these complaints through the media, which apparently acquired them through a FOIA request. The total number of complaints to the FTC was small, especially when viewed in context of the tens of millions of reviews on Yelp, and many of them appeared to be from businesses that simply weren’t happy with their ratings or reviews on Yelp.

More importantly though, the FTC recently concluded a deep inquiry into our business practices and informed us that it will not be taking any action against Yelp. 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. 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.

The folks at the FTC are not the only ones who have examined these issues. In fact, an independent study conducted by the Harvard Business School found that Yelp’s recommendation software “does not treat advertisers’ reviews in a manner different to non-advertisers’ reviews.”

Additionally, 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.

The reason millions of people around the world use Yelp every day to find great local businesses is because they trust the content. That’s why we take so many steps to prevent gaming of our system and to protect consumers and business owners alike — and why we would never do anything to jeopardize that trust.