Yelp's Ad Practices: Extortion?

Rick Fonger, who owns a California jewelry store, used to advertise on Yelp. The day after he stopped, last month, a Yelp employee called to tell him that his competitors' ads were now showing up above the reviews on his store's Yelp page. "She said that for $75 a month, she could make those ads go away," Fonger tells David Lazarus at the Los Angeles Times. When Fonger told her that sounded like extortion, "She said she could understand why I'd think that. But she said they do it to everyone." A Yelp rep later explained to Lazarus that she was simply offering Fonger the opportunity to "buy out the ad space on [his] own page." The practice does sound like extortion to Lazarus, and to the expert he consulted.

The Yelp rep "said Yelp is doing the same thing that phone books do: selling ads that accompany related business listings," Lazarus writes. "The difference, of course, is that the Yellow Pages never told businesses they could pay extra to get rid of someone else's ad." And therein lies the problem. Lazarus points out that other small-business owners have accused Yelp of threatening to make negative reviews more prominent if the owners didn't buy ads on the site. "Yelp succeeds by making a problem and then taking people's money to solve it," Lazarus writes. "I'm no lawyer, but I know a racket when I see one. Anybody who calls to say that you now have a problem but that they can make that problem go away for $75 a month isn't your friend." Click for his full column. (More Yelp stories.)