Wednesday, November 25, 2020

Yelp: The Unethical Behavior on Its Platform (2013 – Present)


Timeline of Yelp
        Yelp, the online directory and customer review site, was founded in 2004. To get more than 100 million published reviews on its site, Yelp has done lots of things not only for the best of the community but also for the success of itself. In 2017, to support the LGBTQQIA community and a trans student, Gavin Grimm, who filed suit against his local school board for denying him use of the boys’ restroom at his school, Yelp allowed customers to find businesses that had gender-neutral bathrooms on its site. Airing political views through Yelp has become such a popular (and unwelcome) pastime that the site had to create “Active Cleanup Alert” in 2016, which was first implemented last year in response to the numerous political attacks to protect the businesses. Recently, on October 8th, Yelp Vice President of User Operations Noorie Malik announced a new initiative which called a “firm stance against racism” to label businesses that users have reported for racist behavior such as using overtly racist slurs or symbols. However, the only problem that Yelp did not successfully solve is about the unethical behavior on its platform.
        Yelp's been sued multiple times. People have accused them of fraudulently misleading consumers about the authenticity and quality of reviews. Businesses have accused them of extortive advertisement sales tactics, alleging that Yelp pressures them to pay for advertising. And there are multiple websites created by disgruntled people to band together against the review juggernaut. But so far, no matter how many times Yelp is sued, they prevail and emerge relatively unscathed from these legal battles. Even the Federal Trade Commission, who revealed in 2014 that they received 2,046 complaints against Yelp, took no action against them. Still, it is concerning that there have been so many complaints against Yelp, and potential future lawsuits are not altogether unlikely [4]. Based on the lawsuit, Yelp demanded the small businesses buy expensive online advertisements to artificially inflate the reviews on their online profiles. The group of small businesses claimed that this tactic produced an environment of unfair competition because larger businesses would be able to pay for the service, and small businesses would lack the funds to do so. Therefore, the larger business would have better control over its online presence and reputation, creating an unfair advantage. Rather than deny or directly address these accusations, Yelp adopted a policy of silence, and instead promoted its “pop-up” notification initiative to distract their users. [8]
Yelp now labels fraudulent reviews with Consumer Alert
        The companies involved in this and other lawsuits against Yelp see an inherent conflict of interest in Yelp’s business model. Yelp automatically categorizes businesses using public records and address information available online, and third-party users are then allowed to rate these companies. Yelp profits from selling ads to the same businesses that are being rated on its site. No matter how much Yelp denies the claims, it is easy to see why some businesses are skeptical. In 2013, Yelp reported net revenue of about $233 million, over 75% of which came from sales of advertising space. Because ad revenue makes up such a large portion of Yelp’s total revenue, the appearance is it could seek to realize huge profits by increasing ad sales and subtlety requiring businesses to purchase ad space on its website in return for posting positive reviews or leaving off the negative ones [3].
        The San Francisco small businesses created a new platform, In response, the public took notice and began to complain and contribute their own stories of reviews being removed from the site. Users added testimonials and shared the website with a larger audience, accelerating the spread of information about Yelp’s scrubbing. Again, although Yelp denied scrubbing was taking place, the user data on provided evidence to the contrary and challenged Yelp’s own reputation. [8]


Important stakeholders to Yelp are anyone who affects or can be affected by the organization’s actions. Mostly, businesses, restaurants, and customers are the most important main stakeholders to Yelp in this case due to one helping Yelp gaining more users as of now and the other helping Yelp gaining more success as of now. The other stakeholder is a federal law, Consumer Review Fairness Act, that Yelp helped pass in 2016 is also important for the company because it will take responsibility for the relationship between customers and the businesses. 


According to Milton Friedman, the only goal of Individualism is to maximize the profit for the owner or the stockholders. Meaning, a business should focus mainly on generating the highest possible amount in profit and should not attempt to be socially responsible, “Spending money on resources, employees, and donations to causes is wrong because it is essentially stealing from the owner or owners of the company.” (Salazar 17) More than that, it is also necessary for a business to operate within the laws and rules of the state that it regulates it. 

        According to the theory of Individualism, Yelp company has failed to maximize the profit for the stockholders. Yelp has introduced lots of alerts to their website just for their users. They want to attract new users and also more users with their new alerts. The only problem is that they didn’t really care about the businesses and the restaurants, who are also their main stockholders, on their apps based on the fake reviews and political reviews from their users which could bring these businesses to the bottom. With the amount of people who use Yelp, it's no surprise that looking over these reviews takes time. Since Yelp is trusted as the online directory and customer review site, one negative fake review can destroy a whole business within a short period. 

Geoff Donaker - Chief Operating Officer
        In order to make money, Yelp advertised businesses who paid Yelp to feature their establishments at the top of relevant searches. In 2009, allegedly, Yelp employees have contacted businesses, offering to remove negative reviews for a fee for "advertising", though Yelp denies this is something they do, “We wouldn't be in business very long if we started duping customers," Chief Operating Officer – Geoff Donaker said. His denials are challenged by nine local business owners and also by a former contract employee who worked with Yelp in its early days and is still close to some Yelp employees and only agreed to be interviewed if granted anonymity [5]. Based on what they said to him, their action is not illegal or unethical; they just helped the little guy by moving bad reviews for his benefit. So, according to Individualism, Yelp is permissible because they are profiting and not doing anything illegal under the law. 


The goal of Utilitarianism is to maximize happiness for all conscious beings in a long-term period, not just for one individual or one company, that are affected by the business action (Salazar 19). The customers who used Yelp will be happy with how Yelp did for them, such as “Customer Alert”. Yelp will be happy since they think that they help the community a lot through what they did for them. However, the businesses and restaurants will be unhappy with how Yelp brings to them the pressure for “advertising”. 

Yelp was successful by introducing lots of new alerts for helping the community and the users of Yelp. However, Yelp was unsuccessful by not caring about their partners – the businesses and the restaurants. In reply to the fake negative reviews, instead of taking these down, Representatives allegedly would offer to remove or hide the reviews in exchange for agreeing to buy an advertising contract with the site with an expensive price. For a long-term period, these businesses will be stressful to pay Yelp with an expensive price for staying at the top of its website. A veterinary hospital in Long Beach, California experienced similar tactics as I mentioned above about paying for hiding negative reviews. When the hospital contacted Yelp to address false and defamatory claims in a review it received on the site, Yelp allegedly refused to remove the comment unless the hospital agreed to pay $300 a month [1]. Therefore, a utilitarian would view this case unethical because of the consequences Yelp brought to their stockholders. 



        While Utilitarianism looks at the consequences of an action, Kantianism looks at the good will of a person. According to Kant, a person must always act as an end and never simply the means. “Always act in ways that respect and honor individuals and their choices. Don’t lie, cheat, manipulate or harm others to get your way. Rather, use informed and rational consent from all parties.” (Salazar, 20)

        Under the ethical theory of Kant, Yelp failed to treat the businesses and the restaurants with a respectful way, instead treating them as a mere means. Yelp was using the threat of harm through negative reviews to force businesses to buy ads. If the owners declined to advertise, the positive reviews disappeared, only the negative reviews stayed. Even though the reviews were untrue, the complaints still exist on the businesses’ review site. This year, a customer complained about being called a racist slur by a manager at the pub, but the incident actually happened at a different establishment. Management reported the comment to Yelp, but the complaint still exists on the company’s page. “I think in many ways it’s a very good idea, but one negative comment can destroy a whole business,” he said. [2]

        Yelp also lied to their users about the authenticity and quality of reviews. Yelp’s use of “community managers, scouts, and ambassadors” to supplement its automated screening does not indicate that Yelp’s directors and officers knew that any significant number of reviews were not authentic or firsthand, beyond what defendants represented to the public. The company itself also admitted its system was not foolproof, and that some filtered reviews could be genuine. [6] Therefore, not only Yelp treats their partners as a mere mean, but Yelp also treats their users as a mere mean. 


        According to Virtue Theory, the most important thing is neither about the outcome, nor the consequences of an action. It is about a person’s character, and how his or her actions reflect who he or she is. There are four cardinal virtues that everyone needs are courage, honesty, temperance, and justice. If one of these is lacking, then the whole will be collapsed. Courage is the quality of mind that enables a person to take risks, face difficulty, danger, and pain without fear. Honesty is the vital role in every aspect of human life that requires honesty, truthfulness, and loyalty. Temperance is having reasonable expectations and desires for yourself and for others. And lastly, justice is the fair treatment among people.

Based on this theory, Yelp lacks all four of cardinal virtues. About honesty, they lied to their users about the authenticity and quality of reviews. Only by paying for “advertising”, businesses can get rid of negative reviews on Yelp sites. Users will wonder about how authentic Yelp is. Yelp is also lacking courage. Instead of admitting the lawsuits in 2014 about manipulating ratings based on ad purchases, they keep denying and being silenced. Yelp lacks justice because of the unfair treatment between small businesses and large businesses. For those small businesses, it is hard for them to stay on the top Yelp’s page by paying an expensive price for each month. This could lead to a loss for every small business in the world nowadays. Lastly, they lack temperance because they do not have a reasonable expectation for the company. Instead of fixing the problem and discussing with businesses against them, Yelp kept silent and promoted its “pop-up” notification initiative to distract their users.


        In my opinion, Yelp’s actions were unethical and unprofessional. They know what they do is wrong and is unfair for their partners and their users. Because of money, Yelp lied to their users about the authenticity of the reviews and forced their partners to pay for “advertising” with an expensive price in order to take down the fake reviews and negative reviews. Instead of admitting their unethical behavior, Yelp still kept silenced and denied all the lawsuits that they were accused of. However, based on the laws, there is nothing that can sue Yelp for what they have done since no evidence has been found. Even though there is evidence, Yelp is still not being sued by saying that their action is illegal or unethical; they just helped those businesses by moving bad reviews for their benefits. So, such tactics may be legal, but clearly raised ethical concerns.


        The current issue of Yelp is that they lied to their users about the authenticity and quality of reviews and used the threat of harm through negative reviews to force businesses to buy ads. In order to solve this problem, Yelp has to admit their unethical behavior and apologize to their users and their partners. Yelp has to stop doing these things and gains more trust from the businesses by treating them nicely with the first month of advertising for free price. The company also needs to develop a code of ethics that details its ethical obligations to users of the site and its ratings with respect to ethical values such as honesty, integrity, responsibility and accountability. 

Yelp’s current mission statement is “to connect people with great local businesses”. My recommendation for the new mission statement is, “We, Yelp, promise to connect people with great local businesses by building trust in an honesty, integrity, responsibility and accountability relationship”. With this new mission statement, Yelp successfully addresses what they need to do for their users and also for their partnership with businesses with a detail of its ethical obligations. By building trust in an honest relationship, Yelp needs to be loyal and be truthful to their users and their partners. They should not take down the negative reviews even though they are fake or bad. By building trust in an integrity relationship, Yelp should not lie to their users and their partners. They should be dependable and following through on commitments such as stop forcing small businesses to buy ads. By building trust in a responsibility relationship, Yelp has to be responsible for their actions. In order to gain trust, they need to stop keeping silenced, take responsibility for what they have done, and work on it to change their actions. By building trust in an accountability relationship, Yelp has to do all good things for their users, their partners, and also for the community. 

To prevent this problem from occurring again, Yelp needs to discuss with their User Operations team about improving their system for identifying fake reviews. They can investigate the types of cheating and unethical behaviors that economic incentives may prompt and what causes this differential behavior to exist. They also need to develop a code of ethics that details its ethical obligations to users of the site. They need to recreate teams who are responsible to work with their partners about the commitments. This team needs to put honesty and integrity as the priority for their partners. To help the company to flourish after the controversy, Yelp needs to replace the VP of User Operations as a new person who knows how to improve their system for identifying fake reviews, not only focused on introducing new alerts. Yelp also needs a representative face who has all four cardinal virtues in order to face the dangers and change it. In the case of bad publicity due to the ethical difficulty it faced, the marketing team needs to find the problems and the cure for the problems in order to respond to the media as soon as possible. Marketing team also needs an effective method to fix it as soon as possible and always apologize first. 

By putting ethics as the priority, my plan will always find a way to satisfy not only the users, but also our partners. By training the employees with a code of ethics, Yelp will be more successful and will do lots of good things for this community. 


[1] Chris Foresman - Feb 25, 2. (2010, February 25). Yelp facing class-action lawsuit over extortive "ad sales". Retrieved November 21, 2020, from

[2] Gross, J. (2020, October 09). Yelp Says It Will Mark Pages of Businesses Accused of Racist Conduct. Retrieved November 21, 2020, from

[3] Is it Ethical to Allow Yelp to Manipulate Ratings Based on Ad Purchase? (2014, October 23). Retrieved November 21, 2020, from

[4] Lafuente, C. (2017, March 03). Secrets Yelp doesn't want you to know. Retrieved November 21, 2020, from

[5] Richards, K. (2009, February 18). Yelp and the Business of Extortion 2.0. Retrieved November 21, 2020, from

[6] Stempel, J. (2015, November 27). Yelp prevails in lawsuit over authenticity of its reviews. Retrieved November 21, 2020, from

[7] Salazar, Heather. The Business Ethics Case Manual. n.d.

[8] WPSU - Penn State Public Media. (n.d.). Retrieved November, 2020, from

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