Yelp's practices sound to some like extortion

Rick Fonger, an Alhambra jeweler, says Yelp told him that troubling ads on the website could be made to "go away" for a price. (Gary Friedman, Los Angeles Times / March 26, 2014)

The difference, of course, is that the Yellow Pages never told businesses they could pay extra to get rid of someone else's ad.

By offering this service, Yelp has introduced a more cutthroat approach to marketing, with itself as the broker for whose pitch is seen first by users of the site.

When I checked out the Yelp listing for Fonger's shop, an ad for a rival jewelry store appeared near the top of the page, undermining the influence of the nine five-star reviews that had been posted by customers.

Sollitto said he was surprised that Fonger likened the company's practices to extortion. He said Yelp is "all about connecting local businesses and consumers."

I asked how offering businesses a chance to pay a monthly fee for erasing a rival's ad was different from websites that post people's mug shots from arrests and then charge a fee to take them down.

Sollitto seemed offended that I'd even make such a comparison.

"Yelp has created a platform for sharing information," he said. "It's a discovery engine for small businesses."

And maybe he believes that. The reality, however, is that Yelp has created an online venue at which a merchant's competitors can post negative reviews and run their own ads.

Yelp then makes money by charging to downplay others' negative reviews and to keep rivals' ads away.

You know the old chestnut about succeeding in business by finding a need and filling it? Yelp succeeds by making a problem and then taking people's money to solve it.

This strikes me as an unfair business practice. But, so far, Yelp has weathered various lawsuits challenging its policies. "Their claims keep getting dismissed for lack of any fact-based evidence," Sollitto wrote last year on Yelp's blog.

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.

Dean, the marketing consultant, said that Yelp is a fact of life for small businesses and that challenging the company's policies is going to be "a fight you're not going to win."

Instead, he advised companies to focus on Google and other online resources, and not lose sleep over any shenanigans Yelp might pull.

That's probably wise. But it doesn't excuse bad business behavior.

I asked Fonger how Yelp's tactics differed from, say, Tony Soprano's or Michael Corleone's.

"Well," he answered, "no one's come by to break my legs."

Then he thought about it a moment. "At least not yet."

David Lazarus' column runs Tuesdays and Fridays. He also can be seen daily on KTLA-TV Channel 5 and followed on Twitter @Davidlaz. Send your tips or feedback to david.lazarus@latimes.com.

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