Online Reviews a Thorny Issue for Small-Business Owners

Mobley’s Shoes’ whole business concept depends on its customer service.

Since 1950, the store has been providing and fitting shoes for children and women, and has depended on its customer service to compete against larger stores.

That’s why the owners of the Raleigh, N.C., shop are concerned about the filtering of online reviews on Yelp, a website that allows customers to rate and review businesses. The site has a practice of filtering reviews and showcasing ones that have been chosen by data-processing software.

Mobley’s Yelp site shows that the shoe store has one review with a three-star rating from 2008. There are additional reviews, but they have been filtered by Yelp. The filtering system, said Clifton Mobley, who runs the store with his father and his brother, is frustrating because it makes it hard for others to see those positive reviews.

Also, one review can end up representing the company for years, he said.

Yelp, founded in 2004, has an average of 108 million unique monthly visitors, and more than 42 million reviews. According to a 2013 Nielsen study, about 85 percent of consumers find local business information online. Also, about 70 percent of consumers trust online reviews somewhat or completely, according to a 2012 Nielsen study. Online opinion was second only to recommendations from people they know.

Mobley and others are learning to navigate Yelp and its review and filtering process. Here are some things to know before using Yelp.

WRITING FAKE REVIEWS IS ILLEGAL: Federal truth-in-advertising guidelines require transparency any time there is a product or service review, according to Glen Gilmore, an attorney and social media expert who teaches at Rutgers University Center for Management Development in New Jersey.

In 2009, the Federal Trade Commission updated its endorsement guidelines to include social media, Gilmore wrote in an email. The guidelines say any connections between a reviewer and the business that’s being reviewed need to be disclosed. This means reviewers should disclose whether they are an employee or a relative, or whether they received a free or discounted service or product, Gilmore said.

When people sign up for a Yelp account – either as a consumer or as a business claiming an account – they agree to limit their reviews to first-hand experiences and to not endorse themselves or write negative reviews about competitors.

Many states have laws similar to the federal regulations.

REVIEWERS CAN BE SUED: Reviewers can be held accountable for malicious and false reviews.

“People are entitled to express their opinion about a meal or service online, but they’re not entitled to lie in what they post without exposing themselves to a lawsuit,” Gilmore wrote.

There is no protection from being sued for defamation, the communication of false fact that damages the reputation of another, just because they post it on a third-party website, he said.

If a business has concerns about a Yelp review, it should first reach out to the site.

Mobley contacted Yelp after suspecting that a negative review had been posted by a former employee; Yelp removed the review.

If the site refuses to remove a fake review, the business can file a lawsuit that seeks to establish the identity of the reviewer to demonstrate a case for defamation.

“Unfortunately, this is a lengthy and costly process,” Gilmore wrote.

Review sites are protected by a federal law that essentially gives immunity to providers of interactive online services from claims related to content posted by third parties, he wrote.

ALGORITHM USED FOR FILTERS: Yelp representatives said the company uses an algorithm to highlight and identify useful and authentic reviews, but some owners say that the practice is used to leverage advertising.

About 25 percent of Yelp reviews are filtered, said Darnell Holloway, Yelp’s senior manager of local business outreach. The system, which sometimes allows authentic reviews to be filtered while fake reviews get through, isn’t perfect, but the company’s intention is to provide useful information to consumers, he said.

“Our software treats advertisers and non-advertisers exactly the same,” Holloway said. “There is no correlation between whether or not a business chooses to advertise and the activity of a review filter.”

Yelp started to recognize fake reviews shortly after it was founded, Holloway said. So it created a filter to highlight authentic content. The filtered reviews are located on each business’s Yelp page. To see them, however, users must click a link and fill out a “Captcha” code.

“Business owners thought they could gain traction in the online space by creating testimonials for themselves and leaving negative reviews for competitors,” Holloway said.

Some small-business owners complain about Yelp’s practices.

Joey Ashley, co-owner of The Organic Bedroom in Raleigh, said he has had issues with Yelp. His company’s Yelp page has two reviews – a one-star and a five-star – but also has 16 five-star reviews that have been filtered.

Last spring, Ashley expressed his concerns to a Yelp advertising representative who had contacted him and then suggested that the filters wouldn’t be as strong if Ashley bought advertising, Ashley said.

A couple of days later, about four positive reviews were released, Ashley said. But later, after Ashley said he wouldn’t advertise, those reviews went away.

“It is completely a company that holds small businesses hostage,” Ashley said.

Holloway reiterated that advertising on Yelp has no influence on the filtering system. Reviews may shift, he said, if a reviewer’s activity increases or there’s a change to the filtering algorithm.

RESPOND TO NEGATIVE REVIEWS: Don’t obsess over negative reviews, said Angela Connor, senior vice president and group director at Capstrat, a full-service marketing agency in Raleigh.

Owners should have a system that will help them decide whether and how to respond to negative reviews. When owners do respond, they should demonstrate some sort of sympathy or acknowledgment and then offer to take the conversation offline, she said.

“You will never win if you try to fight in a review forum,” Connor said. “And no one is going to look bad but the business owner.”

If owners don’t like the way a site has treated them, they should claim their brand on other sites, such as social networking sites, and share content that shows the great things their business is doing, Gilmore said.