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Yelp Share Prices Tumble Following Negative Media Reports

Yelp Share Prices Tumble Following Negative Media Reports

The negative publicity continues to pile up against Yelp (NYSE: YELP).

Share prices of the online locally-oriented business guide dropped six percent Thursday, over $11 since Wednesday morning. The Federal Trade Commission on Wednesday, in response to a Freedom of Information request from the Wall Street Journal, revealed there have been over 2,000 complaints filed against Yelp since 2008.

Most of the complaints are from small businesses,” according to a WSJ article, “that claim to have received unfair or fraudulent reviews, often after turning down a pitch to advertise on the site.”

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For its part, Yelp has denied the allegations. A blog posting on the company's website notes that, while some business owners have even taken the company to court for allegedly manipulating reviews, “their claims keep getting dismissed for lack of any fact-based evidence.”

At the same time, according to the 2013 entry, there are “thousands of non-advertisers with excellent four and five-star ratings on Yelp.” Yelp also says its automated software filters reviews deemed questionable in content.

"The good news is that only a small minority of businesses attempt to write or buy fake five-star reviews about their own businesses or fake one-star reviews about their competitors,” the blog entry continues, “but it’s pervasive enough that anti-gaming measures are required. Yelp’s automated software is designed to protect both consumers and small businesses.”

The Los Angeles Times, meanwhile, reports that around 83 percent of Yelp's nearly $71 million in revenue in the most recent quarter was generated by ads from local merchants.


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