jeremy stoppelman

David Gelles

Yelp has bowed to pressure from disgruntled small business owners and is making changes to its popular reviews platform.

In the wake of three class action lawsuits that accused Yelp of extortion, chief executive Jeremy Stoppelman today announced a series of changes to the site and the formation of a new small business advisory council.

The most dramatic change is that advertisers will no longer be able to choose the featured review that had appeared at the top of their business’ page. This was prime real estate, and undoubtedly one of the most compelling reasons businesses would advertise in the first place. 

David Gelles

Local reviews site Yelp is facing some unflattering reviews of its own service.

In a class action lawsuit filed in Los Angeles federal court, the red-hot startup is accused of unfair competition and what amounts to extorting small businesses.

The plaintiff in the suit, an animal hospital in Los Angeles, alleges that after negative reviews about its business appeared on Yelp, sales representatives from the company called and said that for $300 per month, they could make the ads disappear.

Don’t be surprised if this sounds familiar. In a lengthy article last year, the East Bay Express leveled similar charges against the company. But in an interview with the FT, Yelp chief executive Jeremy Stoppelman flatly denied the claims

David Gelles

The success of Yelp (which is very popular, if not profitable), has drawn attention to the local user-generated review site as a potentially viable business model. Indeed, with millions of small businesses looking for new customers (and presumably willing to advertise), accurate, comprehensive and trustworthy local directories are invaluable services for companies and customers alike.

So when Yelp introduced its London site in January, it signalled its intention to attract advertising from a chunk of the city’s 300,000 local businesses. Other similar sites were already active in London, and now one local competitor, TrustedPlaces, is trying to outflank Yelp before it gains traction.