Yelp was founded in 2004 as a local search website, and then was re-launched in 2005 and concentrated on user reviews. It became a publicly traded company in 2012. The company's primary sources of revenues are from local business advertising and approximately 15-percent from national advertising on its website. Its rating system has been the subject of both controversy and litigation over the years, its most recent controversy comes from a Harvard Business School study that shows that the number of fake reviews on Yelp has risen from only 5-percent in 2006 to 20-percent in 2013.
The Yelp website allows customers to rate the establishments they visit and the businesses are allowed to answer back to those people doing the rating. The results of all of these ratings are shared through the social media networks to form a community, so to speak. Yelp does require the raters to register and encourages them to use their real name and even upload a picture, to add some legitimacy to their ratings system; however, as we can see from the above statistics, there are ways to get around the registration process. This study comes out on the heels of the New York Attorney General's bust of 19 companies, that specialize in fraudulent online reviews – it even has its own name, called "astroturfing." Their fake reviews showed up on Google Local, CitySearch.com, and yes, Yelp. He discovered companies were hiring freelancers, in the Philippines, Bangladesh, and Eastern Europe to write the fake reviews and paid them anywhere from $1 to $10 for each review.
Most people believe that the New York Attorney General only touched the surface of the problem. As competition increases and social media access is on the rise, businesses are fighting for every customer they can get to walk through their doors and one way to do that is to get good reviews or to be "Like(d)" on Facebook. In Yelps case, I know from a personal experience that their inplace filters that are supposed to cherry pick reviews that they feel are false, do not work. I wrote a glowing review of our favorite hangout and Yelp's filter decided it was written by the owner or someone the owner asked to write the good review. I argued with them, but to no avail, so I am one who refuses to use Yelp, and now that I see that 20-percent of the reviews are fake, I will take a chance on a new place and make up my own mind.
Do you use Yelp or one of the other ratings websites when you are making a decision of where to go to eat?