The Problem with Online Review Sites

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Over the last few years, the credibility of online review sites like Yelp, Angie’s List, Google+, Local, Porch, and YP.com have taken a few hits. These and other popular social networking sites that allow anonymous users to rate their experience with an array of small businesses like HVAC contractors, restaurants, home service companies, and retail stores have increased their footprint tremendously. But a recent rash of court cases are raising questions about whether the reviews are trustworthy.

The social networking sites in question have several aspects in common: they allow anyone to create an account and rate and review a business. But this is not their primary focus or business model. While some of the sites require a subscription fee to post and read reviews, all of them allow businesses to advertise to readers, and in some cases place their advertisements based in a conspicuous location when showing search results.

The sites allow registered users to rate their experience with an array of small businesses and there’s a certain level of trust involved. One of the vulnerabilities of these online review sites is the anonymity of the registered users who post reviews. There’s no way to be certain that a positive review wasn’t written by an employee or owner of the company or if the negative review was from a competitor.

Another troubling aspect of online review sites identified by a 2013 Consumer Reports article is that businesses could pay to have advertisements placed in response to user searches. Angie’s List may be known for its prominent founder but, according to Consumer Reports, it also allows higher rated companies to “buy their way to the top of the default search results.”

The problem of fake reviews and ad placement has created some negative reviews for the biggest online review site, Yelp.
A recent class action suit filed by Yelp shareholders accuses company executives of selling off more than $81 million in stock while the stock price was inflated. The suit charges the company did not inform shareholders about business practices that included permitting false reviews and allowing businesses to pay to “hide” negative reviews.

These accusations against Yelp are not new. Even though their review filter algorithm is designed to weed out unsubstantiated reviews, many do make it onto the site. And as to the charge of manipulating the system to benefit preferred business, as far back as 2009 Los Angeles Times columnist David Lazarus detailed incidents of Yelp sales staff contacting small business owners in San Francisco and offering to “improve their ranking in search results and to move their most positive review to the top of the page” if they paid a monthly sponsorship fee. Some business owners who chose not to become sponsors saw their star ratings drop. Yelp’s response was that the constant posting of new reviews will change the ratings over time.

In March 2014, Lazarus revisited the issue of Yelp engaging in practices that some small businesses felt was a shakedown: become a sponsor or see your best reviews pushed down the list. Again, the company challenged these allegations by saying that their website is a service not much different than the old Yellow Pages phone book. Back when it was the only resource for consumers looking for a contractor, any company could pay to have a prominent advertisement within the listings.
So there are two important questions related to these online review sites for any small business owner: How do you deal with negative reviews, including the ones you suspect are fake? And given the credibility issues related to online review sites, is it worth it to engage in the pay to play system by paying to advertise.

Small Business Sues Yelp to Reveal Identify of Negative Reviewers
In 2012, Hadeed Carpet Cleaning, a small business in Arlington, Virginia, filed suit against Yelp when it refused to identify the authors of seven online reviews it felt were fake or defaming. Hadeed was unable to match the specifics of the negative reviews with their own customer records. The company alleged that the reviewers were not customers and that the comments were defamatory because the reviewers lied by saying they were provided shoddy services by Hadeed. In one case, the reviewer was identified as living in New Jersey, several hundred miles outside of Hadeed’s service area. A Virginia Circuit Court issued an order in favor of Hadeed and directed Yelp to divulge the names of the reviewers. Eventually the court found Yelp in contempt when it did not comply with the order. Yelp appealed and in October 2014 the Virginia Supreme Court heard oral arguments in the case which has implications on free speech and defamation.

Social media consultants will advise small businesses to engage with any customers who have provided negative reviews in an open and honest manner. Most online rating services provide a method for the business owner to reach out privately or publicly on the forum with the reviewer. When done properly, the interaction can lead to a resolution that can showcase a commitment to customer service by the small business and satisfaction by the consumer.

Savvy users of online review sites are getting better at detecting fake reviews or frivolous reviews. When a contractor has taken the time to remedy a problem publicly, it demonstrates a higher commitment to customer service. It almost never pays to respond negatively to low ratings or reviews.

The online review sites themselves are constantly updating their internal processes and review filters to eradicate fake or frivolous reviews. Online reputation management companies can help but there are unscrupulous ones that are known to promise remove or bury negative reviews with multiple positive postings or by gaming the review sites algorithms.

Other Strategies
You can always ask your customers to review your company, especially when you know they’ve been satisfied. Some contractors will give prizes to technicians who are specifically mentioned in a review. But it doesn’t make sense to offer discounts to customers who write positive reviews. New Federal Trade Commission rules on endorsements in advertising require the reviewer to disclose any connection between the endorser and the marketer of a product if it would affect how people evaluate the endorsement. If the customer gets a discount for endorsing your company on a social media site they must disclose it.

Should You Pay-to-Play?
Whether you decide to pay to have your company’s ad placed at the top of an online review site search is up to you. Last year the Federal Trade Commission updated its guidance to search engine companies about how they distinguish between advertisements and search results. Paid search results must be clearly identified with a visual cue, label, or other technique in order to avoid misleading consumers.

Online review sites can be a bane or a boon for HVACR contractors. The Consumer Reports article published last year hinted that a user’s ability to change negative reviews (after a problem has been resolved) undermines the review process. While this may seem like good customer service from the businesses point of view, it does make the review site ripe for abuse by “squeaky wheel” customers.

The outcome of the two pending Hadeed vs. Yelp case will be closely watched by users and rated companies. A ruling in not expected until the first part of 2015.

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Posted In: ACCA Now, Management, Sales & Marketing