Locksmith Art Kuperstock still does business the same way he did when he opened PCH Lock & Key in Hermosa Beach three decades ago. New customers often come by word-of-mouth and some of his adult customers first visited his drive-through shop while riding in the back of their parents’ cars as kids.
But word-of-mouth travels far wider and faster than it used to thanks to San Francisco online review giant Yelp! Inc. The site provides an online, mobile directory of nearby businesses ranked on a 5-star scale and reviewed by customers. That means Kuperstock and an untold number of other small business owners now need to consider the potentially-global reach of each customer interaction.
Kuperstock’s concern is that Yelp is not giving people an honest take. He said Yelp has placed two unusually negative reviews at the top of his PCH Lock & Key page and pressured Kuperstock to purchase advertising packages for hundreds of dollars a month to have the reviews moved to a less prominent location. He said he feels extorted.
“They’re using these negative reviews as a trigger to then approach you about the advertising, insinuating that the advertising will be helpful with the reviews,” he said. “If you don’t respond, then they move the negative reviews into the most prominent location … If we started thinking this was hurting us to a great extent we would have to consider paying them their extortion money.”
Still, Kuperstock, who also owns Art’s Lock & Key in Manhattan Beach, has thus far declined to purchase Yelp ads, which typically are displayed in search results and on pages for related businesses. As a result, he said, his page still shows a disproportionate number of negative reviews.
The top three reviews on PCH Lock & Key’s page are a 5-star review from February, a 2-star review from November and a 1-star review from February. Those three reviews, along with nine other reviews, average together to give PCH Lock & Key a 4.5-star rating. (Most of the other reviews give the shop five stars). There are also eight “non-recommended” reviews at the bottom of the page that do not factor into the rating, including a 5-star review from April.
“They have manipulated the reviews so it looks like there are (more) negative reviews,” Kuperstock said.
Michael Chasalow, a professor at the USC Gould School of Law and director of the USC small business clinic, said Kuperstock has legitimate reasons to be concerned.
“One bad review can cause substantial problems,” Chasalow said.
Yelp did not respond to a request for comment. In a video, the company explains its proprietary software that ranks reviews based on quality, reliability and user activity. The video also says it treats advertisers and non-advertises exactly the same. The company launched the review feature in 2005 and in 2010 responded on its blog to concerns that it fixes reviews for advertisers.
“By conventional standards, Yelp can seem weird. We’re different than other review sites and that can throw people off,” the post said. “The main basis for confusion: Yelp has an automated system in place that helps to maintain the legitimate quality of content. This automated system often removes reviews from business pages that people don’t want removed.”
Still, Kuperstock is skeptical. If that’s true, he asked, why is a reviewer who has only posted twice – both times to give his shops 1-star reviews – displayed prominently on his pages, while a reviewer who has written 11 reviews and gave his shop five stars is not?
“There’s something that doesn’t smell right about it, assuming the allegations are true,” Chasalow said. “If you can show bad behavior, then Yelp has a problem. The issue is whether you can show that bad behavior.”
Yelp has faced similar claims from a variety of small businesses over the years. A group of Bay Area small businesses filed a class action lawsuit against Yelp with similar claims of extortion a couple years ago, but the case was dismissed. Last year the U.S. Ninth Circuit of Appeals upheld the dismissal, citing that the business owners’ claims did not meet California’s high standard for extortion.
“The business owners failed sufficiently to allege that Yelp wrongfully threatened economic loss by manipulating user reviews,” a case summary said.
One challenge for litigious small business owners is that Yelp has the legal backing of a public company with a $3.6 billion market capitalization. The company generated about $378 million in revenue last year – most of it from local advertising. The company grew its local advertising clients last year by 48 percent.
By comparison, Kuperstock’s two locations generate about $200,000 in revenue a year. His core customers are real estate brokers and realtors who need house keys. He also does business with defense contractors and drivers who need spare keys.
In March, Kuperstock wrote a letter to Attorney General Kamala Harris’s office seeking help on the matter. The office told him he would be better off seeking the help of an attorney.
Kuperstock said he has not decided if he will pursue legal action.
For now, he’s hoping to raise awareness of the issue.
“This whole thing is going to kill many small businesses who don’t toe the line for Yelp,” he said.
