• by Wendy Davis  @wendyndavis, January 7, 2015

Review site Yelp says that the Federal Trade Commission has closed an investigation of the company's ad practices without bringing a complaint.

“The FTC recently concluded a deep inquiry into our business practices and informed us that it will not be taking any action against Yelp,” the company wrote Tuesday on its blog. “The FTC looked into our recommendation software, what we say to businesses about it, what our salespeople say about our advertising programs, and how we ensure that our employees are not able to manipulate the ratings and reviews that we display on our platform.”

The FTC's move appears to end an official probe into allegations that Yelp gives advertisers an advantage by displaying positive reviews of their businesses more prominently, while also burying the negative posts.

Since 2009, the FTC received more than 2,000 complaints about Yelp, including complaints sent from the Better Business Bureau, according to records released by the agency last year. Many of the criticisms appear to center on bad reviews by customers, but others accuse Yelp of attempting to “extort” ad buys from small businesses by manipulating customer reviews.

“Yelp made my great reviews disappear after we refused to advertise with them,” one February 2014 complaint reads. “Yelp is the judge, jury, and extortioner,” states another, also from last February.

Yelp has consistently denied that it gives advertisers preferential treatment. The company says it doesn't allow business owners to pay to revise their reviews, and that it aggressively filters out reviews it believes are unreliable.

Several small business owners unsuccessfully sued Yelp for allegedly trying to extort advertising purchases by manipulating users' reviews. Last September, a three-judge panel of the 9th Circuit Court of Appeals upheld a trial judge's ruling dismissing the lawsuit.

The entrepreneurs alleged in their lawsuit that Yelp promised to bury bad reviews — and promote good ones — in exchange for ad buys. But the 9th Circuit judges said that those allegations don't amount to “extortion,” as the term is defined in California.

Yelp is still facing a lawsuit in California state court by restaurant owner James Demetriades, who alleges that the company engages in “false advertising” by making misrepresentations about its review filter. Specifically, Demetriades takes issue with Yelp's statements that it uses filters in order to display the “most trustworthy” reviews on the business's page, and that its reviews offer “unbiased and accurate information.”

He argued in 2012 court papers that these statements by Yelp are false, and that the site instead contains reviews written by people who are “specifically and demonstrably biased against the businesses they review.”

A trial judge threw out Demetriades' lawsuit, but a California appellate court reinstated it last year.