Hotel’s $500 threat to brides backfires in latest dust-up over Yelp reviews

A swanky hotel in upstate New York offered a textbook example of how not to manage social media — threatening to fine brides and grooms for negative Yelp(s yelp) reviews — at a time when small businesses are challenging the power, and occasional abuse, of online customer reviews.
The latest incident, in case you missed it, comes via the New York Post, which reported this week that the Union Street Guest House in Hudson, New York has a policy of withholding $500 from wedding couples’ security deposits for every negative Yelp review posted by their guests.
The hotel has since tried to backpedal with an unconvincing explanation that the policy was a “joke,” but the explanation appears to have come too late. The inn is now notorious as a flood of would-be comedians are flaming the place on (where else?) Yelp. Here’s a sampling of recent low-star reviews:
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The episode of the Union Street Guest House will be familiar to anyone who knows about the “Streisand effect” — a term that describes the unintended consequences, in the form of additional attention, that can arise when someone tries to smother online information.
But the hotel case also highlights the extent to which small businesses have come to fear the power of Yelp, which can be a powerful tool not only for customers, but for competitors that want to harm a rival. The issue is now the subject of a closely watched court case, in which a Virginia carpet-cleaning business is seeking the identity of anonymous individuals who allegedly posted false and harmful reviews. Yelp has so far refused to identify the reviewers, and is appealing an order for it to do so.
Meanwhile, as the Wall Street Journal reported in April, many small businesses believe that Yelp engages in an unfair version of pay-to-play — adjusting the reviews it displays in order to reward the companies that pay it to advertise, and punishing those that do not. Yelp has vehemently denied such allegations.
This story was updated at 11PM ET to note Yelp disputes the allegations that is adjust reviews based on advertising.