Trustpilot tanks as Grizzly Research uncovers 'mafia-style' extortion tactics

(Sharecast News) - Trustpilot tanked on Thursday after short seller Grizzly Research disclosed a short position in the shares and said it had uncovered "mafia-style" extortion campaigns against non-paying businesses. Grizzly argued in a report that the review site's "extortion model" destroys the value proposition.

"According to our investigation, Trustpilot creates unsolicited review profiles for all kinds of businesses with the intention to attract hyper-negative reviews and force these businesses into paying subscription deals to 'more actively manage' the reviews," it said. "Paid-for profiles see their review score magically lift from under 2 of 5 stars to over 4 of 5 stars. Industry experts call this scheme the 'Trustpilot Mafia'."

Grizzly said reviewers find their genuine negative reviews "spuriously challenged" or removed for companies that pay Trustpilot.

On the other hand, it found countless obviously fake positive reviews and reviewers for paying companies.

"Trustpilot is either doing a very bad job at policing their website or is willfully negligent when convenient," it said.

Grizzly said Trustpilot seems to be most appreciated by companies who run "sketchy" business models. It added that many companies that are already shut down due to fraud "are somehow still extremely highly rated on Trustpilot".

Grizzl said: "We believe that the public will increasingly wake up to the fact that Trustpilot has traded the integrity of reviews for revenues.

"We see this resulting in a rapid depreciation of the Trustpilot brand and its fundamental value proposition."

At 1140 GMT, Trustpilot shares were down 24% at 143.96p.