🔍 Exposed: Trustpilot's "Review Racket" & Klarna's Deepening Crisis

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✍️ Update on Previous Story - Klarna 

As a reporter, I believe in holding my own analysis accountable, both when I get things right and especially when I'm wrong. In this case, my concerns about Klarna have unfortunately proven accurate.

In my previous coverage, I wrote that "most companies preparing to go public craft narratives centered on explosive growth potential, yet Klarna has taken the opposite approach [referring to cost cutting measures]. This unusual strategy suggests deeper issues within the business model."

It didn't stop there, adding that "Perhaps more concerning is the customer base itself, those needing credit for everyday purchases like groceries and clothing often represent high credit risks with lower lifetime value, creating a precarious foundation for sustainable growth & high loss ratios."

Yesterday's financial reporting validated these concerns in stark terms. Klarna's net loss more than doubled in the first quarter as more consumers failed to repay loans. The company reported a net loss of $99 million for the three months to March, concrete evidence of the credit risk issues I flagged.

The numbers speak for themselves. A business model built on extending credit to consumers for everyday purchases appears to be showing fundamental weaknesses. 

Main Story - 🔍 Exposed: Trustpilot's "Review Racket" & Klarna's Deepening Crisis

My work writing a tech newsletter involves consuming vast amounts of information daily, from traditional media and industry reports to private company data and social media conversations. Whilst seeing an isolated customer complaint or two isn’t uncommon if you see half a dozen appear in the space of 10 days it’s something to pay attention to. And signals something likely more serious. 

This has just happened with Trustpilot, the popular consumer review platform, with an uprising of prominent tech figures starting to publicly speak out against their shady business practices so thought I’d dig in. 

Noah Kagan, founder of AppSumo, recently stated: "Trustpilot just tried to extort us. We've used them for years to collect real, honest reviews… Now they're threatening legal action unless we pay. Apparently, showing our own customers' reviews on our own website is a problem… unless we pay Trustpilot."

This doesn't appear to be an isolated incident. Chrys Bader, CEO of Rosebud, shared a message he reportedly received from Trustpilot: "Saw you are from Mass and went to BU. I used to beat them in hockey all the time and I am not trying to berate you on removing the testimonials on your site. I simply am trying to educate you on our platform. Our team has already put the badge on your site, but if it continues could delete your profile. What is holding you back from upgrading?"

Similar accounts have emerged from other prominent tech figures including Nathan Barry (Founder of ConvertKit), Mathias Schroder, Nathan Resnick, and Jeremy Sonne.

Potentially Deeper Issues

The allegations extend beyond aggressive sales tactics. Supabase co-founder Paul Copplestone described a concerning pattern: "For the first five years of operating, Supabase receive just 3 Trustpilot reviews. Since our founding was announced 1 month ago we have received 5 negative reviews."

Copplestone continued, noting that since the founding announcement didn't trigger significant growth, this suggests "Trustpilot may be running a racket. Seed your company page with negative reviews so you're forced to send your happy users to Trustpilot (so they get more traction) and incentivises the company to pay $339/month so the team can respond to negative reviews."

The timing and nature of these complaints may indicate underlying business pressures at Trustpilot. The increasing frequency and aggressiveness of their sales tactics suggest the company may be struggling to meet financial targets. If this is the case, these aggressive approaches could intensify further.

What this means for you

For companies currently using Trustpilot's services, these developments warrant careful consideration. Businesses may want to explore alternative review platforms to avoid potential legal threats or, as in Supabase's case, the risk of potentially illegitimate negative reviews that could damage brand perception.

As the situation develops, I'll continue monitoring the growing chorus of complaints about Trustpilot's business practices.

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