See, this illustrates the fallacy of the "yelp extortion" argument: what the rep said was totally clear -- when you advertise, your rating gets better. It did not imply that your rating gets better because they'll change it. That was your leap to an unsupported conclusion.

Moreover, assuming that s/he did say what you're quoting, you have to put it in context: Yelp employs hundreds (if not thousands now) of telephone sales reps. They get paid crap, work in a call center, and have zero ability to influence anyone, anywhere. Sales people, when incentivized to say things for money, tend to walk as close to the ethical line as they can without going over. I haven't looked, but there probably is data showing that advertising increases your rating. It wouldn't surprise me.

Every time I've bothered to dig into these claims, it's a story like yours, where a business leapt to a conclusion because they thought they heard something that validated a rumor they read on the interwebz.