• by Wendy Davis  @wendyndavis, April 6, 2010

Faced with growing backlash by small businesses and three potential class-action lawsuits accusing the site of "extortion," Yelp on Tuesday said it would make several changes to the way it displays reviews.

The company will no longer allow business owners to pay to have a favorite review highlighted at the top of its page. Also, Yelp will allow people to see some reviews it previously filtered out of the listings, including reviews that the site's filters flagged as having been authored by business owners.

The move comes as Yelp is dealing with growing pressure by small business owners who have accused the site's sales force of unfairly offering to place bad reviews far down in the results in exchange for ad buys.

Since February, three separate lawsuits have been filed on behalf of several companies -- a case by the California veterinary center Cats and Dogs Animal Hospital, one by the owner of D'Ames Day Spa and one by the owner of furniture repair shop Renaissance Restoration.

They essentially allege that Yelp's sales representatives offered to bury bad reviews and/or highlight favorable ones in exchange for ad buys.

CEO Jeremy Stoppleman reiterated Tuesday that the site had never offered to bury bad reviews for advertisers.

But the decision to end the "favorite review" feature and make filtered reviews available might have come too late to solve Yelp's legal problems now that litigation has commenced.

"Those lawsuits are going to continue apace," predicts Santa Clara University law professor Eric Goldman, adding that businesses can still argue that they were damaged by Yelp's alleged prior practices.

But, he says, Tuesday's move might limit liability in the future. "In theory it might deflect some future advertisers from queuing up. We'll just have to see about that."