Local review powerhouse Yelp is rolling out a number of product changes on Tuesday in an effort to put to rest allegations that it hides negative reviews in exchange for money. Such allegations aren’t a new problem for Yelp, but came to a head in February when a class action lawsuit was filed against the company and included the headline-grabbing term “extortion scheme.”

Among the changes being made to address this issue, all reviews that are filtered by Yelp’s algorithm will now be visible in one place to anyone that wants to see them. Looking through filtered reviews, which can be accessed via a new link on all business pages, users can expect to see both overly positive reviews that Yelp suspects of being solicited by a business, and overly negative ones that Yelp suspects of being intentionally malicious — such as those written by a competitor.

The algorithm that Yelp uses to filter reviews will continue to remain private. However, the company did shed some light on the subject last month, releasing this video that explains some of the criteria that is looked at in determining which reviews to filter:

Beyond being more transparent about review filtering, Yelp is eliminating the “favorite review” feature that allows businesses to pay to prominently feature a positive customer review on their page. CEO Jeremy Stoppelman told me in an interview on Monday that one of his goals is to make it such that “even if you’re not familiar with Yelp, you have a good chance of figuring out what’s going on and why [when you land on a business page].”

While Yelp contends that its salespeople never told businesses that they could pay to have negative reviews removed, Stoppelman conceded that “some people got the wrong idea.” By removing “favorite reviews,” the company hopes any ambiguity between reviews and advertising will be eliminated. At the same time, Yelp plans to introduce a new revenue stream – video for business pages – in the near future.

This couldn’t have been an easy decision for Yelp – after all, its filtering algorithm is part of what helped separate the site from its competitors. By making all filtered reviews so easily accessible, there is also a risk that the secret sauce becomes a bit more apparent (and hence, easier to game).

Nonetheless, with words like “extortion” being throw around and a slew of new location-based services cropping up, Yelp had to become more transparent, and the changes seem to represent a solid compromise between what makes the site work and what skeptics need to see.

Do you think Yelp’s changes go for enough? Let us know what you think in the comments.

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Tags: small business, yelp