Facts About The Better Business Bureau You May Not Know

1) The Better Business Bureau is NOT a government agency. Instead the BBB is a private 501(c)(6) organization with $143 Million in annual revenues derived from membership dues it receives from the very businesses it reports on.

2) Attorney General questions new BBB Grading System. The Connecticut Attorney General is looking into the practices of the Better Business Bureau after they gave their annual Torch Award for Best Business to Custom Basement, a firm under investigation for violation of consumer protection laws.

3) U.S. Representative says BBB negatively classify businesses they don’t like. Addressing Congress, US Representative Corrine Brown said some BBB’s libel and slander small businesses they don’t like while rating other companies with terrible records as being satisfactory.

FROM THE CONGRESSIONAL RECORD

I have learned that we have within our country a private organization that with the appearance of being quasi-governmental and without any legal or regulatory oversight and control can libel and slander and tortuously interfere with a small business. They can do so with virtual immunity. This organization is the National Better Business Bureau and their franchise local Better Business Bureaus.

At times, some of these bureaus classify small business owners as unsatisfactory, libel and slander them with opinion and innuendo, and provide them no due process to correct the problem. If sued in court, they argue qualified immunity under the guise of the public good. No one disputes the right of a Better Business Bureau to print facts. It is when they print falsehoods, opinion, or negative innuendo that a mechanism for redress or correction must be assured.

When closely examined, however, one finds that there are Better Business Bureaus that arbitrarily and capriciously exclude and negatively classify those they don’t like. They also frequently rate companies with terrible records as being satisfactory.

For Complete Statement of Representative Brown, Click Here
4)  Membership in the BBB guarantees a better grade. By their own admission, membership in the Better Business Bureau improves a business’ grade.   Calling this a membership service is a misnomer, it more closely resembles an advertising service where BBB “members” pay to play.

5) Even the Better Business Bureau is NOT a member of the BBB. Not only does this exhibit a lack of confidence in their own product, it makes it impossible for anyone to complain about the Better Business Bureau to the organization.

6) The Better Business Bureau’s model of operations seems to closely resemble that of McDonald’s restaurants–plenty of individual franchises (or BBB offices) under a central command (The Council of Better Business Bureaus) “CBBB”, albeit with much less oversight than practiced by McDonald’s, and that is part of the problem.  With McDonald’s you’re pretty much assured that a cheeseburger you buy in St. Louis, MO will taste exactly like one in Bend, OR or Macon, GA.    With the Better Business Bureau, there is no consistency in grading from region to region, and this lack of oversight is used by the CBBB as an “out.”  There have been numerous press articles, recent and old, that have pointed out discrepancies in evaluating businesses and questioned the BBB’s “pay for play” ethics.  These seem to have been easily deflected by the BBB as just being momentary aberrations of a regional nature, and not something to concern, or come under the purview of, the CBBB.

7) The BBB is funded by its Membership. Both Consumer Reports (Consumer Union or CU) and the Better Business Bureau (BBB were created to protect consumers from false, misleading, or grandious advertising claims).  The BBB was established in 1912 as a self-governing body to police misleading advertising.  CU was established in 1936 in response to advertising flooding the mass media.  Both CU and BBB are non-profit organizations.  CU judges products, the BBB judges businesses.  In spite of these similarities, there is a marked difference in their business models.  Consumer Reports is funded through subscriptions from consumers who are interested in their reviews of products.  The BBB is funded by memberships paid for by businesses.  This rightly or wrongly gives the appearance of a conflict of interest.

The National BBB Adopted The Los Angeles Better Business Bureau System of Letter Grades in order to generate more profits for the BBB.  The BBB does this by high pressure telemarketing tactics to business. They have chosen to continue to publicly support a grading system that has been demonstrated to be arbitrary, subjective and in many cases flat-out wrong.  And to make the Letter Grade system truly work, they will find they need to adopt the very high pressure, deceptive telemarketing tactics of the LA BBB, the very type of sales tactics they (the BBB) deplore publicly.  The BBB has become the captain on its sinking ship that refuses to leave the vessel.  It would seem that the CBBB is at a crossroads:  they can continue to stonewall the situation and behave like Mark McGwire or Roger Clemens in the face of steroid allegations and meet increasing skepticism and investigation or they can take the high road, like Andy Pettitte and admit their mistake and (hopefully) get back on track.

9) The Better Business Bureau current grading system is inaccurate, biased, and faulty which has caused legitimate, well run, consumer friendly businesses to suffer greatly from bad grades given to them by the Better Business Bureau.  Mechanic’s Heating & Air Conditioning, LLC’s BBB “Letter Grade” is one such example of the BBB’s unfair system.

10) The Better Business Bureau current grading system has not done the due diligence necessary to guarantee accurate results about non-member businesses for which it has given grades.

11) The Better Business Bureau has no mechanism in place for a non-member business to seek independent arbitration for what they deem to be an unfair grade.  In other words, the Better Business Bureau refuses to subject itself to the very process that they require businesses to participate in if they wish to be members.

12) There is no standardization between regional offices of the Better Business Bureaus when it comes to grading or sales tactics.  There is no appearance of oversight of these regional BBB offices by the national Council of Better Business Bureaus.

13) Consistency is a concept that the Better Business Bureau has yet to perfect. Take for instance the Better Business Bureaus’ policies on how they take into account government actions against a business when grading said business.  According to Howard Schwartz of the Connecticut Better Business Bureau  the bureau “does not report on government actions.“   Contradicting this, Judy Mills of the Southwest Missouri BBB states that  “Variables plugged into the (grading) algorithm include government actions against a business.“  Based on the events, it seems likely that the Connecticut Better Business Bureau wishes they adopted the Missouri approach.  On March 18, 2009 the Attorney General for the State of Connecticut filed suit against this year’s Connecticut BBB Torch Award and has demanded responses from the Connecticut BBB on their grading system and other issues.  (Note:  for an excellent series on the troubles facing the Connecticut Better Business Bureau read George Gombossy’s column in the Hartford Courant.)  The inconsistency in what counts and doesn’t count towards a businesses’ grade has led to great disparity between different regional BBB offices grading essentially the same businesses.  This is why Disneyland in California had a “F” and Disneyworld in Orlando had a “B”, the San Jose Mercury News a “F” and the Philadelphia Enquirer a “C”, and other regional discrepancies that have no rhyme or reason.  Other inconsistencies exist: how the word “accreditation” is used and what it means; how complaints are displayed (some BBB’s list only 12 months of complaints, others 36 months);  whether one can view the actual complaints or must make-do with the synopsis; even the color scheme of the various member sites differs.  Just as one trusts that a McDonald’s Quarter Pounder with Cheese would taste the same in Chicago as it would in Reno or Little Rock, one would hope that a “A” grade in one BBB region would mean the same as an “A” grade in another.  Sadly this is not the case.

14) Regardless of its not-for-profit status, the Better Business Bureau operates as an aggressive and ruthless business interested in money, and lots of it. The BBB’s main source of revenues comes from the membership fees it charges BBB member businesses.  This means there is a great incentive on getting new businesses to join the BBB.  This in turn has led to a significant portion of Better Business Bureau employees being nothing more than telemarketers who solicit businesses to join.  Common tactics employed are “the warning call” in which the BBB representative will call up and explain how they just received a complaint about a business and this needs to be addressed right away and that joining the BBB is somehow the best way to handle this complaint.  Many businesses have complained about excessive calls (six or seven within a one week period for instance.)  These same tactics, if employed by any other business would be grounds for a complaint that would tarnish their BBB grade.

15) LACK OF OVERSIGHT Another issue that needs to be cleaned up at the Better Business Bureau is the lack of oversight.  The CBBB (national BBB office) lack of oversight of their BBB regional offices has led to the non-standardized, non-uniform regional practices and discrepancies.  This reflects badly on the Better Business Bureau and calls into question the grading system, the objectivity of BBB reports, and erodes the trust consumer and business can place in the BBB.  Additionally, this lack of oversight has led to damages to small business who have no recourse against bogus claims and erroneous information and wrongly given bad grades from various regional BBB offices.  In the event a small business believes they have been “done wrong” by their local BBB they find themselves without recourse.  The regional BBB routinely refuses to not only change a businesses grade, but also will not agree to a meeting on the issue, nor accept mediation or arbitration to settle the dispute.  Yet, the BBB routinely gets involved in arbitration on behalf of the consumer against member businesses.  The CBBB, or national BBB, in turn refuses to entertain any request to address the wrong doing and refers everything back to local BBB.  Thus, the small business is not only prevented from clearing their good name, they are denied even the opportunity of arguing their case.  To put things in perspective, the following chart demonstrates how the BBB system of handling a dispute compares with that of the United States legal system.  As a society, we don’t allow the Better Business Bureau’s standards of justice and fair play to be tolerated in our courts.  So why do we allow these standards and practices to be tolerated within our business community?  Clearly, the new grading system, the regional inconsistencies, the overaggressive sales tactics and the lack of oversight are areas that the Better Business Bureau needs to improve.  These problems and issues do a dis-service to the community: they deprive the consumer of accurate, reliable information and can hurt innocent businesses, like Mechanic’s Heating & Air Conditioning, LLC, while rewarding bad businesses.  The BBB asks us to trust them, then they go scurrying around at all hours of the night, putting band-aid tweaks on their most egregious mistakes, and fail to acknowledge their errors or actions.  Trust is hard under such circumstances.

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