Better Business Bureau

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Better Business Bureau
BBB logo
Type 501(c)(6) non-profit organization
Tax ID No. 52-1070270
Founded 1912
Headquarters
Key people Sharon Abrams, Chairman
Mary E. Power, President & CEO
Product(s) BBB Business Reviews
Accreditation for Businesses
Dispute resolution services
Service(s) Rating site
Focus(es) Consumer protection
Industry self regulation
Revenue $184,000,000
Employees 2,500
Subsidiaries BBB Wise Giving Alliance[1]
Motto Start With Trust
Website http://www.bbb.org

The Better Business Bureau (BBB), founded in 1912, is a nonprofit organization focused on advancing marketplace trust,[2] consisting of 112 independently incorporated local BBB organizations in the United States and Canada, coordinated under the Council of Better Business Bureaus (CBBB) in Arlington, Virginia.[3]

The BBB collects and provides free business reviews on more than 4 million businesses to over 100 million requests from consumers in 2012,[4] helping make the BBB's website rank among the top 300 most-visited websites in the United States.[5] The BBB serves as an intermediary between consumers and businesses, handling nearly 1 million consumer disputes against businesses in 2012.[4] The BBB also alerts the public to scams, reviews advertising, and assists when donating to charity.

Nearly 400,000 local businesses in North America support the BBB.[4] The BBB prospects successfully vetted businesses to become dues-paying Accredited Businesses that pledge and continue to adhere to the BBB Code of Business Practices.[6] In return, the BBB allows Accredited Businesses in good standing to use its trademarked logo in marketing materials.

Although it has "bureau" in its name, the Better Business Bureau is not affiliated with any governmental agency. Businesses that affiliate with the BBB and adhere to its standards do so through industry self-regulation. To avoid bias, the BBB's policy is to refrain from recommending or endorsing any specific business, product or service.[7]

The organization has been the subject of controversy, particularly related to its practice of giving higher ratings to businesses that pay a membership fee. The BBB disputes the claim that payment from businesses is required for them to receive an "A" rating.[8]

History[edit]

"Medical quackery and the promotions of nostrums and worthless drugs were among the most prominent abuses which led to the establishment of formal self-regulation in business and, in turn, to the creation of the NBBB."[9]


Structure and funding[edit]

The 112 BBBs are independently governed by their own boards of directors and must meet international BBB standards, which are monitored by the CBBB. The CBBB is governed by leaders of local BBBs, as well as by senior executives from major corporations, and community leaders such as academics and legal experts. Each BBB is run separately and is chiefly funded by its Accredited Businesses, who often serve on its board. A study by a business school dean at Marquette University found that ninety percent of BBB board members are from business.[10]

Businesses that move from one BBB jurisdiction to another may need to apply for BBB Accreditation in the new BBB location unless they have a system-wide accreditation. CBBB receives membership dues from BBBs, which amounted to $4,884,226.00 in 2009.[11]

Dispute resolution procedures[edit]

The organization's dispute resolution procedures are established by the Council of the Better Business Bureaus, and implemented by local BBBs. Usually, disputes can be resolved through mediation; when appropriate, low- or no‑cost arbitration may also be offered and provided through the BBB. The BBB acts as a neutral party when providing dispute resolution services.[12]

Complaints about the practice of professions like medicine and law are usually not handled by the BBB and are referred to associations regulating those professions.[13] The BBB does not handle complaints that have gone to court or are in the process of going to court as the complaint is already being handled by an alternative entity.[14]

If a BBB receives a consumer dispute, the BBB contacts the business in question and offers to mediate the dispute. A business does not need to be a member of the BBB to use its mediation services. These mediation services are free to all businesses and consumers. BBB Accreditation, or membership, is completely optional for a business to accept and participate in through the payment of dues. Past complaints allege that the BBB compiles scores based upon their ability to collect their money from businesses, and not entirely upon business performance.[15]

Possible misrepresentation of regulatory status[edit]

The BBB website states,

"What government actions does BBB report on?
BBB reports on known significant government actions involving business' marketplace conduct."

However, the BBB does not report when an official FDA Warning Letter regarding a business' marketplace conduct specifically labels it as illegal and instructs the company to respond within fifteen days, threatens it with a court injunction, and informs it that "Other federal agencies may take this Warning Letter into account when considering the award of contracts." Although the FTC categorizes an issuance of a Warning Letter as an Enforcement Action, the BBB considers one a "suggestion", not a "government action".[16] [17]

Rating system and accreditation[edit]

Until 2008, the BBB rated companies "satisfactory" or "unsatisfactory". On January 1, 2009, the BBB moved to a new system based on a school-style A+– F rating system.[18] The 16 factors have been posted on each business review since the program’s inception[19] and the details on the points awarded as well.[20] Initially there was a 17th factor worth 4 points for businesses that were Accredited and paid a fee to BBB. That process was changed in November 2010 in response to criticism in the media and from the Connecticut attorney general who accused BBB of using 'pay to play' tactics.[15]

If a business chooses not to provide basic information, such as size and start date, the BBB may assign a Not Rated (NR) rating.[19][21] A low rating due solely to a company not providing information would read: "BBB does not have sufficient background information on this business."

A business is eligible for BBB Accreditation if it meets, in the opinion of the BBB, the "BBB Standards for Trust."[2] There are eight BBB Standards for Trust that the BBB expects its Accredited Businesses to adhere to: Build Trust ("maintain a positive track record in the marketplace"), Advertise Honestly, Tell the Truth, Be Transparent, Honor Promises, Be Responsive (address marketplace disputes), Safeguard Privacy (protect consumer data) and Embody Integrity.[22]

The Attorney General of Connecticut demanded that the BBB stop using its weighted letter grade system, calling it "potentially harmful and misleading" to consumers.[23] Responding to the Attorney General of Connecticut and others, the BBB has since modified its letter grade system.[15]

Criticism[edit]

In 2010 ABC's 20/20 reported in a segment titled "The Best Ratings Money Can Buy" about the irregularities in BBB ratings.[24] They reported that a man created two dummy companies which received A+ ratings as soon as he had paid the membership fee. They also reported that business owners were told that the only way to improve their rating was by paying the fee. In one case a C was turned to an A immediately after a payment and in another case a C‑minus became an A+. Chef Wolfgang Puck said that some of his businesses receive F's because he refuses to pay a fee. Ritz Carlton, which does not belong either, also receives Fs for not responding to its complaints.[23]

In response, the president of the Council of Better Business Bureaus has stated the BBB ratings system will cease awarding points to businesses for being BBB members.[25] The national BBB's executive committee voted to address the public’s perception of the ratings system. It voted that the BBB ratings system would no longer give additional points to businesses because they are accredited. It voted to implement a system to handle complaints about BBB sales practices. [26] Despite the vote, the BBB website still states that points are taken away if accreditation is lost.[27][28]

In Canada, the CBC News reported in 2010 that Canadian BBBs were downgrading the ratings scores of businesses who stopped paying their dues. For example, a moving business who had an A rating and had been a BBB member for 20 years, dropped to a D‑minus rating when they allegedly no longer wanted to pay dues.[29]

BBBs have been accused of unduly protecting companies. If a branch does not act reasonably on behalf of a consumer, a complaint may be filed with the Federal Trade Commission. However, recent reports have suggested that the Austin chapter of the Better Business Bureau refused to resolve complaints against companies if customers do not pay a $70 mediation fee.[30]

Criticism on case resolutions[edit]

It has been reported that the BBB encourages and solicits money from the very businesses they monitor which, again, raises the question of neutrality.[31] The BBB states that they hold their Accredited businesses to a higher standard, as outlined in their Accreditation standards.[32]

On December 22, 2010, William Mitchell, CEO of the Los Angeles BBB, and originator of the BBB Letter Grading System, resigned as a result of an internal investigation conducted by the CBBB.[8][33]

The resignation was rescinded shortly afterward, however, with Mitchell claiming that his health prompted him to resign, and criticizing the National Council for attempting to take over the Southern California chapter.[34]

Canada[edit]

The Better Business Bureau of Metropolitan Toronto closed about 2001 following reports of high executive pay.[35][36] Paul Tuz, formerly president of the Toronto BBB, died on June 16, 2012.[37]

Four Canadian Better Business Bureaus changed their names or closed in 2011 following what they termed a takeover by the U.S.-based Council of Better Business Bureaus.[35] The Better Business Bureau of Windsor and South Western Ontario changed its name to IntegrityLink in 2011.[38] The Hamilton, Ontario BBB adopted the name Canadian Businesses and Charity Bureau.[39] In May 2012, the Hamilton organization was locked out of its office by its landlord in a rent dispute.[40] Local BBBs in Montreal[41] and St. John's, Newfoundland also left the CBBB and lost the right to use the BBB name. The Montreal BBB changed its name to L'Office de Certification Commerciale du Québec or Québec Commercial Certification Office, while the BBB in St. John's, Newfoundland, reportedly closed.[42]

Los Angeles[edit]

On March 12, 2013, the Council of Better Business Bureaus expelled the Los Angeles-based Better Business Bureau of the Southland, the largest local BBB, claiming that the local group had not met the Council's "standards relating to accreditation, reporting on businesses, and handling complaints."[43] [44] The Los Angeles group changed its name to the Business Consumer Alliance and said that it had followed all the Council's policies.[45][46] [47] The Council of Better Business Bureaus launched a new local BBB for the Los Angeles area.[48]

See also[edit]

References[edit]

  1. ^ http://www.bbb.org/us/Storage/16/Documents/BBB-WGA-2011-IRS-Form-990.pdf
  2. ^ a b "The Better Business Bureau Vision, Mission and Values". Council of Better Business Bureaus. Retrieved 31 August 2012. 
  3. ^ "Council of Better Business Bureaus - U.S. BBB". Bbb.org. Retrieved 2012-03-29. 
  4. ^ a b c "CBBB Annual Reports". BBB. 
  5. ^ "BBB.org Site Info". Alexa. 
  6. ^ "BBB Code of Business Practices - U.S. BBB". Bbb.org. Retrieved 2013-11-20. 
  7. ^ "The Better Business Bureau FAQs and Information - U.S. BBB". Bbb.org. Retrieved 2012-03-29. 
  8. ^ a b Joseph Rhee (December 22, 2010). "Report: Controversial Head of L.A. Better Business Bureau Chapter Quits Job". abcnews.go.com. 
  9. ^ Ladimer, Irving. The Health Advertising Program of the National Better Business Bureau - A.J.P.H. Vol. 55, No. 8. August 1965 (PDF). pubmedcentral.nih.gov. 
  10. ^ Parmar, Neil (September 24, 2008). "Is the BBB Too Cozy With the Firms It Monitors?". SmartMoney. 
  11. ^ "Income Tax Form 990" (PDF). 
  12. ^ "Dispute Resolution Processes and Guides - U.S. BBB". Bbb.org. Retrieved 2012-03-29. 
  13. ^ Roos, Dave (2008-12-10). "HowStuffWorks "File a Complaint with a BBB "". Money.howstuffworks.com. Retrieved 2012-03-29. 
  14. ^ "Alternatives to Going to Court | The People's Law Library". Peoples-law.org. Retrieved 2012-03-29. 
  15. ^ a b c Associated Press, Patrick Preston (2010-11-19). "Better Business Bureau Changes Ratings System Following Criticism". NBC 4i. Retrieved 2012-05-19. 
  16. ^ Clean business review showing A+ rating and no government actions.
  17. ^ FDA Warning Letter on the business[dead link]
  18. ^ "New BBB Letter-Grade A+ Through F Ratings System Helps Businesses Evaluate Suppliers, Improve Operations". eNews Park Forest. 
  19. ^ a b "What are BBB Ratings?". BBB. Retrieved 2012-03-29. 
  20. ^ "What are BBB Ratings?". BBB. Retrieved 2012-03-29. 
  21. ^ "The Better Business Bureau checks up on companies but who checks up on the Better Business Bureau?". blogs.absnews.com. 
  22. ^ "The Better Business Bureau Standards for Trust - U.S. BBB". Bbb.org. Retrieved 2012-03-29. 
  23. ^ a b Rhee, JOSEPH; Ross, Brian (November 12, 2010). "Terror Group Gets 'A' Rating From Better Business Bureau? Consumer Watchdog Accused of Running 'Pay for Play' Scheme With Grading System". 20/20. 
  24. ^ "BBB Ratings". ABC. 
  25. ^ "A Message from the President of CBBB", November 18, 2010, reproduced at "BBB revises rating system to regain consumer trust". RELO RoundTable. Retrieved 2010-12-02. 
  26. ^ "BBB Takes Action". Better Business Bureau. November 18, 2010. Retrieved 2010-12-02. 
  27. ^ "BBB | What are BBB Ratings?". Web.archive.org. 2011-07-25. Retrieved 2013-11-20. 
  28. ^ "BBB | What are BBB Ratings?". Web.archive.org. 2013-01-16. Retrieved 2013-11-20. 
  29. ^ CBC News, The National, November 23, 2010
  30. ^ Segal, David (March 12, 2011). "Complaint Resolved? Well, Not Exactly". New York Times. Retrieved 13 March 2011. 
  31. ^ FeeFighters (July 22, 2011). "Report: Better Business Bureau BBB & CBBB". FeeFighters.com. Retrieved 6 December 2011. 
  32. ^ "BBB Online Business Best Practices - - U.S. BBB". Bbb.org. Retrieved 2012-03-29. 
  33. ^ "A Message from the President of CBBB". BBB Information Center. November 18, 2010. [dead link]
  34. ^ Sharon Bernstein (February 8, 2011). "Head of local Better Business Bureau rescinds resignation". latimes.com. 
  35. ^ a b Van Alphen, Tony (September 7, 2011). "Consumer watchdog to reduce local presence in Canada". Toronto Star. Retrieved May 25, 2013. 
  36. ^ "Thumbs down for the critic". Canadian Business. August 1, 1995. Retrieved May 26, 2013. 
  37. ^ "Paul John Tuz". Toronto Star (legacy.com). Retrieved May 25, 2013. 
  38. ^ Pearce, Kristie (August 10, 2011). "Local BBB president not happy with change". The Windsor Star. Retrieved May 25, 2013. 
  39. ^ Coward, Cathie (August 24, 2011). "Hamilton Better Business Bureau vows to stay open". The Hamilton Spectator. Retrieved May 25, 2013. 
  40. ^ Hayes, Molly (May 20, 2012). "Business bureau locked out". The Hamilton Spectator. Retrieved May 29, 2013. 
  41. ^ "Le Bureau d’éthique commerciale disparaît et renaît". canoe.ca. August 12, 2011. Retrieved May 25, 2013. 
  42. ^ MacEachern, Daniel (July 28, 2011). "Better Business Bureau closing Aug. 16". The Telegram (St. John's). Retrieved May 25, 2013. 
  43. ^ Lopez, Ricardo (March 12, 2013). "Better Business Bureau expels Los Angeles chapter, largest in nation". Los Angeles Times. Retrieved May 25, 2013. 
  44. ^ "Better Business Bureau Expels Los Angeles Organization for Failure to Meet Standards" (Press release). Council of Better Business Bureaus. Retrieved May 25, 2013. 
  45. ^ Lopez, Ricardo (March 12, 2013). "Better Business Bureau L.A. chapter changes name after expulsion". Los Angeles Times. Retrieved May 25, 2013. 
  46. ^ "About Us". Business Consumer Alliance. Retrieved May 25, 2013. 
  47. ^ "Business Consumer Alliance Responds to BBB Allegations of 'Pay to Play'" (Press release). Business Consumer Alliance. Retrieved May 25, 2013. 
  48. ^ "New BBB Serving Greater Los Angeles Has Banner First Month Helping Consumers and Businesses" (Press release). Council of Better Business Bureaus. April 17, 2013. Retrieved May 25, 2013. 

External links[edit]