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Better Business Bureau

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Better Business Bureau
Founded1912
FocusConsumer Protection
Location
  • 4200 Wilson Blvd.
    Arlington, VA 22203
Area served
United States
Canada
Websitewww.bbb.org

The Better Business Bureau (BBB), founded in 1912, is a corporation consisting of several private business franchises of local BBB organizations based in the United States and Canada, which work together through the Council of Better Business Bureaus (CBBB). The BBB goal is to foster a fair and effective marketplace, so that buyers and sellers can trust each other ("Start With Trust"). Many BBB services can be accessed online through their website.

BBBs gather and report information on business reliability, alert the public to frauds against consumers and businesses, provide information on ethical business practices, and act as mutually trusted intermediaries between consumers and businesses to resolve disputes. News media frequently turn to the CBBB and local BBBs as expert sources of news about scams and consumer issues.

History

"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."[1]

BBB's inception has been credited to the court cases, such as United States v. Forty Barrels and Twenty Kegs of Coca-Cola, initiated by the government against a number of firms, including the Coca-Cola Company, in 1906 after the Pure Food and Drug Act had become law. Samuel Candler Dobbs, sales manager of Coca-Cola and later its president, took up the cause of truth in advertising.

In 1909, Dobbs became president of the Associated Advertising Clubs of America, now the American Advertising Federation (AAF), and began to make speeches on the subject. In 1911, he was involved in the adoption of the "Ten Commandments of Advertising", one of the first codes of advertising developed by groups of advertising firms and individual businesses. Similar organizations in succeeding decades, such as the National Better Business Commission, Inc. of the Associated Advertising Clubs of the World (1921), and the National Association of Better Business Bureaus, Inc. (1933) merged to become the Association of Better Business Bureaus, Inc in 1946. In 1970, the Council of Better Business Bureaus, Inc. (CBBB) was established.

Structure and funding

The 112 regional BBBs are independently governed by their own boards of directors, but must meet international BBB requirements, which are monitored and enforced by the CBBB on a continuous basis. The CBBB is governed by leaders of local BBBs, as well as by senior executives from major American corporations, and community leaders such as academics and legal experts. A study by a business school dean at Marquette University found that ninety percent of BBB board members are from business.[2]

Each BBB entity is run separately. 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. BBB entities are chiefly funded by member businesses. The national CBBB receives franchise fees, which amounted to $131 million in 2007.[2] CBBB also receives funding from corporate partners and sponsors.[2]

Core services

BBB core services include:

The council of Better Business Bureau administered a self-regulatory program created in 2004 by American business organizations to promote consumer confidence. Electronic retailing self-regulation program ERSP is a program of the Electronic Retailing Association in conjunction with the National Advertising Review Council (NARC). The mission of the program is to enhance consumer confidence in electronic retailing, by providing a forum to self-regulate direct response advertising.

Business reliability

Companies that are invited to join the BBB as Accredited Businesses must meet the BBB Standards for Trust[3] and maintain all requirements of BBB Accreditation, including payment of annual dues. Businesses that agree to the BBB dispute resolution procedures may identify themselves as Accredited. If Accredited Businesses fail to meet the BBB's Standards, their accreditation is revoked.

BBB Accredited Businesses make a commitment to conduct their business affairs with reliability and integrity, in accordance with BBB Standards and guidelines, and pay the BBB an annual tribute. Some argue that receiving payments from the businesses they report on creates a significant conflict of interest.

The Better Business Bureau name and torch logo can be used by accredited businesses. The logo use by accredited business is only allowed on printed material; to use the logo on a website the business needs to join the BBOnline Accredited Business Seal program.

Dispute resolution procedures

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.

Complaints about the practice of professions like medicine, law and accounting are usually not handled by the BBB and are referred to associations regulating those professions.

However, if a company chooses not to join the BBB(and pay their dues) a decreased score will be given for "failure to provide information." This has caused complaints that the BBB compiles scores based upon their ability to collect their money from businesses, and not entirely upon business performance.

Truth in advertising

The National Advertising Division of the CBBB (NAD) reviews national advertising for truthfulness and accuracy, and fosters public confidence in advertising accuracy. Its policies and procedures are established by the National Advertising Review Council (NARC). The Children's Advertising Review Unit (CARU) of this BBB entity reviews advertising directed to children. The BBB also administers the Children's Food and Beverage Advertising Initiative, a voluntary self-regulation program undertaken in cooperation with major corporations. This initiative is designed to shift the mix of advertising messaging to children to encourage healthier dietary choices and healthy lifestyles.

Wise Giving Alliance

The BBB Wise Giving Alliance reviews and reports on national charities, using the 20 BBB Wise Giving Alliance Standards for Charity Accountability. Detailed national charity reports may be found on the BBB website. Many local BBBs also review charities in their regions and publish detailed charity reports on their local websites.

Website resources

BBB websites offer video content, online resources, and educational tools for consumers. Each local BBB offers a unique assortment of educational resources, tailored to meet the needs of its community. The organization also has BBB channel on YouTube, news alerts featured on individual BBB websites, and BBB videos.

Rating system and accreditation

Until 2008, the BBB rated companies "satisfactory" or "unsatisfactory". Starting in 2008, the BBB would allow companies who did not meet satisfactory standards to be listed as "accredited" if they paid membership dues and met certain standards. A number of chapter presidents expressed concern that disturbed companies could use the label to hide problems.[2]

On June 1, 2009, the BBB moved to a new system based on a school-style A-F rating system.[4] The details are mostly confidential, but company officials say it involves 17 factors. They say that one factor, which accounts for four percent of the rating, is "accreditation" or membership.[5] Companies cannot achieve a 100% or A+ rating without paying membership dues, which begin at $350 and go up to $10,000 for large companies. That aspect has been criticized as biased towards members.[6]

If a business chooses not to provide detailed information for reasons of protecting information considered largely private, the BBB will give them a very low rating.[7] A low rating due solely to a company not providing information would read: "BBB does not have sufficient background information on this business."

A BBB official says that the new rating system gives businesses more incentive to make improvements.[5] Traffic on the BBB websites increased by double-digit increases.[5] The Attorney General of Connecticut has demanded that BBB the stop using the system, calling it "potentially harmful and misleading" to consumers.[8]

In 2010, 20/20, an ABC network news magazine, reported irregularities in BBB ratings. 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- became an A+. Chef Wolfgang Puck said that some of his businesses receive Fs because he refuses to pay a fee. Ritz Carlton, which does not belong either, also receives Fs.[8]

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.[9] The national BBB's executive committee took several steps to address the public’s perception of the ratings system. The BBB ratings system no longer gives additional points to businesses who pay accredition fees. They also implemented a system to handle complaints about BBB sales practices and planned a review of their accreditation process.[10]

Criticisms

The BBB does not recommend specific businesses to consumers, but simply supplies information.[3] Regarding how a group funded by businesses can be fair to consumers, the bureau's website states that its value to businesses depends on its neutrality.[11]

BBBs have been accused of unduly protecting companies.[12] The BBB responds by, at a minimum, notating complaints on the "Reliability Report" section of its web sites.[13] If a branch does not act reasonably on behalf of a consumer, a complaint may be filed with the Federal Trade Commission.

Because of its requirement that businesses pay dues and tribute, this has engendered complaints that the BBB compiles scores based upon their ability to collect money from businesses, and not upon business performance.

Criticism on case resolutions

It has been reported that the BBB encourages and solicits money from the very businesses they have been monitoring. This has not been beneficial to the customer as expected it to be.[14]

References

  1. ^ Ladimer, Irving "The Health Advertising Program of the National Better Business Bureau" A.J.P.H. Vol. 55, No. 8. Aug. 1965
  2. ^ a b c d Parmar, Neil (September 24, 2008). "Is the BBB Too Cozy With the Firms It Monitors?". SmartMoney.
  3. ^ a b "BBB: Standards of Trust". BBB. Retrieved 2009-02-03. Cite error: The named reference "BBB" was defined multiple times with different content (see the help page).
  4. ^ "New BBB Letter-Grade A+ Through F Ratings System Helps Businesses Evaluate Suppliers, Improve Operations". eNews Park Forest.
  5. ^ a b c Hathaway, Matthew (February 7, 2010). "Rating system boosts BBB New method Website traffic is up since watchdog started assigning letter grades. Credit for dues Membership gives companies an unfair edge, critics claim". St. Louis Post – Dispatch. p. E.1.
  6. ^ Lazarus, David (2009-01-21). "Better Business Bureau grades companies on a peculiar curve". LA Times.
  7. ^ "The Better Business Bureau checks up on companies but who checks up on the Better Business Bureau?". blogs.absnews.com.
  8. ^ 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.
  9. ^ "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.
  10. ^ "BBB Takes Action". Better Business Bureau. November 18, 2010. Retrieved 2010-12-02.
  11. ^ "The Better Business Bureau FAQs and Information – U.S. BBB". BBB. Retrieved 2009-06-10.
  12. ^ Tempe Arizona (February 22, 2000). "Rip-off Report: Better Business Bureau". ripoffreport.com. Retrieved 25 November 2010.
  13. ^ "2005 Annual Report of the Council of Better Business Bureaus" (PDF). Council of Better Business Bureaus. Retrieved 2009-01-14.
  14. ^ Tempe Arizona (February 22, 2000). "Report: Better Business Bureau BBB & CBBB". ripoffreport.com. Retrieved 25 November 2010.
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