Better Business Bureau

Founded	1912
Headquarters	3033 Wilson Boulevard, Suite 600 Arlington, VA 22201
Area served	North America
Focus	A marketplace where businesses and consumers can trust one another
Revenue	$184,000,000
Employees	2,500
Motto	Start With Trust
Website	bbb.org

The Better Business Bureau (BBB), founded in 1912, is a nonprofit organization focused on advancing marketplace trust,^[1] consisting of 113 independently incorporated local BBB organizations in the United States and Canada, coordinated under the Council of Better Business Bureaus (CBBB) in Washington, D.C.^[2] In 2012, the BBB celebrated its 100th anniversary.^[3]

The BBB collects and provides free business reliability 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 500 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 invites successfully vetted businesses to become dues-paying Accredited Businesses that pledge and continue to adhere to the BBB Code of Business Practices. In return, the BBB allows Accredited Businesses to use its logo and dispute resolution services.^[6]

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. In addition, the organization has been accused of requesting fees from consumers in excess of the amount consumers are attempting to retrieve. 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]

BBB's concept has been credited to several 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 the wake of those judgements.^{[citation needed]}

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 (CBBB) was established.^{[citation needed]}

Structure and funding [edit]

The 113 regional BBBs are independently governed by their own boards of directors, but must meet international BBB requirements, which are monitored by the CBBB. 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. Each BBB is run separately and is chiefly funded by its members, 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. BBB entities are chiefly funded by member businesses. The national CBBB receives franchise fees, 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] There are currently over 625,000 companies rated "A⁺" that are not accredited and pay no fees to BBB and almost 300,000 accredited firms with an "A⁺" rating that are paying annual fees.^{[citation needed]}

If a business chooses not to provide basic information about his/her business, such as size and start state, the BBB does not have sufficient information and 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"^[1] There are eight BBB Standards for Trust that the BBB expects its Accredited or Member 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]

Shortly after the resignation was rescinded. Mitchel claimed that his health lead him to initially resign and criticized the Nation Council for attempting to take over the Southern California chapter.^[34]

See also [edit]

• Better Business Bureau Video Series
• ResellerRatings

References [edit]

External links [edit]

• Official website
• Better Ethics Bureau
• Better Business Bureau on Google+
• Better Business Bureau - Recent Development
• Answers.USA.gov - Better Business Bureau (BBB)
• Lighting the Way - Better Business Bureau
• Better Business Bureau - A useless institution