Better Business Bureau

Better Business Bureau

Motto	Start With Trust
Founded	1912
Type	501(c)(6) non-profit organization
Tax ID no.	52-1070270
Focus	Consumer protection Industry self-regulation
Location	3033 Wilson Boulevard, Suite 600 Arlington, Virginia United States 22201
Products	BBB Business Reviews Accreditation for Businesses Dispute resolution services
Services	Rating site
Key people	Sharon Abrams, Chairman Mary E. Power, President & CEO
Subsidiaries	BBB Wise Giving Alliance[1]
Revenue	$215,000,000
Employees	2,500
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 123 million requests from consumers in 2013, helping make the BBB's website rank among the top 1,000 most-visited websites in the United States.^[4]

The BBB serves as an intermediary between consumers and businesses, handling over 885,000 consumer disputes against businesses in 2013, of which close to 78% were settled.

Nearly 400,000 local businesses in North America support the BBB.^[5] 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

"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

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

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. 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

The BBB website states,

"What government actions does BBB report on?

BBB reports on known significant government actions involving business' marketplace conduct."

Rating system and accreditation

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.^[16] The 16 factors have been posted on each business review since the program’s inception^[17] and the details on the points awarded as well.^[17] 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.^[17][18] 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.^[19]

The Attorney General of Connecticut demanded that the BBB stop using its weighted letter grade system, calling it "potentially harmful and misleading" to consumers.^[20] Responding to the Attorney General of Connecticut and others, the BBB has since modified its letter grade system.^[15]

Criticism

In 2010 ABC's 20/20 reported in a segment titled "The Best Ratings Money Can Buy" about the irregularities in BBB ratings.^[21] 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.^[20]

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.^[22] 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. ^[23] Despite the vote, the BBB website still states that points are taken away if accreditation is lost.^[24][25]

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.^[26]

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. Moreover, 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.^[27]

Criticism on case resolutions

It has been reported that the BBB encourages and solicits money from the very businesses they monitor which, again, raises the question of neutrality.^[28] The BBB states that they hold their Accredited businesses to a higher standard, as outlined in their Accreditation standards.^[29]

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][30]

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.^[31]

Canada

Toronto BBB Closes

The Better Business Bureau of Metropolitan Toronto Toronto closed in 1995 following reports of high executive pay.^[32][33] Paul Tuz, formerly president of the Toronto BBB, died on June 16, 2012.^[34]

BBB Integrates US & Canadian Operations

On August 16, 2011 the Council of Better Business Bureaus (CBBB) August 16, 2011: BBB Integrates US and Canadian Operations announced the formal integration of operations in the United States & Canada, effective immediately.

The CBBB Board of Directors voted earlier this month on the integration plan. Council of Better Business Bureaus is the international headquarters of the BBB system and the governing body that licenses local BBBs and provides support services to increase their effectiveness.

According to the statement, integration marks the way "...for an improved customer experience for those who purchase goods and services across the border." “The U.S. and Canada remain each other’s largest trading partners,” noted Stephen A. Cox, President and CEO of CBBB. “We are really one North American marketplace, and the BBB system now reflects that. Not only will it be easier for consumers to check out businesses in either country, it will be simpler for them to file a complaint or resolve a dispute.”

The move was supported by the Canadian Council of Better Business Bureaus (CCBBB). “Given the advances in technology and the globalization of services, it no longer makes sense to maintain two separate systems,” said M. Jean Lemyre, chair of the CCBBB. “The vast majority of consumers initially contact BBB through the Internet. Aligning BBB services into one integrated system will be more efficient for businesses in Canada, and will ensure that consumers continue to receive the high quality of services they’ve come to expect from BBB.” ^{[35] [36] [37] [38]}

BBB Revokes Trademark Authorization from Hamilton, Montreal, St. John’s & Windsor Offices

The Council of Better Business Bureaus (CBBB) revoked the BBB name & trademark from four Canadian Better Business Bureaus. The CBBB said it made the move to withdraw trademark authorization from the offices in Hamilton, Windsor, Montreal and St. John’s after determining these four Canadian offices did not meet the defined standards of operation.

CBBB realigned the boundaries of its affected Canadian offices and fold them into larger offices. Hamilton has been gathered under the banner of the BBB's Kitchener office, while the territories in SW Ontario (including Windsor) are now part of the Western Ontario region based in London, ON.

The former President of the Better Business Bureau of Windsor and South Western Ontario claims that he continues to operate under the name IntegrityLink in 2011, although services offered under that name have not been verified and the CBBB maintains concerns that some of the former BBB's continue to make use of proprietary information to which they are no longer entitled.^{[35] [36] [37] [38] [39]}

Since 2011 the Hamilton, Montreal & St. John's offices have also changed their names or closed following what they termed a takeover by the U.S.-based Council of Better Business Bureaus.^[32] The Hamilton, Ontario BBB adopted the name Canadian Businesses and Charity Bureau.^[40] In May 2012, the Hamilton organization was locked out of its office by its landlord in a rent dispute.^[41] Local BBBs in Montreal^[42] 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.^[43]

Los Angeles

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."^{[44] [45]} The Los Angeles group changed its name to the Business Consumer Alliance and said that it had followed all the Council's policies.^{[46][47] [48]} The Council of Better Business Bureaus launched a new local BBB for the Los Angeles area.^[49]

See also

• Angie's List
• ConsumerAffairs
• ResellerRatings
• SiteJabber
• Trustpilot

References

External links

• Official website
• Better Business Bureau – Recent Development
• Lighting the Way – Better Business Bureau