Better Business Bureau

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Better Business Bureau
BBB logo
Founded1912
Headquarters3033 Wilson Boulevard, Suite 600
Arlington, VA 22201
Area servedNorth America
FocusA marketplace where businesses and consumers can trust one another
Revenue$184,000,000
Employees2,500
MottoStart With Trust
Websitebbb.org
 
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Better Business Bureau
BBB logo
Founded1912
Headquarters3033 Wilson Boulevard, Suite 600
Arlington, VA 22201
Area servedNorth America
FocusA marketplace where businesses and consumers can trust one another
Revenue$184,000,000
Employees2,500
MottoStart With Trust
Websitebbb.org

The Better Business Bureau (BBB), founded in 1912, is a nonprofit organization focused on advancing marketplace trust,[1] consisting of 116 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 is celebrating 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 400 most-visited websites in the United States.[5] The BBB serves as a trusted 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 remain unbiased, 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 businesses that pay a membership fee higher ratings. 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]

Contents

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]

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

The 116 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

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]

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.[18] 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.[17][19] 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.[20]

The Attorney General of Connecticut demanded that the BBB stop using its weighted letter grade system, calling it "potentially harmful and misleading" to consumers.[21] 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.[22] 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.[21]

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.[23] 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 accreditation fees. They also implemented a system to handle complaints about BBB sales practices and conducted a review of their accreditation process and instituted a strict, uniform, minimum Accreditation Processes.[24]

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.[25]

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.[26]

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.[27] The BBB states that they hold their Accredited businesses to a higher standard, as outlined in their Accreditation standards.[28]

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][29]

See also

References

  1. ^ a b "The Better Business Bureau Vision, Mission and Values". Council of Better Business Bureaus. http://www.bbb.org/us/mission-and-values/. Retrieved 31 August 2012. 
  2. ^ "Council of Better Business Bureaus - U.S. BBB". Bbb.org. http://www.bbb.org/us/cbbb/. Retrieved 2012-03-29. 
  3. ^ "Lighting the Way: 100 Years — Better Business Bureau of Minnesota and North Dakota". Bbbis100.org. http://www.bbbis100.org/. Retrieved 2012-03-29. 
  4. ^ a b c "CBBB Annual Reports". BBB. http://www.bbb.org/us/cbbb-annual-reports/. 
  5. ^ "BBB.org Site Info". Alexa. http://www.alexa.com/siteinfo/bbb.org. 
  6. ^ "BBB: Dues Schedule". BBB. http://louisville.bbb.org/dues/. 
  7. ^ "The Better Business Bureau FAQs and Information - U.S. BBB". Bbb.org. http://www.bbb.org/us/bbb-faqs/. 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. http://abcnews.go.com/Blotter/la-business-bureau-chapter-head-bill-mitchell-quits/story?id=12458713. 
  9. ^ Ladimer, Irving "The Health Advertising Program of the National Better Business Bureau" A.J.P.H. Vol. 55, No. 8. Aug. 1965
  10. ^ Parmar, Neil (September 24, 2008). "Is the BBB Too Cozy With the Firms It Monitors?". SmartMoney. http://www.smartmoney.com/investing/economy/Investigating-the-Better-Business-Bureau-23879/?page=all. 
  11. ^ http://dynamodata.fdncenter.org/990_pdf_archive/237/237079691/237079691_200912_990O.pdf
  12. ^ "Dispute Resolution Processes and Guides - U.S. BBB". Bbb.org. http://www.bbb.org/us/Dispute-Resolution-Services/Process/. Retrieved 2012-03-29. 
  13. ^ Roos, Dave (2008-12-10). "HowStuffWorks "File a Complaint with a BBB "". Money.howstuffworks.com. http://money.howstuffworks.com/better-business-bureau4.htm. Retrieved 2012-03-29. 
  14. ^ "Alternatives to Going to Court | The People's Law Library". Peoples-law.org. http://www.peoples-law.org/node/901. 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. http://www2.nbc4i.com/news/2010/nov/19/better-business-bureau-changes-ratings-system-foll-ar-296803/. Retrieved 2012-05-19. 
  16. ^ "New BBB Letter-Grade A+ Through F Ratings System Helps Businesses Evaluate Suppliers, Improve Operations". eNews Park Forest. http://www.enewspf.com/index.php?option=com_content&view=article&id=7686:new-bbb-letter-grade-a-through-f-ratings-system-helps-businesses-evaluate-suppliers-improve-operations-&catid=88888960&Itemid=88889783. 
  17. ^ a b "What are BBB Ratings?". BBB. http://www.bbb.org/business-reviews/ratings/. Retrieved 2012-03-29. 
  18. ^ "What are BBB Ratings?". BBB. http://www.bbb.org/business-reviews/ratings/overview.html. Retrieved 2012-03-29. 
  19. ^ "The Better Business Bureau checks up on companies but who checks up on the Better Business Bureau?". blogs.absnews.com. http://blogs.abcnews.com/pressroom/2010/11/the-better-business-bureau-checks-up-on-companies-but-who-checks-up-on-the-better-business-bureau-brian-ross-investigates-on.html. 
  20. ^ "The Better Business Bureau Standards for Trust - U.S. BBB". Bbb.org. http://www.bbb.org/us/bbb-standards-for-trust/. Retrieved 2012-03-29. 
  21. ^ 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. http://abcnews.go.com/print?id=12123843. 
  22. ^ "BBB Ratings". ABC. http://abcnews.go.com/Blotter/business-bureau-best-ratings-money-buy/story?id=12123843. 
  23. ^ "A Message from the President of CBBB", November 18, 2010, reproduced at "BBB revises rating system to regain consumer trust". RELO RoundTable. http://reloroundtable.com/blog/examinercom/bbb-revises-rating-system-to-regain-consumer-trust/. Retrieved 2010-12-02. 
  24. ^ "BBB Takes Action". Better Business Bureau. November 18, 2010. http://www.bbb.org/us/article/bbb-takes-action-23670. Retrieved 2010-12-02. 
  25. ^ CBC News, The National, November 23, 2010
  26. ^ Segal, David (March 12, 2011). "Complaint Resolved? Well, Not Exactly". New York Times. http://www.nytimes.com/2011/03/13/your-money/13haggler.html?hp. Retrieved 13 March 2011. 
  27. ^ FeeFighters (July 22, 2011). "Report: Better Business Bureau BBB & CBBB". FeeFighters.com. http://feefighters.com/blog/the-bbb-is-a-scam/. Retrieved 6 December 2011. 
  28. ^ "BBB Online Business Best Practices - - U.S. BBB". Bbb.org. http://www.bbb.org/us/bbb-accreditation-standards/. Retrieved 2012-03-29. 
  29. ^ "A Message from the President of CBBB". BBB Information Center. November 18, 2010. https://www.bbb.org/bbbinformationcenter. 

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