The Better Business Bureau, often referred to as the BBB is more than 100 years old. Its motto is “Start With Trust” and claims to provide a forum for businesses and consumers to interact and resolve disputes. But what exactly is the BBB and can they really be deemed a trustworthy organization? Let’s dig deeper and find out, shall we?

A BBBrief History of the BBB

The Better Business Bureau was founded in 1912 in New York City by the Gentleman’s Advertising League (now the Ad Club of New York) with a mission to promote truth in advertising. They felt false claims by doctors and the peddling of worthless/dangerous drugs were harmful to both legitimate businesses and consumers. (Ironically, today the BBB does not handle medical claims.)

In spite of its name, the Better Business Bureau is not a government agency and is not centrally located. Instead, it is comprised of 112 individual BBBs throughout the US and Canada, which are overseen by the Council of Better Business Bureaus (CBBB) located in Arlington, VA. They are run as non-profits, and contributions to them are tax-deductible.

What Does the BBB Do?

The Better Business Bureau’s goal is to help companies regulate themselves by providing guidance on proper practices. To do this, they have published a Code of Advertising as well as a Code of Online Business Practices. But because they are not a regulatory agency, they cannot shut a business down that fails to adhere to these standards.

It should also be noted that the BBB is not a consumer watchdog agency. It does, however, receive complaints from consumers about local businesses and sends reports to the Federal Trade Commission, which may take action. If a consumer has a complaint, they are instructed to contact the BBB in the city where the company is headquartered and file a complaint. The BBB says it then acts as a mediator between the business and consumer in hopes of a satisfactory resolution.

Accreditation and Ratings

The primary source of income for all BBB chapters is from accreditation, a voluntary program where businesses agree to adhere to a set of standards… and pay an annual fee. These standards include “Build Trust,” “Advertise Honestly,” “Tell the Truth,” and “Embody Integrity.” In exchange for the fee and the agreement, businesses are allowed to put the BBB accreditation logo on their storefront, in their advertising, and/or on their website.

Whether or not a business is accredited, the BBB also issues a rating from A+ to F.  These are based upon 16 factors, including length of time in business, its size, and whether or not the BBB feels the company has appropriately responded to any complaints.

Controversy 

The Better Business Bureau itself has been involved in a number of controversies as to the way it grades and accredits businesses. Some have accused the organization of “Mafia-like” tactics extorting money for accreditation. If the business refused, they complain, their BBB rating would be lowered.

In 2010, ABC News program 20/20 did an expose on the BBB, where they set up a fake business in Los Angeles and were told by the local BBB they could get an A- rating if they paid $425 for the accreditation. On the program, other business owners asserted they were promised ratings could be raised if fees were paid.

Initially, the BBB denied there was anything shady, citing that there were 500,000 businesses that had A’s that were not accredited. But 3 years later they finally took action and expelled the BBB of the Southland, its largest chapter. (That organization now calls itself the Business Consumer Alliance.) They also adjusted their ratings criteria so that accreditation was not a factor. 

An Ally to Consumers?

The BBB also appears slow to act on behalf of consumers. For many years, “As Seen On TV” giant Telebrands enjoyed BBB accreditation and solid A rating in spite of thousands of complaints. It wasn’t until 2014 when the New Jersey attorney general sued Telebrands for aggressive upselling, lousy customer service, and violating the state’s Consumer Fraud Act that the BBB revoked their accreditation and lowered their rating to an F. (The suit is still pending and Telebrands denies any wrongdoing.)

In recent years, the BBB appears to be offering more transparency as to how they rate businesses. Specific consumer complaints of a company are now listed on their BBB page as well as actions taken by the company and resolution. The BBB stresses on their website that accreditation is voluntary and does not affect a business’ rating.

Consumers appear to trust the BBB for recommendations. The BBB stated in 2012 consumer inquiries had risen 20% and it had fielded more than 1 million complaints. Indeed, we at BrightReviews often look at a company’s BBB rating to gage their reputation. Still, it should be noted that the BBB ratings are still not standardized and can sometimes be inaccurate. We suggest you use it as a general snapshot and not as the final word.

In Conclusion:

  • The BBB is NOT a Government agency
  • The BBB is NOT a consumer watchdog
  • The BBB can help with consumer complaints but its powers are limited
  • The BBB rating/accreditation is an imperfect measure of a business’ reputation

Still, if you feel you’ve been burned by a company you should report it to the BBB via this handy online form.

And, of course, let us know here at BrightReviews!

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