The Better Business Bureau council – the leadership group for the 120 bureaus in the U.S. and Canada – are expected to meet Tuesday to decide how to respond to the devastating ABC 20/20 investigation into its grading system as well as Connecticut Attorney General’s thinly veiled threat to take legal action if the BBB doesn’t immediately change its marketing program.
Both Friday night’s ABC program and Atty. Gen. Richard Blumenthal’s attack focused on the two-year-old BBB marketing tool to assign letter grades ranging from the low of F to the top A+ rating to hundreds of thousands of businesses. It replaces what the BBB used for 95 years, the simple satisfactory/unsatisfactory ratings.
The BBB claimed when it rolled out the program that it was intended to provide a quick and easy way for consumers to check out a business on the BBB web sites by simply looking at a grade.
However, I and several other consumer advocates began questioning the motivation behind the grades when we discovered that accredited businesses – those who paid anywhere from $330 annually to millions of dollars depending on their size – would automatically receive additional points toward their grade.
We also questioned how the the 120 bureaus – each with only a few employees – could be capable of deciding what grades to give the millions of businesses listed.
Some bureaus also had questions about the plan – developed and tested in the southern California chapter – and refused to follow it. The five chapters finally got with the program after the council threatened to expel them.
One of the main critics of the BBB grade system is a businessman/journalist who uses the pen-name of Jimmie Rivers and launched a website BBBRoundup to expose the bureau’s marketing scheme.
His largest expose came last winter when an anonymous group of his friends tested the BBB’s claim that its grades were solely based on how well a business serves customers and not on whether they are dues paying members.
The Southland (southern California) BBB chapter fell into their trap. Within 24 hours after the group paid $425 on a credit card the BBB listed “Hamas” on its website as a legitimate business and gave it an A- rating. The group added icing to its cake by stating that “Hamas'” president was Bill Mitchell – the name of the Southland BBB director who is paid $400,000 a year.
Two other fake sites were similarly created, one for a non-existing Sushi bar with a fake address, and a “StormFront” a skinhead website. Both were immediately given A ratings as soon as the credit cards cleared. StormFront actually received an A+ rating.
BBB officials said those were simple errors.
The ABC Friday night show – for which I provided information for – used those examples plus they had even more damaging evidence – again focused on the California BBB chapter.
The program filmed two business owners who were not BBB accredited businesses and who had been given C grades on the BBB website.
The two called the BBB and asked how they could improve their grades. They were told that by paying to become accredited members their ratings would improve.
And they did. Both businesses’ ratings quickly went up to A+ after paying their dues.
BBB Council President Steve Cox called these as a mistake on the program. However, Cox ended the interview early with ABC and refused to answer further questions.
To be fair, most of the outrageous examples come from the Southland BBB chapter – which is also the largest. Other chapters are operated more professionally based on my experience.
However, the letter grade system permits the chapters to use it as a marketing tool to pressure businesses to “pay to play.”
As part of that, BBBRoundup’s Jimmie Rivers revealed Friday night that the BBB is beginning to outsource its sales marketing efforts and is offering pay of up to $150,000 a year to telemarketers.
It will be interesting to see what the BBB council has to say next week in response to what has been unprecedented attacks against its credibility – the only thing of value it has to sell.
- Better Business Bureau To Investigate Los Angeles BBB Chapter
- Better Business Bureau Considering Changes To Its Controversial Ratings System
- BBB chapters – under pressure – adopt controversial letter grading
- Steps Better Business Bureau Must Take To Regain Credibility
- Canada BBB Also Accused Of Biased Ratings Based On Membership
- NYTimes Latest To Probe Better Business Bureau’s Shady Behavior & Incompetence