Blumenthal’s BBB Investigation: Made For TV

If Connecticut Attorney General Richard Blumenthal’s investigation into the controversial Better Business Bureau’s grading system is an indication as to how effectively his office probes critical consumer issues, the next Attorney General will have to do a lot of cleaning up.

For months I have had the gut feeling that Blumenthal’s investigation into the A+ to F grading system was little more than a sham, one of his “investigations” which he gets publicity when it is announced and then gets put on a back burner for new investigations or ones that the media is salivating over.

Since this was an issue I have been intimately involved in, I decided to dig through Blumenthal’s investigation file to see what exactly his office had done since March 14 2009 when he promised to investigate both the BBB’s yearly awards to businesses and how it determined who got what grades.

The BBB should be the first line of defense for consumers. But over the past two years it has turned into a marketing organization where ratings are skewed to reward businesses that pay to be accredited and businesses that don’t are punished with lower grades.

Blumenthal – whose term ends on Jan. 4 and will become the next U.S. Senator from Connecticut – had a special reason for investigating the Connecticut Better Business Bureau. He got sucked into appearing at its annual Torch Awards ceremony in 2008 where a Glastonbury company – Custom Basement – was given the BBB’s highest honor for ethical conduct. It turned out that the company was almost bankrupt at the time and ended up taking tens of thousands of dollars from customers and vendors without completing the work. Blumenthal ended up suing the firm.

When announcing the action against Custom Basement, Blumenthal also promised to investigate why the BBB’s 122 chapters in the U.S. and Canada switched from its traditional satisfactory/unsatisfactory ratings to letter grades.

I and several other consumer columnists had written critical stories about the change, believing that the BBB was incapable of fairly grading hundreds of thousands of companies.

Under a state Freedom of Information Act request, Blumenthal’s staff gave me access to all correspondence and investigatory documents last week.

The file showed that the “investigation,” which mostly consisted of questions and answers from the BBB, was focused on how the Torch award nominees and winners were chosen and not on the grading system.

It was only after mid-July this year that Blumenthal warmed up the investigation after I and a few other news sites reported that a group of anonymous California businessmen had shown the letter grades were for sale. The men purchased BBB accreditations for three fake businesses, with false addresses, by simply giving a credit card number over the phone.

The man in charge of that chapter, the largest in the country, resigned this month under pressure from his $410,000 a year job.

Despite the BBB’s claim that all accredited businesses are thoroughly checked out before being given a letter grade, the men had registered the fake businesses with A ratings – including HAMAS – the name of a Middle East terrorist organization.

The following month Blumenthal wrote to Connecticut BBB President Paulette Scarpetti saying he remained “concerned about whether the bbb can logistically implement this new rating system in any meaningful way.”

In late September ABC TV’s 20/20 began investigating the Better Business Bureau. Its producer, Joseph Rhee contacted me in early October along with Jimmie Rivers, the former journalist from California who has been on the forefront of exposing BBB’s flawed grading system.

ABC also contacted Blumenthal to tell him they wanted to interview him since he had been saying he was investigating the 98-year-old organization.

He was interviewed for the program, where he discussed the results of his “investigation.” The program aired Nov. 10 and its findings were printed by dozens of major newspapers.

On the day that the program aired, Blumenthal was ready to capitalize on the national publicity by sending a formal notice to the BBB demanding changes to its system.

Another person on that program was Jimmy Rivers, a former journalist from California who uses that pen name and has dished more dirt on the BBB than any other reporter.

Despite the fact that Blumenthal’s office was aware of Rivers and his collection of sensitive documents, unlike ABC TV, the alleged investigators never even tried to contact Rivers, who owns www.bbbroundup.com.

Blumenthal declined to discuss any aspect of his investigation, including why his office never even tried to contact Rivers.

His sole response to my questions was:

“I am pleased that the BBB is heeding my call to sever ratings from dues — but more needs to be done. Pay-to-play — or its perception — is unacceptable and unconscionable, as the BBB has rightly recognized. Cash can no longer inflate BBB ratings, as happened under the old system.

“While I applaud this significant step, I remain troubled by the BBB’s rating system. The BBB lacks the resources to verify much information used to rate, rendering its ratings unreliable and suspect. The BBB cannot rely on the word of businesses about licenses, state laws or other information; objective and independent confirmation is vital to accurate ratings. At the very least, the BBB has an ethical — and perhaps legal — obligation to clearly and prominently inform consumers of the severe and significant limitations of its rating system.

“I will continue working with the BBB to help assure its rating system is consistent, factual and fair.”