It is a commonly held misconception that the Better Business Bureau is a government agency, not true. The BBB is a non-profit, charity organization set up as a 501(c)(3). They are independent private franchises who report their income, board of directors and program activities to the IRS on form 990. Meaning no income tax is paid. All monies they collect are donations.
Each local franchise pays dues/fees and agrees to the bylaws of The Council of Better Business Bureau (CBBB). Any complaints against a local BBB chapter may be directed to CBBB as well as the Attorney General of your state. Local BBB’s are not members of their own organizations. You may not file a complaint against them with them. The CBBB is supported by very large national corporate donations.
The BBB markets to local companies in a variety of ways. Through direct mail, telephone solicitation, door to door sales calls, business expos, you name it. They aggressively seek new membership. Once a company agrees to join, they pay dues, and fill out an information sheet, which the BBB claims to verify. They are then an accredited member. This allows the joining member to use the BBB logo in advertising and be listed on the BBB’s web site, along with some other benefits.
A new secret formula algorithm grading system was put in place to rate companies, both members and non-member companies. The rating system uses the old elementary school A+ through F we all remember so well. The CBBB rating guidelines state the number of valid complaints and company’s response is the major factor in ratings or grades given. However, keep in mind every franchise is privately owned and judges each business according to their understanding or lack of; that industry, experience, expertise, legal knowledge, time spent, proper research, willingness to investigate or possible personal or professional relationships.
A good or bad rating can have substantial impact on a business in a competitive industry. Recently there have been several complaints from companies that due to the economy they dropped their BBB membership. With that dropped membership, came an immediate downgrade in their rating/grade with the BBB. When they complained to the BBB they were told the only way to get their rating back up was to rejoin. This practice is under investigation by the Attorney General’s Office in several states. In addition several private lawsuits have been filed.
The premise for the BBB is good. Hopefully with the media spotlight on the over aggressive, sometimes heavy handed local BBB franchise operators that gave the honest and fair minded franchises owners a bad name, things will begin to improve. Until some of these law suits have time to work their way through the system and these rogue operators are forced to pay large sums of money for their slanderous actions, greed will rule the day.
The BBB claims to want to protect you from the unscrupulous, scams, schemes, cheats, rip-off-artists, liars, lazy contractors and bad companies. But what I really want to know is, who is going to protect us from the BBB? Is a wolf in sheep’s clothing not the most dangerous predator of all?
BBB logo courtesy of Google Images.