Better Business Bureau
The Better Business Bureau, founded in 1912, is a private, nonprofit organization whose self-described mission is to focus on advancing marketplace trust, consisting of 106 independently incorporated local BBB organizations in the United States and Canada, coordinated under the International Association of Better Business Bureaus in Arlington, Virginia.
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 avoid bias, the BBB's policy is to refrain from recommending or endorsing any specific business, product or service.
The BBB rating system relies on an A+ through F letter-grade scale. The grades represent BBB’s degree of confidence that the business is operating in a trustworthy manner and will make a good faith effort to resolve any customer concerns filed with the BBB. The ratings system relies on a proprietary formula that takes into account 17 factors based on objective information and actual incidences of a business’s behavior that have been verified and evaluated by BBB professionals.
Nearly 400,000 local businesses in North America are accredited by the BBB. The BBB prospects 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 in good standing to use its trademarked logo in marketing materials.
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." The concept of the Better Business Bureau 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 organizations, 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 judgments.In 1909, Dobbs became president of the Associated Advertising Clubs of America, now the American Advertising Federation, 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 , and the National Association of Better Business Bureaus, Inc., merged to become the Association of Better Business Bureaus, Inc., in 1946. In 1970, the International Association of Better Business Bureaus was established.
Structure and funding
The 112 BBBs are independently governed by their own boards of directors and must meet international BBB standards, which are monitored by the IABBB. The IABBB is governed by leaders of local BBBs, as well as by senior executives from major corporations, and community leaders such as academics and legal experts. Each BBB is run separately and is chiefly funded by its accredited businesses, 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.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. IABBB receives membership dues from BBBs, which amounted to US $4,884,226 in 2009.
Dispute resolution procedures
The organization's dispute resolution procedures are established by the International Association of 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.While neutrality is claimed the BBB leans very heavily toward their dues paying members. In any dispute the BBB picks the arbiter and the complainant has to agree that the decision reached by the BBB's arbiter will be the end of the dispute and no lawsuit may be brought after that.
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. 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.
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. 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.
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+ to F rating system. The 16 factors have been posted on each business review since the program's inception and the details on the points awarded as well. Initially there was a 17th factor worth 4 points for businesses that were Accredited. 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.If a business chooses not to provide basic information, such as size and start date, the BBB may assign a not-rated rating. 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". There are eight BBB Standards for Trust plus paying them fee which overrides all others, that the BBB expects its accredited businesses to adhere to build trust, advertise honestly, tell the truth, be transparent, honor promises, be responsive, safeguard privacy and embody integrity.
The Attorney General of Connecticut demanded that the BBB stop using its weighted letter grade system, calling it "potentially harmful and misleading" to consumers. Responding to the Attorney General of Connecticut and others, the BBB has since modified its letter grade system.
Criticism
In 2010 ABC's 20/20 reported in a segment titled "The Best Ratings Money Can Buy" about the irregularities in BBB ratings. 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+. The chef Wolfgang Puck said that some of his businesses receive F because he refuses to pay a fee. Ritz Carlton, which does not belong either, also receives Fs for not responding to its complaints.In response, the president of the International Association of Better Business Bureaus has stated the BBB ratings system will cease awarding points to businesses for being BBB members. The national BBB's executive committee voted to address the public's perception of the ratings system. It voted that the BBB ratings system would no longer give additional points to businesses because they are accredited. It voted to implement a system to handle complaints about BBB sales practices. Despite the vote, the BBB website still states that points are taken away if accreditation is lost.
In Canada, 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.
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. Moreover, 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.
Additionally, while the BBB publishes names of corporations, it withholds the names of individuals lodging complaints.
Criticism on case resolutions
It has been alleged that the BBB encourages and solicits money from the very businesses they monitor. The BBB states that they hold their Accredited businesses to a higher standard, as outlined in their Accreditation standards. This behavior is likely the reason for such backronyms as, "Better for Businesses Bureau" and "Bribes from Businesses Bureau," popular nicknames for the organization presumably stemming from the frustration regarding the above criticisms.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. The resignation was rescinded shortly afterward, however, with Mitchell claiming that his health prompted him to resign, and criticizing the National Council for attempting to take over the Southern California chapter.
Canada
Toronto BBB Closes
The Better Business Bureau of Metropolitan Toronto closed in 1995 following reports of high executive pay.Integration of US and Canadian operations
On August 16, 2011 the then-named Council of Better Business Bureaus announced the formal integration of operations in the United States & Canada, effective immediately. The CBBB Board of Directors voted earlier this month on the integration plan. The International Association of Better Business Bureaus is the international headquarters of the BBB system and the governing body that licenses local BBBs and provides support services to increase their effectiveness.According to the statement, integration marks the way "...for an improved customer experience for those who purchase goods and services across the border." "The U.S. and Canada remain each other's largest trading partners," noted Stephen A. Cox, President and CEO of CBBB. "We are really one North American marketplace, and the BBB system now reflects that. Not only will it be easier for consumers to check out businesses in either country, it will be simpler for them to file a complaint or resolve a dispute."
The move was supported by the Canadian Council of Better Business Bureaus. "Given the advances in technology and the globalization of services, it no longer makes sense to maintain two separate systems," said M. Jean Lemyre, chair of the CCBBB. "The vast majority of consumers initially contact BBB through the Internet. Aligning BBB services into one integrated system will be more efficient for businesses in Canada, and will ensure that consumers continue to receive the high quality of services they've come to expect from BBB."
BBB Revokes Trademark Authorization from four Canadian offices
The then-named Council of Better Business Bureaus revoked the BBB name & trademark from four Canadian Better Business Bureaus. The CBBB said it made the move to withdraw trademark authorization from the offices in Hamilton, Windsor, Montreal and St. John's after determining these four Canadian offices did not meet the defined standards of operation.CBBB realigned the boundaries of its affected Canadian offices and folded them into larger offices. Hamilton has been gathered under the banner of the BBB's Kitchener office, while the territories in SW Ontario are now part of the Western Ontario region based in London, ON.
The former President of the Better Business Bureau of Windsor and South Western Ontario claims that he continues to operate under the name IntegrityLink in 2011, although services offered under that name have not been verified and the CBBB maintained concerns that some of the former BBB's continue to make use of proprietary information to which they are no longer entitled.
Since 2011 the Hamilton, Montreal & St. John's offices have also changed their names or closed following what they termed a takeover by the U.S.-based Council of Better Business Bureaus. The Hamilton, Ontario BBB adopted the name Canadian Businesses and Charity Bureau. In May 2012, the Hamilton organization was locked out of its office by its landlord in a rent dispute. Local BBBs in Montreal and St. John's, Newfoundland also left the IABBB and lost the right to use the BBB name. The Montreal BBB changed its name to L'Office de Certification Commerciale du Québec or Québec Commercial Certification Office, while the BBB in St. John's, Newfoundland, reportedly closed.