Is the Better Business Bureau Running a Racketeering Scam?‏

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I’ve Tried That is scamming consumers, and here’s why- check out its rating with the Better Business Bureau:

BBB

Google is also iffy; its BBB score is a “C-”. E-Trade, which I’ve been happily using for years as my discount broker, gets a grade of “D-”.

You may think that the BBB is some government watchdog group that looks out for the consumer and mediates complaints against businesses. You might also think that any business listed with the BBB is legitimate.

It’s time to rethink the BBB.

The 20/20 Exposé of the BBB

Back in 2010, the ABC News show 20/20 conducted an investigation of the BBB of Southland, which served the Los Angeles area. What they found was a “non-profit” business using tactics akin to those of certain New Jersey sanitation companies. In essence, businesses that didn’t “pay to play” with the BBB by forking over $425 in membership dues were assigned substandard grades even if they had few or no complaints. Conversely, businesses that paid for membership in the BBB were assigned grades of “A-” or higher.

In a scambaiting maneuver, several local businesses decided to pay the $425 membership fee for a fictitious business named “Hamas” which, interestingly enough, is also the name of a Middle Eastern terrorist group. Hamas instantly got an “A-” grade. Stormfront, which is a neo-Nazi skinhead group, received an “A+” rating from the BBB when an anonymous blogger used this group’s name to register with the BBB and pay its membership fee.

But it didn’t stop there. Apparently, businesses with lackluster grades could also pay to improve their grades. When a local business owner called the Southland BBB, she was told by its customer service department that she could raise her business’ grade to an “A” from its current “C” if she simply paid a $395 membership fee. When she provided her credit card number to the rep, her business’ grade became an “A+” the next day. Another L.A. business owner was able to go from a “C-” to an “A+” by paying the $395.

After 20/20 interviewed the BBB CEO Steve Cox about the sham businesses receiving high grades and legitimate L.A. businesses being able to buy their good names, the Council of Better Business Bureaus shut down the Southland branch and noted this decision in a large press release dated March of 2013. However, it still took over two years for the BBB to shut down a branch that was openly engaging in extortion. And even after the expulsion of Southland, there is reason to doubt the BBB’s commitment to, as stated by Carrie Hurt, President and CEO of the CBBB, “a strong, standards-based BBB that consumers can depend upon and that businesses large and small can participate in with pride.”

Why am I still skeptical about the BBB?

“A few bad apples” is a myth.

There is a common practice in the business world when a (usually large) company is ousted for scandalous or outright illegal behavior: Blame the problem on a few “bad apples” and make a public example of them. However, for such bad apples to turn up in the first place, there is usually a permissive/complicit business environment that spoils them. And in the case of the BBB, that environment is still in place. Why?

Pervasive conflict of interest

The BBB is not some government body that’s acting as a third party watchdog group to protect consumers. In fact, consumers have little to do with the actual BBB. Technically, the BBB is a private 501(c)(6) non-profit organization that makes its revenues by selling annual memberships to businesses for a charge of $200 to $10,000, depending on the size of the company. Membership is synonymous with accreditation, by the way. National companies like Johnson & Johnson, Heinz and 3M are often invited to become CBBB corporate partners and pay up to $75,000 for this privilege.

That’s right- the BBB’s clients are not Joe-Blow Consumer or concerned taxpayers; they are corporations and firms that can actually afford to pay the annual BBB dues in order to become “accredited.” These facts are stated on the BBB blog.

However, if the BBB is making its revenues through dues-paying businesses, how can it remain objective when a client business receives a consumer complaint? In short, it can’t.

“Addressing” consumer complaints

Let’s say one of the BBB’s client businesses does receive a complaint from a consumer. In order to remain in good standing with the BBB, that business must demonstrate “good faith effort to resolve complaints.” However, the BBB does not explain just how this process should occur. A business could get away with sending a form email to the consumer saying “Sorry, try again,” and leaving the actual complaint unresolved.

If the consumer doesn’t provide a rebuttal within 10 days, the case is closed as “resolved.” Meanwhile, if a consumer truly wants to pursue a shady business via the BBB, she is charged a fee to use the BBB’s Dispute Resolution Services. Honestly, what consumer is going to shell out $79 to obtain a refund on a $29 item? In this way, businesses with a bunch of unhappy customers maintain their good grades with the BBB.

Living in oppositeland: I’ve Tried That is a scam (and so are Wolfgang Puck, Ritz Carlton and Disney)

As to why I’ve Tried That has a big, fat “F” rating, I may have a reason. On the BBB Code of Business Practices (BBB Accreditation Standards), there is the stipulation as to what a business in good standing with the BBB shouldn’t do:

Avoid involvement, by the business or its principals, in activities that reflect unfavorably on, or otherwise adversely affect the public image of BBB or its accredited businesses.

Since ITT regularly exposes scam businesses, it may have at one time inadvertently hit a BBB accredited business. Thus, for doing the actual work of the BBB, ITT gets slammed by this “watchdog” group.

I can live with I’ve Tried That being a scam.

Photo credit by deemikay

12 Comments

    1. SMH. This is why I’ve been telling my visitors for years to take a BBB rating with a grain of salt. So many people live by their ratings like it’s the be and end all of determining a company’s legitimacy. And it’s not.

      The fact they’ve rated a site that has literally helped thousands of people avoid scams says it all. I hope this opens some folks eyes.

    2. Interesting and well written, but mostly frustrating to read (about). In the past I’ve definitely used BBB to determine whether or not I wanted to business with companies; now I realize I may have unfairly shut the door on someone who just didn’t pay their membership dues. Sad.

    3. Why does this important post seem like the tip of an iceberg? What else don’t we know about the BBB?
      I, too, have more than once used BBB ratings to help decide whether or not to use a business. Is there another watchdog agency or organization to use instead?
      In 2007 I wanted to file a dispute with the BBB and found exactly what this article mentions: the fee to file was larger than the return I would have received, so I didn’t pursue it.

    4. I found out a while ago that BBB is a farce after I tried to make a complaint about a business. It’s a shame that an organization that’s supposed to be a watchdog on behalf of consumers is as maladjusted as some of the businesses it claims to rate.

    5. Thanks everyone for your comments- and thanks for stopping by, Eddy! It’s good to hear from you again. Sabriga, to answer your question about other watchdog groups, I did find a couple, like Charity Navigator. However, I’m not sure how trustworthy these groups are either. Some watchdog groups criticize others for charging for a seal or grade or whatever- yet then they go ahead and charge for something else. So, my best advice at the moment is to just use search engines and Yelp to find out if a business/non-profit has a bad rap. I often peruse websites devoted to exposing scams before spending my time/money with a given business/org/etc. I hope this helps!

    6. Very enlightening article. I don’t think I will worry too much about trying to get BBB rated for my business.

      Thanks for providing this valuable insight.

    7. Hi,

      I founded and ran a chain of computer retail stores, and service providers throughout the 1990′s. We were ranked as one of americas top 100 retailers and system builders during that time.
      Early on, I required all of our location to become BBB members, as I knew the importance of a good BBB grade.
      I knew it was a scam, however it was a cost of doing business.
      In 1997, a manager chose not to renew, and the rating at the location became an F with ZERO complaints!
      I had enough and stopped subscribing any and all of our locations.
      To answer the question about which agency can you go to, the truth is your state Attorney Generals office is the best place!
      If you file a complaint with the AG office, they take it serious.
      Companies laugh when people threaten to call the BBB and file a complaint, but when you threaten to call the AG office, they usually take care of you. The AG will criminally charge companies that are performing illegal activities. The AG also will let people know who and what to watch out for if you contact them to check on a business or an industry.
      That’s who you all should be using, the state attorney general!

    8. With these modern times and the many other sources where consumers can get accurate information off the internet I believe it is the beginning of end for the BBB. They seem to be is trying hard to revive themselves from oblivion with a newly adopted accreditation system that is a joke. The new BBB letter grade system is indeed bias and their complaint process is totally flawed as well. It is a fact that the BBB does not list all complaints against their own members and screens what they put up on their websites. Businesses that operate unfairly or deceptively such as this new BBB system will not succeed in the long run. I will not use a company that is a BBB member. I don’t support the new mafia style tactics of the BBB or the way they sander every non member business by stating in capital letters THIS IS NOT BBB ACCREDITED BUSINESS. Shame on them.

    9. funny I went to go check out to see if my business was on BBB website, and I noticed their latest article is titled

      Better Business Bureau Names “BBB Top Ten Scams of 2013”

      It’s not what I thought it was about though from the title.

    10. Halina Zakowicz says:

      Hi Jason,
      Yes, I’ve seen that same article. Ironic, isn’t it? The BBB has been releasing a “Top X Scams” list for several years now, and I have to wonder if they’re doing it to knock down their own negative reviews that come up in the search engine results. Kind of like a last minute reputation management campaign. Budget-priced, I might add.

    11. BBB is a complete sham and scam. I was “offered” a renewal of my accreditation. When I asked what would happen if I didn’t renew I was told point blank that my grade would drop which I suspected it would. About a month later that news story aired on 20/20 and confirmed everything for me. Complete extortion with little to no regulatory oversight. This is damaging to many business out there that deserve fair business practices. It’s actually ironic that BBB operates how they do.

    12. They also hand out plaques each year “BBB Best of “. You PAY FOR THEM or you don’t get one.

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