BBB Under Scrutiny

Link: http://www.bbbroundup.com

It appears that after four years of ignoring the warning signs, the Better Business Bureau may finally be due a come-uptance beyond their worst nightmare.

The firestorm started with articles around the country questioning the new grading system put in place by the BBB on January 1st.

David Lazerus of the Los Angeles Times quickly grabbed the spotlight with his piece about the disparity between the grades of world famous Spago Restaurant (B- and non-member)and little known Cafe Santorini(A+ and member). His column reiterated what many Los Angeles business owners have griped about for years....that the BBB gives good grades to its members and lousy grades to non-members, especially if the non-member rebuffs their high powered sales pitch for membership.

What makes all this interesting is that it was the BBB of the Southland, Inc. (Los Angeles, Orange County, Riverside County, San Bernardino County) who spawned this albatross of a grading system. The CBBB (Council of Better Business Bureaus) likes to say they spent four years developing and testing this new system. They specifically ignored several lawsuits filed against the BBB of the Southland, Inc. brought by non-member businesses seeking redress for unwarranted bad grades, rather than investigate them. In a coincidence that is too strong to ignore, it is interesting to note that the Los Angeles BBB is the largest contributor of membership dues of any regional BBB office. The lack of due diligence displayed by the CBBB in rolling out their new grading policy makes it appear that CBBB's pursuit of ethics was not as strong as their pursuit of membership money.

Follow up:

LA businesses were certainly not inspired to hear that William G. Mitchell, CEO of BBB Southland, Inc., is on record as saying that in the final analysis, the grades given to companies (under the new grading system) were "subjective." Comparing Disneyland's F rating (non-member in the BBB Southland region) and Walt Disneyworld's B rating (non-member in the BBB Orlando region) underscore these subjective vagaries. Since, by definition, an algorithm is objective, this only makes the new BBB grading system even more suspect.

After some brilliant investigative reporting by George Gombossy of the Hartford Courant, as well as the Hartford BBB's own ineptitude which led to the public embarrassment of the State AG, Richard Blumenthal, the BBB has been put on notice that the Connecticut Attorney General is looking into their new grading system. Specifically, he is starting with these questions:

What criteria does BBB use to determine a business rating?

How are the various criteria weighted? Does one criterion, for example, count for 20 percent, while another makes up only 5 percent of of the overall rating?

What role do membership and the level of giving play in determining BBB ratings?

Are there rating levels of that businesses can only achieve if they are members?

Does the amount of donation influences rating? If the answer to either question is yes, please explain.

Why did BBB introduce a new rating system?

The questions posed by AG, are a great starting point, and the answers long overdue. Based on previous BBB strategy my prediction is that the Attorney General will be met with delay after delay, testimony that this is an isolated instance and in no way reflects on the CBBB, and in any event the BBB is protected under freedom of speech statutes. I would say to the Attorney General that he is in a unique position to finally right the wrongs the BBB has perpetuated through liable, slander, outright favoritism, and corruption on innocent small businesses, some of whom have lost hundreds of thousands of dollars in revenues through the irresponsible actions of the BBB offices. Part of the Connecticut BBB's response will be to refer certain things to the CBBB, the national Better Bureau Business "headquarters." I hope the AG uses this as an excuse to suppoena records from the National BBB.

Some questions and actions that I think are worth considering:

What percentage of employees are involved in selling memberships?

Since it is already acknowledged that members get better grades than non-members, what differentiates the BBB from any other online advertising business? In short, hasn't the BBB disqualified themselves from 501(c)(6) non-profit status?

Are there other instances, than the reported case in Denver, of BBB members obtaining personal gain from their positions at the BBB, another violation of their 501(c)(6) status?

I would also recommend that the AG seek an immediate injunction against the BBB from providing results of any kind for non-member businesses.

This then is the dilemma the CBBB is faced with. To admit they their grading system is in fact a pay for play system is to destroy the trust in the BBB's objectivity that they make their money off of. It may well lead to the BBB losing their not for profit status. To not admit their grading system is pay for play is to fly in the face of the evidence. The only satisfactory and fair solution for now is to remove all grades for non-member businesses, and prohibit the BBB from publishing grades for non-members until such time as they have the manpower to correctly grade these non-member businesses.