BBB Under Scrutiny

Link: http://www.bbbroundup.com

I must confess that when I first started this project I vastly underestimated the scope of work and the effort required. Writing this series on the Los Angeles BBB has been revealing. It has stirred passions in me that have lain dormant for far too long. The reverence given Jimmie Rivers by small businesses when he returns their calls is a heavy burden, because I know the pain and frustration they are feeling. Most of all it is the frustration. I have heard, with unerring consistency, that in the Los Angeles BBB territory, once you get on their radar you are screwed. Complaining drops your grade. Payment improves your grade, as long as you haven’t complained. They rule by fear, not from a position of trust, but one of extreme distrust.

My original thought was to develop and investigate a ten part series on the Los Angeles Better Business Bureau. Today, marks the 9th installment of this ten part series. Recently, a number of developments have occurred that indicate this story will continue to be expanded upon in the months to come.

The 10th installment of our investigative series into the LA BBB will publish next week. In it, I will offer some suggestions to make the BBB relevant again and how they can restore their tarnished brand. By then, I should have a clearer idea of where the story will go from there.

Link: http://www.bbbroundup.com

According to William G. Mitchell, CEO of Better Business Bureau of the Southland, Inc. his office of the BBB handles 10,000 complaints per month. I accept this number and concede that Mr. Mitchell is in a better position than I to know the current figure.

However, my problems with the BBB complaint process are only increased by this revelation. Here's my take.

First is the margin of error that exists in the Complaint Handling process used by the LA BBB. To be handled correctly, an average complaint should require at least a half-hour of attention from a BBB employee.

(Just think of how much time you spent the last time you tried to resolve a complaint on your own then multiply by two. That's because the BBB inserts itself into the middle of the complaint process and therefore must communicate with both the consumer and the business before it can reach any decision.)

That's 5000 BBB employee hours spent handling the 10,000 complaints each month. That's approximately 30 full time employees dedicated to handling complaints. Rather than hire the necessary personnel, the LA BBB uses automated software throughout the process. There's too few people, too much pigeonholing and too much room for error.

Additionally, nowhere on the LA BBB website are there any definitions for the various complaint descriptions. What's the difference between an "unanswered" and "unassigned" complaint? Between "refusing to make an adjustment" and "refusing to adjust, relying on terms of the contract"? Do you know? Apparently the BBB doesn't know either, otherwise you'd think they'd tell us.

Second is that the algorithm places a heavy emphasis on the results of the complaint process.

(Almost 40% of the 16 criteria used in the algorithm have to do with complaints. The penalties for complaints not properly handled as deemed by the BBB are among the most severe in the entire algorithm.)

As we've just discussed, there is room for error in the complaint process, and any error becomes magnified by the algorithm. The clearest proof of this is the goofy grades.

Finally, there is a built in bias on the consumer side. This manifests itself especially when the LA BBB uses these complaints as sales leads, rather than try to impress the business with their ethics.

I want to thank Mr. Mitchell for bringing this matter to our attention.

Link: http://www.bbbroundup.com

I’ve been asked more than once why I’m doing bbbroundup. My stock answer is that “I don’t have a dog in this fight”—my own business is not on the LA BBB’s radar, nor likely to show up there soon. (I run a small consulting firm in the greater Los Angeles area with a handful of loyal clients who know they can come to me at any time and I will resolve any issue that might come up.) All of this is true.

There’s more to it than that though. My entire life has been spent rooting for the underdog, the little guy, those who dare to be different…the antithesis of Corporate America with a capital C.

Here we are in a time of grave economic crisis, and I’m once again I’m rooting for the little guy as manifested in two groups of citizens. For all those who are recently retired, or had planned to retire around now, I hope your stock portfolios go up. And for the small business I wish nothing but the best. It’s the small business who has the deck stacked against them in the best of time and who now has hind tit as the federal bailout trough. You can count the dollars small business will be getting from the feds as zero. Small business is simultaneously being battered by tighter credit, less consumer demand, increased taxes—all things that hit the small business much harder and much quicker than their big business counterpart.

And then along comes the LA BBB in one of the hardest hit regions economically in the United States and kicks small business when they’re already down through unprincipled tactics and motives, under the guise of protecting the consumer when in many instances they are actually misleading them.

Hypocrisy and violence are my only pet peeves (outside of people who wait for the light to turn green before putting on their turn signals) and I will state for the record that I’ve neither heard about nor witnessed any instance of the BBB resorting to violence. Hypocrisy is another matter.

In a time when corporate America is outsourcing help desks and designing ever more circuitous automated call centers to avoid the customer in seek of answers, the small business is more likely to have actual humans answer the phone…real humans who place a high premium on satisfying customers. The average small business owner puts in an enormous amount of hours and the one thing he doesn’t have time for is the BBB meddling in his customer satisfaction process. Especially, if he has chosen not to be a BBB member. The small business owner is much more inclined to take the direct approach in resolving issues with customers than funneling them through a middleman like the BBB. For the BBB to insert themselves in a business’ process and practice without invitation is not right. Let’s face it, 99% of American businesses have chosen NOT to be BBB members, so why should anything the BBB says be relevant?

Having said all that, I also believe it is not too late for the BBB to resurrect themselves. They’ve got a 99% upside, why not re-invent themselves as an organization offering something of value, rather than a wooden plaque? At the end of this ten part series, I will come up with both conclusions and suggestions on how the BBB could reach their potential, serve both the consumer and business sectors more efficiently and effectively, and overcome the inequities and temptations that exist in the current system.

Link: http://www.bbbroundup.com

I’ve been asked again, why I’m doing this story. The reasons are complex, but essentially in this economy, what the Better Business Bureau is doing by adopting an ill-conceived Letter Grade system, and ramming it down the throats of their membership in an apparent attempt to maximize revenues comes at the expense of the small business. This is bad for the economy.

It’s been pointed out before, albeit in a satirical voice, that the newly adopted Letter Grade system is prone to mistakes, and while Disneyland can survive an unwarranted “F” grade from the Los Angeles Better Business, many a small business cannot. This is especially true in today’s economic meltdown when people are being more cautious before spending and are using the Better Business Bureau in record numbers before making purchases. The Council of Better Business Bureaus knows their Letter Grade algorithm is flawed but continues to ram it down the throats of not only the consumer, the businesses they grade, but to a large percentage of their Better Business Bureau regional offices as well. This is rapidly becoming a great divide among the Better Business Bureau. Not only do these revelations increase the appearance of impropriety, the Council of Better Business Bureau actions in stonewalling and ignoring the media queries give the appearance of making the organization look guilty.

The Better Business Bureau built up the incredible trust they have with the public for over 90 years. At the rate they are going, they will squander this trust by the end of the year.

I have stated before, and will state again that I have no wish to destroy the Better Business Bureau. I do wish to help reform it by making sure that small business is treated fairly, the Bureau operates with much more clarity and transparency, and returns to the business model of being an advocate for complaint resolution through mediation and assistance rather than adversarial, arbitrary and confrontational means.

What’s been going on in the last few days gives me hope that the “good guys” can win here. I had noticed Josh Parsons’, CEO of the Houston BBB, stand against the Letter Grade system in the Houston back in January. To date he is the only BBB official to have the strength of his ethics and go on the record against the Letter Grade system. He did it, because as he rightly pointed out, the BBB does not have the resources to do an accurate, impartial job of it, so they are better off not doing it all. Yesterday, he went on record again, reaffirming his bureau’s stance in the matter. The most important fact that wasn’t pointed out is that for the last three years, even in the wake of Katrina, the Houston Better Business Bureau was one of the fastest growing regional BBB offices (by revenues) in the nation, doing far better than the national average. Again, this brings with it an appearance of impropriety. Reasonable men, making reasonable assumptions, could conclude that the National BBB chose to ignore ethical considerations (a grading system many of the regional BBB offices think is unfair) in favor of money (the increased revenues generated by the Los Angeles BBB’s Letter Grading system.) Count me among them.

Link: http://www.bbbroundup.com/LosAngelesBBB.html

Today we debut the first in a ten part investigative series that delves into the standards and practices of the Better Business Bureau of the Southland, Inc., better known as the LA BBB.

For years the BBB operated under the guise of the consumer's best friend, an advocate for the little guy. At the beginning of this year, the CBBB (national BBB organization) chose to adopt the Los Angeles BBB letter grading system of businesses which replaced their previous Satisfactory/Unsatisfactory grading system.

Reporters around the country were quick to catch on to the inequities in this letter grading system (something Los Angeles small businesses knew about and suffered through for years)and branded it a pay for play system.

Just how ridiculous the LA BBB claims that not being a member in no way disparaged a business were brought to light when it was revealed that Disneyland and the Los Angeles Times both had "F" grades by this reporter. Quickly, quietly, and in the dead of night, the letter grades of these two businesses were upgraded to "A" grades, but the damage to the BBB's credibility had begun.

Now, after months of research, interviews and correspondence, bbbroundup believes it has the goods. In our ten part series, we will attempt to show the dishonest, deceptive and unethical methods employed by the LA BBB as it pursues the almighty dollar, regardless of the damage it inflicts on honest, hard working, small businesses in the Los Angeles, Orange, Riverside and San Bernardino counties of southern California.

Read the first installment now.