Los Angeles Better Business Bureau: A Good Brand Gone Bad

PART TEN: THE REMAKING OF THE BETTER BUSINESS BUREAU BRAND

This is the tenth of what was originally scheduled to be a ten part investigative report into the standards and practices of the Better Business Bureau of the Southland, Inc., here-in-after referred to as the LA BBB. This ten part report is the result of months of research, interviews, and information supplied or confirmed by a highly placed LA BBB employee of long standing who has requested confidentiality. We have now concluded that the story has more to offer and we will be expanding our investigation of the Better Business Bureau of the Southland shortly.

Part one is business reliability score. It is based on the BBB algorithm elements of length of time in business (or experience of owners), whether it has the appropriate licenses, whether there are any advertising issues and whether there are any government actions against the business.

Part two is complaint score. This is primarily based on how many complaints a business has compared to the average number of complaints in that type of business (adjusted for size of business). There should also be a figure for how long the average hold time a customer goes through on the company’s customer service line. Finally, there should be an average score based on customer satisfaction with the company’s resolution of their complaint.

Part three is type of business. The current emphasis by the BBB on type of business is often arbitrary and categorizes certain types of business so negatively it is difficult for them to be graded higher than a D or F. Career counselors, debt settlement and credit counselors seem to be among those doomed to failure by the BBB. This is both unwarranted and counterproductive. No one argues that these businesses have their fair share of unethical practitioners. Quite possibly more than their fair share. But it is equally true that there are many businesses within these industries that have been around for dozens of years, with few if any complaints, who woke up one morning to find the BBB has given their business a F grade. While some sort of warning flag, alerting the public to possible risk, is perhaps warranted it is wrong to paint all participants with the same negative brush.

PART TEN: THE REMAKING OF THE BETTER BUSINESS BUREAU BRAND This is the tenth of what was originally scheduled to be a ten part investigative report into the standards and practices of the Better Business Bureau of the Southland, Inc., here-in-after referred to as the LA BBB. This ten part report is the result of months of research, interviews, and information supplied or confirmed by a highly placed LA BBB employee of long standing who has requested confidentiality. We have now concluded that the story has more to offer and we will be expanding our investigation of the Better Business Bureau of the Southland shortly.
Here's What We Would Do To Fix The Better Business Bureau IS THE BBB BUSINESS MODEL SUSTAINABLE? There are many reasons to think the current business model of the BBB is not sustainable. There is too much negative press, too much business backlash, too much internal strife, too many lawsuits active and pending, and too much Attorney General interest to think otherwise. This is not to say that the BBB is doomed, but it is even money that they are at a crossroads. BBB CORE ASSETS Yet it is apparent that the BBB has the assets necessary, if leveraged correctly, to survive, even thrive. One BBB asset is their incredible infrastructure. Its 180 regional offices cover the United States and Canada on the local level. They have great lines of communication between the regional offices. The BBB has great relations with District Attorneys, Attorney Generals, The Federal Trade Commission, Consumer Groups and the media. Another BBB asset is their database and IT system. bbbRoundup believes the BBB algorithm prevents the database from returning meaningful or accurate results. However, that does not negate the fact that the database has a lot of pertinent, historical data in it and can perform calculations which can be displayed on the BBB website. Given proper algorithms, the database can return meaningful results. The most important BBB asset, and the one in biggest jeopardy, is their brand and the public’s trust in it. At a time when businesses’ trust in the BBB appears to be at an all time low, the public trust remains high…in fact there are record inquiries into the BBB these days. THEMORAL AND ETHICAL DILEMMA FACING THE BBB Morally and ethically, there are two things the BBB needs to do. First, the BBB must cease and desist from selling memberships. Either that, or they must cease from grading businesses and handling complaints. There is no way possible, ethically, for the BBB to take membership fees from the same businesses it grades. This is even truer when the BBB also grades businesses who are not members. The stench of impropriety is just too strong to be viable. Second, there are too many instances of inaccurate grades, unjust penalties and misleading statements in the reliability reports. The margin of error is too large. Worse, it provides too many temptations to abuse the system in favor of members throughout the complaint and grading processes. Additional temptation falls in the laps of the telemarketers to misuse the complaint process to close membership deals. The current grades given by the BBB to businesses are effectively meaningless. The current grading system does a disservice to business and public alike. THERE MUST BE SOME WAY OUT OF HERE Let’s hypothesize that the Better Business Bureau actually wants to put out a better product, one that offers more meaningful insight into a business, one that compels businesses to voluntarily offer better customer satisfaction, and one that provides consumers with more relevant information to judge businesses on. If so, they need to lose the arrogance that has defined them of late. Here’s how that can be accomplished: FIRST Amnesty for all. Everyone starts with the same grade and all previous complaints are wiped out. Second, the BBB admits that the letter grade system was not up to BBB standards and will be replaced with a new business reporting system. SECOND The new reporting system will be a three part score: Part one is business reliability score. It is based on the BBB algorithm elements of length of time in business (or experience of owners), whether it has the appropriate licenses, whether there are any advertising issues and whether there are any government actions against the business. Part two is complaint score. This is primarily based on how many complaints a business has compared to the average number of complaints in that type of business (adjusted for size of business). There should also be a figure for how long the average hold time a customer goes through on the company’s customer service line. Finally, there should be an average score based on customer satisfaction with the company’s resolution of their complaint. Part three is type of business. The current emphasis by the BBB on type of business is often arbitrary and categorizes certain types of business so negatively it is difficult for them to be graded higher than a D or F. Career counselors, debt settlement and credit counselors seem to be among those doomed to failure by the BBB. This is both unwarranted and counterproductive. No one argues that these businesses have their fair share of unethical practitioners. Quite possibly more than their fair share. But it is equally true that there are many businesses within these industries that have been around for dozens of years, with few if any complaints, who woke up one morning to find the BBB has given their business a F grade. While some sort of warning flag, alerting the public to possible risk, is perhaps warranted it is wrong to paint all participants with the same negative brush. There are all kinds of cool gauges or symbols that could be useful in illustrating a company’s performance in type of business, reliability and complaint resolution. Here’s a thought starter. THIRD The BBB ceases selling memberships. Instead they sell software. The BBB has all the tools to offer the best Help Desk and Complaint Resolution online, on-demand software solution on the market. This software solution would be interactive between the consumer and the company, and would be accessed through a button on the company's website (not through the BBB website). There should be a limited series of strictly defined steps in the complaint resolution process. If both sides remain in disagreement, the case would be turned over to a "Judge Judy" type (my experience with small claims court judges is they usually get it right) whose decision would be final. The decisions would be reflected as part of the company grade. It is important to note that the BBB is not involved in any way unless the sides cannot resolve things and require the "Judge Judy" type. A side benefit to all this is that the business would be required to enter all the information that the BBB requires as part of the software installation process. Required information can include the NAICS code for type of business and annual gross revenues from their income tax forms. With this information, and the newly improved ongoing complaint system; meaningful, accurate conclusions can be drawn on a company’s complaint history as complaints will be judged on a level playing field—with volume compared by both size of business and type of business. Also, the riskiness of particular type of business can more accurately be spotted. And all this can now be done without error, without involvement by the BBB. Financially and ethically, switching the business model from selling memberships to software is huge. It eliminates the moral dilemma of higher grades to paying members. It actually offers something of value to businesses (instead of a plaque they are now buying software) that participate. Currently, approximately one percent of business in America and Canada are members of the Better Business Bureau. I fully expect this percentage would greatly increase if the BBB was selling software instead of memberships. From what I see available on the marketplace, the BBB could offer the software to businesses for approximately $100 per seat per year and be highly competitive. Even conservative projections indicate revenues would double within two years.
NEXT: Sound Off Coming Soon Someone’s started watching the watchers. If you’ve ever tried to complain about the BBB and have been frustrated in your efforts, you won’t want to miss this.

Editor's note: Neither I or this website have a problem with the Better Business Bureau. Indeed, there is a need for a consumer advocacy group that the public can turn to, and in most cases, the Better Business Bureau fulfills this role adequately. What we do have a problem with is the BBB's "A-F" grading system. It is demonstratively biased, based on hearsay, weighted in favor of dues paying members and offers no recourse when the BBB makes an error. It is obvious the Better Business Bureau does not now, nor ever will have, the resources to fully investigate the four million businesses in their database, much less grade them with any sense of accuracy. It's an impossible job, and to think otherwise is a mistake that the BBB should acknowledge so they can get back to their reason for existence--protecting the consumer. There's an old saying, "who will watch the watchers" and it applies here as the BBB has set themselves up to be above the law. We are simply here to help the Better Business Bureau do a better job so that they may properly serve the consumer, the business community and themselves.
© 2009 bbbcentral.org. all rights reserved.	Previous Articles About the Better Business Bureau of the Southland, Inc. (LA BBB) background part one part two part three part four part five part six part seven part eight part nine

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		V 1.3 May 2009