PART ONE:  LOS ANGELES BBB -- ROTTEN TO THE CORE?

This is the first of 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 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.

Our ten part report will look into the type of business the LA BBB really is; how consumer complaints are handled; the anatomy of the controversial “A-F Letter Grade Algorithm”—the precursor to today’s National BBB “A-F Letter Grade Algorithm;” and legal cases brought against the LA BBB.

The LA BBB has its main office in Colton, California with branch offices in Long Beach, Reseda, Culver City, and Placentia.  Altogether, the LA BBB employs approximately 100 people.  William G. Mitchell, the CEO is at the top of the organization.  Underneath him are branch managers, complaint handlers, telemarketers, complaint posters, human resources, accounting, arbitration (auto line/lemon law and member/consumer BBB supervised sessions), IT, and trade practices personnel.

To define what type of business an organization is engaged in, one looks at their core business.  Core business is defined as the central focus of an organization’s activities that make a vital contribution to its success.  In other words, to determine the type of business an organization is engaged in, one would look into what activity comprised the largest segment of their work force along with the activity that generated the most revenue.  Find these, and you’ve found the organization’s core business.

LOS ANGELES BBB SOURCES OF REVENUE
(TOTAL ANNUAL REVENUES OF $10.6 MILLION)

As we can see from the preceding charts, the largest group of employees by far is the telemarketing group and they account for approximately 90% of all revenues received by the LA BBB.  This strongly indicates that the Los Angeles BBB’s core business is telemarketing.

Next, let’s examine the methods employed by the telemarketing department of the LA BBB.  (The telemarketing department actually carries the politically correct term “Membership Representatives” as its moniker.)  There are essentially three types of telemarketing calls: the added value—where you are sold on the virtues of a product or program; the fear based—where you are doomed unless you buy a product or program; and the deceptive where you are sold a bill of goods. 

The most typical solicitation call from the LA BBB begins with the words “we’ve received a number of inquiries about your business,” the assumption being that the LA BBB has a number of sales leads they can provide your business with.   In reality, these inquiries are derived from either searches done on the LA BBB website for your business, or complaints about your business to the LA BBB.  Neither is a hot candidate to consummate a sale.

LA BBB telemarketing efforts that begin with the phrase “we’ve received a number of inquiries about your business” are deceptive in their implication of being about sales leads for your business.

Placentia, California businessman Rod Condit counted over twenty “urgent messages” from the LA BBB about consumer inquiries.  This is known as the over-aggressive telemarketing tactic.

LA BBB telemarketing callers have stated that “Uncle Sam will return your entire fee when you file your tax return” says Judee Slack of Fountain Valley, California.   The LA BBB is not an accountant and should not be giving out tax advice.  Generally speaking, you are allowed to deduct the amount of your LA BBB membership dues from your income when you file taxes, but this is a far cry from getting the entire membership fee returned by Uncle Sam.  This is known as being sold a bill of goods.

Another LA BBB telemarketing tactic is to inform businesses that the only way to make complaints go away is to join the BBB states Dan Golka of Tustin, California.   This is known as the fear based telemarketing technique.  This goes deeply against the credibility of the Los Angeles BBB.   It calls into question every grade the LA BBB displays on its website.

It’s not that the LA BBB doesn’t use the added value proposition in its telemarketing efforts; it’s just that they pale in comparison when the best they are able to offer is that membership comes with a wooden plaque that’s suitable for mounting in the office.

In another instance on record, Terri Linzmeier of Rancho Santa Margarita, California was asked by the LA BBB if they could do a background check on her business, adding they would need a credit card to perform it.  Two weeks later she was shocked to learn she’d been charged $364 for an annual membership in the LA BBB.  When she called to complain, she was told the LA BBB had a no refund policy.  Finally, after threatening to sue, Terri was refunded her money.  This is the antithesis of added value telemarketing and borders on fraud.

It is ironic as well that the BBB is quick to put out releases decrying aggressive telemarketing tactics such as their recent blasts at the auto warranty business.  If only they were amenable to policing their own BBB offices as ferociously, these BBB notices might have more credibility.  Instead, the telemarketing arm of the LA BBB continues to operate in the manner of a churn-and-burn, cold-calling commodity broker telemarketing outfit.

At their worst the telemarketing practices of the LA BBB have crossed the line between acceptable and unacceptable business practices.  This is especially true in the case of an organization such as the LA BBB, who because of their self-promotion as an unbiased, consumer advocate group, must exceed the norm in every facet of conduct and must perform as a role model.   In such a situation, even the appearance of unacceptable business practices is too much; and the LA BBB has a very strong appearance. 

If we choose to view the LA BBB as an ostrich might, we can still conclude that the LA BBB telemarketing practices are deceptive and misleading at best; they are over aggressive in nature and frequency; and not up to the standards an organization like the BBB should condone.  There is no “do not call” list, or if there is, it is ignored.  Since telemarketing is the core business of the LA BBB, and continues to ply unsavory tactics, tactics that if employed by any other business would result in a failing LA BBB grade, we have to say the telemarketing practices of the LA BBB are rotten to the core.