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Follow the story on
 AN INVESTIGATIVE NEWS SERIES ON THE STANDARDS AND PRACTICES OF THE BETTER BUSINESS BUREAU START WITH TRUTH |
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V 1.3 May
2009 |
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PART NINE: LOS
ANGELES BBB -- BASTARDIZATION OF A BRAND
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A SHORT RECAP OF WHAT'S BEEN LEARNED
ABOUT THE
LOS ANGELES BBB
Business Reliability Reports No Longer Reliable Once upon a time, the Better Business Bureau brand stood for trust. Consumers and businesses alike thought well of the BBB. The BBB championed the little guy and alerted the public to ongoing scams. Today, though they won't admit it, the Better Business Bureau stands at a crossroads. How they choose to deal with the impending fire storm may well determine the future of the Better Business Bureau brand. Our ongoing investigative series has uncovered many disturbing practices at the Los Angeles Better Business Bureau that have their genesis in their proprietary Business Reliability Report Letter Grade System. These same practices have started invading regional BBB offices throughout the United States and Canada with the roll out of the National version of the Business Reliability Report Letter Grade System this year. From the beginning, the point of this series has not been just to uncover wrong doing at the LA BBB, but to find solutions. We believe in the need for an organization such as the Better Business Bureau. We also believe, the Better Business Bureau falls far short of its potential. The national BBB is complacent in these short comings. Whether the change comes internally in the October BBB vote to expel five regional BBB offices over their refusal to adopt the Letter Grade System, or externally via media, legislative or judicial pressures, we predict the change will come. TOP
THINGS WRONG AT THE LOS ANGELES BBB
1. COMPLAINT PROCESS Simply put, the Los Angeles Better Business Bureau has too few employees to handle too many complaints. (10,000 complaints per month handled by 25 employees.) In order to compensate, the LA BBB automates too many of the complaint process procedures which in turn increases the likelihood of error. Complaint handling at the BBB is a lot of smoke and mirrors. Rather than something that offers the consumer useful information, the BBB has devised a formula that is biased against non-member businesses, has arbitrary standards, and positions the BBB as a middleman in a process it is ill-equipped and understaffed to operate with enough accuracy to be made public. Additionally, I find the BBB complaint criteria lacking sufficient depth. It’s a fact of life in today’s world that a lot of transactions have glitches in them. From the bank freezing your card over an internet transaction because they suspect fraud (even when It’s been a regular, ongoing monthly payment), to a discrepancy in your phone bill, to a one-time only purchase from a company you’ve never done business with before, problems happen. Sadly, it seems to be happening far too often these days. So, what I’m interested in are things like average wait time when I call to complain; is there a phone help line I can contact, an online support ticket system? More importantly, do I feel the business I have a complaint with is being reasonable with me? Are the business interested in satisfying me or not? In short, are they interested in retaining me as a customer? The Los Angeles Better Business complaint handling process gives me no insight into these areas. Their display about the complaint history of a business offers no useful information. The LA BBB is more interested in whether a business kowtowed before them, than they are in whether the consumer was satisfied. More importantly, some businesses just have more complaints than others. We know this from practical knowledge--cell phone companies screw up more often than the post office for instance, yet we rely on both daily. Currently, the BBB doesn't differentiate from type of business on complaint volume. Instead, at a specified complaint volume any business gets the same grade penalty, regardless of type of business. More useful would be a system that ranked complaint levels of businesses in the same industry against each other. In other words, all electronics stores would be judged according to their competition, not according to some one-size-fits-all model. Additionally, the BBB complaint system makes no differentiation between products and services. There are two very different dynamics in play between product complaints and service complaints. Product complaints are much more likely to be a black and white issue. Either the product works or it doesn't. If it doesn't work, the question is what will the business do about it. In this category, I also put repair services, because the issue here is more about the product (did it get repaired) than the service. Unfortunately for the BBB, Consumer Reports does an excellent job in ranking products with a scientifically based, thoroughly researched, fully disclosed system. Service complaints are far more likely to fall into gray areas and involve subjective judgment calls on the part of the BBB. Did the service meet the consumer's expectations? Were those expectations realistic? Was the consumer dealt with truthfully? Do both parties have valid points? None of these questions can be answered scientifically, they require judgment calls. The BBB does not have enough employees assigned to do an adequate job in judging complaints. Those they do have cannot possibly be familiar enough with the over 7000 types of businesses they pass judgment on to do a competent job, as each of these 7000 industries has its own quirks, rules, requirements and standards they operate under. There is also an inherent conflict of interest through the Los Angeles Better Business Bureau's use of consumer complaints as telemarketing leads for their sales staff. There is no Chinese wall between the complaint process and the telemarketing process. By their very business model, the BBB sets up an adversarial relationship with the very people it wants to enroll as members. This is not only dumb, but it renders the complaint process meaningless. 2. TYPE OF BUSINESS We've already seen how the BBB can penalize a business by their type of business through their one-size-fits-all complaint volume scoring. Pity the poor business man who opens up a business in the wrong vertical. One of the biggest penalties that a business can incur in the BBB grading algorithm is by engaging in the wrong business vertical. In the worst case, this penalty guarantees a business a "F" grade. I believe the Type of business should not impact the grade. The BBB justifies their algorithm penalty by stating that even in an industry deemed bad by the BBB, the good companies will separate themselves from the bad companies due to the complaint component of the grade. How is that possible if the ceiling for that industry is an “F” grade? It’s fine that the BBB wants to warn consumers about a particular industry. But it should not impact all companies just because some of them are bad. Any business, any industry can be run unethically. Any business, any industry can also be run ethically. Let the BBB warn, not grade on this category. I would also submit that these are the very businesses that the public relies on BBB grades for, because the consumer is savvy enough to check out business that have potential for scamming more thoroughly than an innocuous transaction like buying groceries in a supermarket. So the penalty to a business, especially a non-member business, for being in the wrong industry is compounded over and over. 3. LETTER GRADES The biggest sin of the letter grade is not that it can be improved through membership in the BBB. The biggest sin is the prominence given to the letter grade on BBB websites and publicity given to the letter grade launch. By backing the letter grade with their reputation, the BBB is in effect selling its trust to the highest bidder. To the consumer, it’s a very convenient shortcut to checking out a business…satisfactory/unsatisfactory meant you had to dig deeper into the complaint history and such…but everyone knows what an “A” is or an “F.” The BBB is distorting a grade which is demonstrably defective in too many cases to be shown to the public. 4. DISCLOSURE/TRANSPARENCY The interesting thing is how bbbroundup found out about the LA BBB attempt at disclosure. In comments an article by Jan Norman, one reader (JRP) derided Jan for not doing her research because the LA BBB had great detail about the grading system. The reader even provided a link to the page on the LA BBB website to prove Jan’s lack of due diligence. The only problem was that this page was first published AROUND THE SAME TIME Jan’s article appeared. There was no page, no LA BBB disclosure for Jan to find, because at the time Jan was doing her research the page did not exist. This is born out in the following screen shots which show when Google first found the page. The source for Google finding out about the page? The Jan Norman reader who submitted the comment to Jan’s article with the link to the ratings disclosure page. The reader link was published at 3:36pm on April 27, 2009.  Google came across the LA BBB Ratings Overview page for the first time April 29, 2009. If Google didn’t find the page until two days AFTER the reader comment was made, then how was a human supposed to?  Where is the transparency? Why are these pages on the site? Presumably they’re there to benefit the consumer. If so, why hasn’t there been any PR about them? Why are they essentially being hidden? Why no front page link to them? Why are they three clicks from the home page? The disclosure revealed a lack of standards, or at least a lot of room for error and judgment calls. The more the BBB shows, the less we know. 5. THE ISSUE OF TRUST The BBB slogan is start with trust. In a recent poll, part of an article by Jan Norman of the Orange County Register, approximately two-thirds of the responders said that they did NOT TRUST the BBB Ratings! Sure, this was an unscientific poll. And yes, it was conducted in Orange County with its decidedly pro-business population. Even so, when two-thirds of responders say the Trust is Gone, the LA BBB should be worried. So too the CBBB. The recent manner in which the CBBB and the LA BBB published the algorithm and rating criteria (abridged) are not those of an honorable public service organization, nor a genuine attempt at full disclosure. Not when they sneak them onto the site. Not when they don't link to them from the home page. Not when it takes a minimum of three clicks to get to them. These are the actions of an arrogant organization reminiscent of Nixon’s actions with the Watergate tapes. 6. ATTITUDE There's a difference between being corruption free and thinking you walk on water. Neither the CBBB or the LA BBB respond well to criticism. The CBBB tries to spin their way past criticism through deflection. The LA BBB lashes back furiously and with great vehemence. In the Southland, business fear the LA BBB. Not because the business has done anything wrong, but because they know the LA BBB is capable of doing great wrong. This fear has no place in operations of a public service organization. Individually and collectively, the BBBs should be doing the mea culpa routine, not Roger Clemens' deny, deny, deny routine. 7. DOES ANYONE BENEFIT? Arguably both consumer and business should come out winners in the BBB process. My research, summarized above, indicates that business to a large extent, and by extension consumers in significant numbers, are being misled, misguided and misinformed by the whole Letter Grade process as presently constituted. 8. THE BIGGEST FLAW At the root of it all however is the BBB business model. They are selling memberships. Or wooden plaques. Or grades. Of the three, only the grade has any value to a member business. Whatever relevance the membership or plaque may have held in brick and mortar days is vastly eroded. When the grade changed from Satisfactory/Unsatisfactory (pass-fail grades) to A through F(letter grades) it opened up a can of worms. According to their recently published algorithm (abridged), BBB membership improves a business’ rating by a half-grade. Elsewhere on the LA BBB website it states that membership in the LA BBB guarantees a business a grade of at least a “B.” Still elsewhere on their website, the LA BBB says that non-membership does not disparage a business in any way. In any case, there are obviously definite advantages given to BBB members on their Letter Grade. I have no problem with any company selling memberships. If customers want to join enough to pay membership fees, that's fine. However, when a consumer advocacy group accepts membership dues from the very group (businesses) that they sit in judgment on, there is a problem. In a public service organization that is supposed to be impartial and promotes themselves as unbiased, this is intolerable and unacceptable. The fact that less than 2% of American businesses are BBB members is a very strong indicator that this is a failed business model. MY PERSONAL BIAS Most of the time I deal directly with the business I have a complaint with. Most of the time I am satisfied with the business' response. I've found that a good way to nudge malingering businesses to respond properly is to dispute the credit card charge. Businesses tend to listen to banks more than they do customers. The last two times I was not satisfied with the company's response, I did not bother complaining to the BBB as both companies had A+ grades. My own personal experience as a consumer with complaints about businesses to the Better Business Bureau appears to be par for the course. I average about one complaint to the BBB a year. In one case, the BBB arranged a refund. (The business I complained about was a BBB member.) In another case, the BBB responded that they do not handle warranty or guarantee complaints, yet their charter clearly states this is exactly the type of complaint the BBB does handle. In the other six complaints I never heard anything from the BBB. As a small business man, living vicariously through my clients, the BBB was never an issue, never worth a minute's thought until some four-and-half years ago. (I have lived and worked in the Los Angeles area the past 13 years. My BBB awareness coincides with the LA BBB’s implementation of the Letter Grade. My initial personal experience concerned two clients in the same tech business. Both were frugal. Business A had a fully staffed customer service operation, Business B didn’t. Business A paid their bills on time, Business B didn’t. Business A was ethical, Business B was borderline questionable. Guess which one had the better BBB grade? Hint: It wasn’t Business A. Did I mention Business B was a LA BBB member? Another client was a LA BBB member who went out of business. A week later he opened up a new business, which happened to be in one of those bad type of type of businesses and still had his BBB membership and “A” grade transferred to his new business immediately. Then I did some research into the LA BBB grades for companies I had personally done business with in the Los Angeles area. The LA BBB grades were not consistent with my experiences. Some of the time, yes. The majority of the time? Perhaps. All of the time? Not by a long shot. Enough discrepancies existed between the LA BBB's view of businesses I had dealings with and my own world view to know that I couldn’t rely on the LA BBB for much of anything. I have also talked with enough businesses to know that the impact of an “F” grade on a small business can have a potential revenue hit in the millions of dollars. That’s a lot of damage, especially if the grade is wrong. As a small businessman, I think this is an unwarranted obstacle to a business’ endeavors. When the potential impact is so large, to not have a national oversight of letter grades review board is WRONG. If even one business is unfairly graded with an “F” grade, that is one business too many. |
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OFFERS SUGGESTIONS ON HOW TO FIX THE BETTER BUSINESS BUREAU bbbRoundup
puts on its thinking cap and goes outside the box to reinvent the
Better Business Bureau. Does Jimmie Rivers have a better business
model, one that is more efficient than the current one? Is it
possible for the BBB to offer something both business and consumer want
and value? Is it feasible that the Better Business Bureau can
regain the Trust of the business world? bbbRoundup thinks so. |
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| 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. | |
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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 |