bbb roundup-an investigation of the Better Business Bureau
 Lead story on the Better Business Bureau
Investigation of the Los Angeles Better Business Bureau
News Reports Clearing House of Filed Stories on the BBB
Side by Side Comparisons of Grades given by the BBB to like companies
BBB misconceptions and myths about the Better Business Bureau
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      AN INVESTIGATIVE NEWS SERIES
    ON THE STANDARDS AND PRACTICES   
    OF THE BETTER BUSINESS BUREAU

      
         START WITH TRUTH


 
The BBB Grading Algorithm

The Better Business Bureau adopted a new system for grading businesses in January, 2009.  Previously, the BBB would give businesses either a Satisfactory or Unsatisfactory grade.  The new system calls for grades from A+ through F.  The top score is 90.  There are 16 criteria in the new grading algorithm.1  They are:
  1. The type of business and its business model.
  2. How long the business has been operating.
  3. Whether the business has appropriate competency licensing.
  4. Total volume of complaints filed against the business.
  5. The number of unanswered complaints.
  6. The number of unresolved complaints.
  7. The number of serious complaints.
  8. An overall complaint analysis.
  9. The number of complaints with delayed resolution.
  10. Government actions against the business.
  11. Any advertising issues found by BBB.
  12. The extent of background information available to BBB for evaluation.
  13. The extent to which BBB is able to develop a clear understanding of the business.
  14. Whether the business has honored any mediation/arbitration commitments.
  15. Whether the business has attained BBB Accredited Business status.
  16. Whether the business has had its BBB Accreditation revoked.
For the sake of argument, assume that each topic has a maximum grade of between 5 and 6 points.  The algorithm is already heavily weighted in favor of a company's complaint history (6 our of 16 criteria deal with complaints).  Unlike certain BBB offices, we will not ding a business almost three grade points for not being a member of the BBB, but give this question equal weight when determining our final grade.

We decided to use a lax grading curve for this exercise as we would rather err on the side of caution.  Therefore, a score of 80-90 results in an A, 70-80 a B, 60-70 a C, 50-60 a D, and 40-50 an E, and below 39 a F grade.
bbb roundup Grades The BBB
Here's how we assessed the BBB, based on information available to us, on each of the 16 criteria used in their own Grading Algorithm:

1.  The BBB is essentially a boiler room telemarketing business that   solicits members on a fee-based structure.  1 point
2.  The BBB has been around since 1912.  5 points
3.  Does not apply.  0 points
4.  There are a large volume of complaints against the BBB.  0 points
5.  A large number of complaints have not been answered.  0 points
6.  A large number of unresolved complaints.  0 points
7.  Many complaints have led to lawsuits against the BBB.  0 points
8.  In general, the BBB does not answer complaints against its grading system and will not agree to arbitration to resolve them.  0 points
9.  Most complaints remain unresolved.  0 points
10.  A US Congresswoman has denounced them in the House of Representatives.  1 point
11.  We find the BBB accreditation disclaimers to be misleading.  We find the BBB consistantly misrepresents itself in its press releases.  0 points
12.  We have lots of information on the BBB available to us.  5 points
13.  We have a clear understanding of the BBB business.  5 points
14.  The BBB refuses to undertake any mediation/arbitration process over disputes with businesses profiled in its database.  0 points
15.  The BBB is not an accredited BBB business.  0 points
16.  Since it has never attained BBB accreditation status, it's never been revoked.  5 points


Total Score:  22 points out of 90.  FAIL.

Objective or Subjective?

Michael Coil, CEO of BBB on Northern Indiana stated, "These ratings (A+ through F) reports provide detailed insight into a business's track record and are based on our time-tested standards, in-depth research...using objective (emphasis added) information and actual incidences of a business's behavior that have been verified and evaluated by BBB professionals."2

Conversely, William G. Mitchell, CEO of BBB Southland, Inc., the BBB chapter where the A+ through F grading system got its start four years ago is quoted as saying, "At the conclusion (of the grading process) ...we are going to look at the various complaints and rebuttals.  We are going to make a subjective (emphasis added) decision about this matter."3
 ...continued

Dan Parsons, President of BBB Greater Houston and South Texas delayed implementation of the new grading system over his concerns.  "We think it (new grading system) has tremendous inequities."   He said his bureau has been working to figure out how to apply the (new) system fairly so it won't offend members and at the same time report accurately on those who are not members.  "You run the risk of giving someone we really don't know either too good a grade, or, let's say they got problems and we are not reporting that accurately."4

Footnotes and References
1.  Consumerist
2.  Indiana Newscenter ABC 21 and NBC 33
3.  BNET Business Network
4.  Houston Chronicle
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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