Do BBB ratings mean anything anymore?

By | February 15th, 2017

Is the Better Business Bureau (BBB) obsolete? Or, worse, is it misleading consumers?

Perhaps.

When consumers contact us, we ask them to share a paper trail between them and the company, detailing the steps they’ve taken to solve a problem. That path often leads past the BBB. Unfortunately, that’s often an act of futility. In fact, for the most part, our consumers report that they’re ignored when they contact the BBB.

And so we have to ask: Is the BBB worth anything?

In past eras, when a consumer would threaten to contact the BBB, it could spark a burning fear in a business.

Those days appear to be long gone. Maybe that’s because the BBB doesn’t represent the interests of consumers. It exists for the benefit of businesses — for better or worse.

When the BBB was first established as a nonprofit organization in 1912, it was the only agency of its kind. It quickly became the go-to source for checking an organization’s credibility. In cases of dispute, it was especially helpful, acting as the intermediary between consumers and businesses. The BBB was widely seen as a champion for consumers.

While the popularity of modern-day, consumer-friendly review sites such as Yelp and Angie’s List have emerged in recent years, the BBB’s reputation has taken a nosedive, with allegations of questionable business practices.

In 2010, The ABC investigative-news program 20/20 aired a shocking exposé about the organization. It presented evidence that the BBB rating system was highly flawed and that it seemed to allow businesses to buy “A” ratings. Companies that refused to pay membership fees were punished with lower ratings.

Also of concern, this “nonprofit” organization (the BBB) had dozens of executives on the payroll making six-figure salaries. Today that number has risen to more than 100.
Where does the money come from to pay all these jumbo salaries? You guessed it, membership fees. The BBB has every reason to push hard for businesses to become members and to offer incentives to businesses who participate.

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In the 20/20 report, an anonymous activist shows us exactly how easy it is to become a BBB “A” rated member. He goes online and applies for accreditation for the international terror group Hamas. He pays the $425 BBB membership fee, and within several hours, Hamas became a fully accredited BBB member with an A rating.

To prove this was no fluke, he sets up another business called Stormfront, a white supremacy group. He lists the owner as Aryn Whitie and pays the fee. Before long, Stormfront had its own A+ BBB rating.

How can this happen?

20/20 asked Steve Cox, the then-president of the Council of the Better Business Bureau (CBBB), the umbrella agency that oversees all the independently operated BBB’s. Cox appeared flustered and admitted that it was a “mistake” to grant Hamas and Stormfront accreditation. He could not explain how these mistakes happened and ended the interview abruptly.

One week after the report aired, Cox issued a press release that the BBB was immediately revising its rating system to regain consumer trust. He presented an action plan to prevent the ability of businesses to receive A ratings simply by paying for a membership.

Problem solved. Right?

Wrong.

In September 2015, CNNMoney revisited the BBB with yet another exposé. The report revealed that the same practices exposed in the 20/20 segment seem to be alive and well.

CNNMoney highlighted many stories in which positive BBB ratings misled consumers into a false sense of security about companies that may not warrant a consumer’s trust.


Take the case of NourishLife, Inc. In January 2015, The Federal Trade Commission (FTC) charged the company with deceptive claims with regard to dietary supplements that they had been selling since 2008. NourishLife claimed that these $70-per-bottle supplements would cure speech problems in children with apraxia of speech and/or autism.

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There is no approved dietary treatment for these disorders. The FTC ordered the company to stop making such claims and fined them more than $3 million.

Most people would agree that preying on parents’ desperate hopes to cure their children of disorders by selling them a supplement that was little more than a modern-day snake oil is abhorrent. But apparently not to the BBB. Today, NourishLife, LLC maintains a healthy A- rating, despite the FTC action against them. There is no mention of this legal settlement on the BBB site. Parents searching for treatment for their children will continue to see this positive rating when researching this company.

Or take the case of HCR Manorcare, Inc., a leading provider of skilled nursing and rehabilitation services. It is currently facing legal proceedings brought by the federal government. The lawsuit charges it, among other things, with providing unneeded treatments and therapies which, in some cases, may have harmed patients. HCR Manorcare,Inc. denies any wrongdoing and the case is ongoing.

At the time of the CCNMoney story, HCR Manorcare, Inc. was maintaining its “A” rating with the BBB. If you were looking for this type of care for a loved one and searched the BBB for this company, you would probably feel reassured by their excellent rating. But this rating doesn’t seem to tell the whole story.

Both of the above cases appear to directly contradict the terms of BBB accreditation standards, which state that a company must “be free from government action that demonstrates a failure to support BBB ethical principles in the marketplace transactions.”

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To the BBB’s credit, perhaps in part because of the the CNNMoney report — only a few of the multiple BBB listings for HCR Manorcare, Inc. and its subsidiaries maintain an “A” rating now. One of the branches of this agency even has a notation about the government action.

In a quick search through the BBB listings, I found many businesses that have A+ ratings; however, inexplicably, they also have 100% negative customer reviews. How is that possible? The BBB does not make public exactly how they determine their ratings.

So, what is the value of the current BBB to the average consumer?

There’s some value. For example, company contacts are usually clearly listed for most BBB member businesses. That information is useful if you’re trying to contact the company.

Additionally, it appears that customer complaints are becoming more transparent on the BBB site. In many cases, consumers can now see the customer’s description of the problem and the company’s response.

But should the BBB be your first and last stop in vetting a company? No. I recommend a variety of tools, both online and in real life, when making a decision to engage a business. There’s no shortage of sites for consumers to post and read about experiences with all types of businesses. Cross-referencing reviews from multiples sites can offer a much more reliable read on a business.

And, of course, the old-fashioned way of getting recommendations from friends and family is never going to go out of style.

Bottom line: Use BBB ratings with caution. And do not expect them to come to your rescue in a dispute with a company.

Do you trust the BBB?

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