The Shocking Truth About the Better Business Bureau

the Sopranos or the BBB?

"You wanna operate in dis neighbahood?  You gotta pay."

The Better Business Bureau portrays itself as a watchdog, protecting the unsuspecting consumers from the bad guys.  After learning a little more about the Tony Soprano like practices of at least one BBB chapter, we need to ask... who's watching the watchdog?

Questions about the BBB's integrity came to light after an ABC 20/20 investigation of the BBB titled "The Best Ratings Money Can Buy".  This original investigation was back in 2010 and uncovered multiple stories of extortion and bribery.  Basically, the Southern California BBB chapter was blackmailing companies by charging them hundreds of dollars in return for an “A” grade. If you don’t pay up, don’t expect a good grade.   Sign up to pay your $425 per year and shazaam... you're "F" grade is turned into an "A" the same day your credit card clears. 

20/20 reported that two dummy companies (one of which was called "Hamas", the name of a known terrorist organization) received A+ ratings as soon as the membership fee was paid. 20/20 also recorded phone calls where business owners were told that the only way to improve their rating was to pay the fee. In one instance a "C"  grade was turned to an "A" grade immediately after payment was made.  In another case a "C-" became an "A+" immediately after payment.

The National BBB Finally Acts

More than 2 years later, the national BBB organization finally expelled the Southern California chapter in the spring of 2013 for running a "pay to play" enterprise.  In a statement released by president and chief executive of the BBB, Carrie A. Hurt explained the reasons behind the Southern California BBB chapter expulsion. She stated, “Over a period of more than two years, BBB of Southland failed to resolve concerns about compliance with several standards required of BBBs, including standards relating to accreditation, reporting on businesses, and handling complaints."

2 years later?  C'mon BBB... what took so long?  The slow actions of the national organization does not exactly inspire confidence.   Some believe that the timing of the expulsion is directly related to a lawsuit filed by Brookstone Law against the Southern California BBB at the end of 2012.  As the lawsuit picked up steam in the spring of 2013, the national BBB was forced to act.

The BBB is NOT a Government-Run Watchdog Organization

The BBB has been around for more than 100 years, but most people don't really understand what it is or how it works.  Many consumers believe that the BBB is a government agency set up to protect consumers.  The BBB is not a government entity, despite the word "Bureau" in their name.   The BBB is an independent, supposedly non-profit organization... that brings in over 18 million dollars per year in revenue, mostly from the very companies it reports on.  There is no governmental or regulatory oversight of the BBB.

The Better Business Bureau actually makes its money by charging businesses an annual fee to earn the right to don the "BBB Accredited" badge. The fee costs several hundred dollars per year depending upon the location. Whether or not the business pays the accreditation fee is not supposed to impact the "A - F" grading system, but payment clearly impacted grades in the case of the Southern California chapter.

The BBB Uses a Business Model Similar to a Restaurant Franchise

The BBB is composed of 113 independently operated chapters located all around North America. Each branch is like an independent business, sort of like how restaurant franchises work. The Southern California BBB branch was the largest in the U.S. up until it was shutdown in mid-March.

Companies are able to register with their local BBB and opt to pay the annual fee for accreditation. The BBB then grades the company based on 16 different factors, primarily related to how well the company handles customer complaints. An “A+” grade with the Better Business Bureau is supposed to mean the company is excellent at making sure the customer is happy with the product or service.

As the Southern California debacle shows us, the BBB is not just a watchdog.  It's a watchdog with a business model.   In business, it's not uncommon for greed to supersede integrity.   The BBB's model only works if each individual BBB chapter maintains a high level of integrity and is impartial in the grading system.

Has the BBB Lost its Credibility?

The highly paid executives at the Better Business Bureau are in damage-control mode following the shutdown in California, and rightfully so. They maintain that it was an isolated incident, and this sort of corruption is not commonplace at other BBB branches around the country.

There is plenty of other complaints against the BBB, indicating that the Southern California tactics may not be as isolated as the national organization would have us believe. 

Is the BBB Even Necessary Anymore?

The BBB still has its place as a useful organization, if it is operated ethically.  But as we’ve learned from the Southern California fiasco, things you see online aren’t always what they seem. Just because you find a company with an A+ grade from the Better Business Bureau doesn’t necessarily mean that company is reputable and focused on customer satisfaction.

Thanks to the internet, it’s easy for today's consumers to simply jump on the computer and do their own investigation of an individual company.  A BBB grade may be one component of a bigger picture about a particular company.  One can also read reviews of local companies via Yelp, Google and other review sites. Of course, these sites have their own issues in that many of their reviews are easily faked by someone with a self interest.  

For finding roofing contractors, we think our formula here at Hometown keeps it simple and honest:  verified professional credentials + 100% real reviews.  We verify license, insurance, and other 3rd party affiliations claimed by the roofer, including BBB accreditation.   We collect roofing reviews from customers that we have human-verified to be actual customers (not relatives, friends, or employees).  All verified reviews are published, good or bad.

For full disclosure, Hometown is a for profit company.  Roofers do not pay to be listed or reviewed on the site, but they do pay a small referral fee if they are contacted for a job.