Better Business Bureau risks losing credibility over ratings, Conn. AG says

Connecticut attorney general's logoConnecticut's attorney general has told one of the marketplace's most trusted symbols of consumer protection, the Better Business Bureau, that it risks losing its credibility if it favors those who pay for membership over those who don't.

"Any suggestion or appearance of 'pay-to-play' threatens to undermine the accuracy and credibility of the BBB's ratings, potentially misleading consumers and unfairly tainting non-member businesses," state Attorney General Richard Blumenthal said in a letter to the bureau's Connecticut chapter.

Blumenthal told the BBB he wanted more information regarding what role payment of dues plays in determining the rating given a business compared to one that chooses not to join. "Rankings should not be affected by membership in the BBB," he wrote.

At the heart of Blumenthal's investigation, which began last year, is the manner in which the BBB decides which businesses to review. According to the attorney general, the agency mostly rates those businesses that seek and pay for accreditation, which includes the right to display the BBB seal on their product or web site. Membership fees vary depending on location, type and size of business, but generally run between $250 and $700 a year.

The Connecticut attorney general is not the first to point out possible flaws in the organization's methodology.

A former journalist who has been sounding an alarm about the BBB's A to F letter-grading system signed up a fake company named Hamas -- a hard-to-miss reference to the terrorist network -- by paying $425 to the Better Business Bureau in Los Angeles. The bureau gave the non-existent company, which said on its site that it provides "educational programs for troubled youth," an A- rating.

"Something is rotten in the Council of Better Business Bureaus and its BBB offices, and it seems to be a reasonable assumption that the CBBB is aware of it and unwilling to take steps to fix it," said the journalist, Jimmy Rivers, on his website. "The BBB comes across as a major offender of the very tactics it warns consumers about: high pressure, boiler-room sales tactics, false advertising claims, favoritism in exchange for money, and other underhanded business deeds."

Also at issue in the attorney general's complaint is a BBB requirement that dues-paying members "commit" to resolving consumer complaints, for which the agency awards four accreditation points, which in turn lead to higher grades. The organization does not demand the same commitment of non-paying businesses, taking away the opportunity to credit them with an additional seal of approval.

Blumenthal says that system is vague, and may also be arbitrarily and adversely impacting thousands of consumer-friendly entities by virtue of subjecting them to random criteria (such as "time in business," arguably unfair to new businesses), or not taking them into consideration at all.

"We always cooperate with government officials," BBB communications director Howard Schwartz told Consumer Ally. He declined further comment.

The Connecticut chapter of the BBB was sued last week by TicketNetwork, a ticket sales software provider, for refusing to rate the company under the pretext it doesn't have enough information about it. The lawsuit further accuses the BBB of misleading consumers by encouraging them to engage fee-paying companies over non-paying ones, and willfully structuring its rating system and website to increase the number of businesses which pay accreditation fees.

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