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Why You Shouldn’t Trust the Better Business Bureau (BBB)

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For years, the Better Business Bureau was perceived as a great source for consumers to learn about reliable companies. Unfortunately that's no longer true and I now I question whether it ever was true. Until recently, I thought they were a government-run organization. After all the FBI, is a "Bureau" (Federal Bureau of Investigation), right? However, as Wikipedia says, "Although it has 'Bureau' in its title, the Better Business Bureau is not affiliated with federal, state, or local government, and has no direct affiliation with any consumer protection government authority. The BBB, as a privately held corporation, has no governmental authority over businesses."

The BBB is not to be confused with the FTC, the government's consumer protection agency. The BBB is a private nonprofit organization, much like Mozilla, who makes my favorite web browser, Mozilla Firefox. In some ways, the very name "Better Business Bureau" invokes a false sense of trust as most people wouldn't confuse Mozilla with being a government-run organization.

The BBB may be best thought of as a collection of franchises, in the same way that collection of McDonalds restaurants that comprises McDonalds corporation. You can buy a hamburger at McDonalds, but there can be differences between stores. They are owned separately from the global corporation, which is different than Wal-Mart stores, which are all owned by the global corporation. The BBB is like McDonalds with 100+ franchises that are primary funded through its members. (This is an important point that we'll come back to).

In 2009, the BBB switched its grading system from satisfactory/unsatisfactory to a letter grade: A+ through F. There were 16 factors that a company could be rated on a 17th factor, accreditation that could earn a company four extra points if they paid a yearly fee.

An ABC News investigation in November, 2010 found a number of problems with the new system:

  • The BBB gave an A- to a fictional company - ABC News found that "A group of Los Angeles business owners paid $425 to the Better Business Bureau and were able to obtain an A minus grade for a non-existent company called Hamas, named after the Middle East terror group" and that "the BBB also awarded an A minus rating to a non-existent sushi restaurant in Santa Ana, California."
  • Paying Members get A+ ratings - ABC News also found that a a white supremacist website called Stormfront received an A+. Two companies were able to upgrade their C- grades to A+ overnight by submitting their credit card numbers
  • You must pay for the A+ rating - The only way to get the A+ rating was to get the four extra point for paying the yearly fee. This supposedly has changed and non-accredited businesses can get an A+ rating, but it's unclear whether paying for accreditation boost your grade in point system (aside from the cases where merchants were able to simply buy their way from a C- to an A+ score.

This lead to Connecticut Attorney General Richard Blumenthal saying, "Right now, this rating system is really unworthy of consumer trust or confidence." He sent an official demand letter asking the BBB to discontinue the ratings system because it is "potentially harmful and misleading." The BBB has changed it's grading system.

I should also mention that previous to the ABC News investigation, the Los Angeles Times reported that accredited business seem to receive favorable grades

The paying for accreditation where it impacts grades is particularly problematic, since the BBB's funding comes from these fees. The system is completely untrustworthy if a business can pay a fee of around $400 a year and receive an A+ rating. I found this out when MonaVie, an MLM scam/pyramid scheme that I exposed awhile back went from a C- to an A+ in the span of about a month: Did MonaVie Pay For a Better Grade from the Better Business Bureau?

It is this experience that has me writing about the BBB today. When MonaVie got that A+ rating from the BBB, MonaVie and/or its distributors flocked to Wikipedia to trumpet how it was now a reputable company. They ignored the fact that it was a D- recently (the BBB doesn't give a chart of grades over time, so this was easy for MonaVie to ignore). I should have probably written about the BBB then, but I wasn't aware of the full extent of the problem.

A couple of days ago this came up in my exposing of Youngevity, yet another scammy MLM company. It didn't matter that the "doctor" responsible for pushing the vitamins was a veterinarian pitching himself as a medical doctor or that he was making outrageous claims about people in China living to reach their 250th birthday. It didn't matter than I could show people who to buy nearly equivalent products for a quarter of the price on Amazon. A Youngevity-proponent ignored these facts and left a comment that I must be wrong because Youngevity had an A+ rating with the BBB.

Ugh...

I guess I can't expect consumers to have done the research on the BBB and find out that it isn't the reputable rating agency that we all would like it to be. This concerns me greatly because there are a number of people who would have bought into the Youngevity scam on the basis of its BBB rating being reputable. Thousands of dollars later, perhaps they'd find my article and my response to the commenter and realize that they got scammed by both Youngevity and in trusting the BBB.

In the end, I think that Clark Howard has good advice for consumers about the BBB:

"Here’s what you need to know: I want you to use the BBB as a veto, not as a green light. If an organization has a bad rating, that alerts you to potential danger. But just because they don’t have a bad record, that’s not the seal of approval.

It's the same thing with a CARFAX report. A bad CARFAX is a veto, not a green light to buy, that's why you need a mechanic to inspect any used car purchase."

In the case of MonaVie, Youngevity, ViSalus or many other MLM companies, I try to be that mechanic to inspect the company, since it is fairly easy for them to spend the $400 a year to remove that veto.

Fortunately for me, I'm not listed with the BBB, because after this article, I'd find out first hand that by criticizing the Better Business Bureau, they'll likely pull my accreditation.

Update: It appears that that CNN Money has exposed the BBB as well. It has a great story about companies guilty of fraud that earned the highest rankings in BBB. They even have a nice little app here. They also explain how the BBB makes nearly $200 million a year in revenue - mostly by selling businesses on the need to be members, plaques, and other things that sound like Mafia-style protection money.

Last updated on February 3, 2016.

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23 Responses to “Why You Shouldn’t Trust the Better Business Bureau (BBB)”

  1. Gary says:

    I agree. Consumer affairs is preferable to BBB and more likely to be accurate. Of course there are places like angieslist also.

  2. SwearJar says:

    Interesting article and links. Thanks for doing the research. … Maybe you’re not so lazy after all?!?!??!!! :–)

  3. Contrarian says:

    Lazy – same goes with city specific magazines, large publications, and guides that rate the best doctors, dentists, hotels, lawyers, restaurants, coffee shops, auto mechanics, etc.

    These magazines hire sales reps that contact companies directly and sell their “best of” rankings for a price, then publish this information under the guise of an unbiased report. The unwary consumer thinks he/she is getting an objective ranking, when in reality they are getting a cleverly disguised advertisement.

    In many cases proprietors or service providers pay to be ranked as the “best”, whereas those who fail to pay are not given consideration. Nowhere in these magazines do you find a disclaimer stating this is an “special advertisement”.

    I’m sure there are exceptions to this profitable practice of paid rankings, but most published “best of” reports should be considered advertisements … nothing more.

    • Lazy Man says:

      Wait, are you saying that when I’m flying and I’m reading the airline magazine and they have the list of top 10 doctors and steakhouses, they aren’t really the best? ;-) Sorry, I always felt like those are the most ridiculous advertisements and the doctors thing caught my attention. Of course this is a more obvious advertisement.

      It is a great point that you bring up and probably one that would be well served as a separate article. I chose the BBB for this one because it has the reputation of being reputable (say that five times quickly). Also, when the next person comes by claiming that a MLM is awesome because they have an A+ rating, I can simply point to this article and show that it isn’t necessarily true.

  4. Contrarian says:

    Okay, Lazy – I take it from you’re sarcastic tone that my point was so damn obvious I didn’t need to make it ;-) LOL. Well, I suppose same could be said of MLM could it not? Such an obvious racket fraught with so many obvious pitfalls and deceptions yet people still get duped and seduced into joining these deals all the time. For that matter, how many of us have asked a concierge at a hotel where they recommend we go eat? Did you know most of them get kick-backs from the restaurants they recommend? I’m sure everyone already knew this and I”m the last guy to figure that one out! Haha.

    Pat Riley, three-time coach of the year with the LA Lakers (suppose everyone already knew this) said – “A good coach doesn’t teach us anything thing new, a good coach simply reminds us of what we already know.”

    • Lazy Man says:

      Sorry about the sarcastic tone to start with. I took it to another level of ridiculousness. At least I didn’t go into the Enzyte and X-Ray glasses level, right? Perhaps, I should create Lazy Man’s Scam Scale? It would be like Mohs Hardness Scale, but with the level of obviousness of the scam. I think the X-Ray glasses would be at the #1 level, while the airline magazine may be a 3-4. Your thing about the Best of [City X] may be a 7 or 8.

      I think MLM would be at something like a 9 or 10. Though a lot of people know it is a scam, there are still something like 15 million people in the US and many more internationally who fall for it. While it may be obvious to you and eye, clearly there’s a large number of people of who not only don’t know it’s obvious, but will argue to their last breath that it is not a scam.

      I never thought I’d see the day when I’d agree with Pat Riley. He falls in that Peyton Manning/New York Yankees category of evil threats to Boston sports dominance ;-). Good quote though.

  5. Rick P. says:

    LM, Did you realize that the BBB only shows the last 12 mos of complaints as well?

    When I questioned the local BBB branch rep about it she replied that it would hurt their membership to show that kind of history.

  6. As a business owner I’ve known this for years. I’ve never submitted my company because of this reason. It’s a SCAM! This is similar to D&B reporting.

    It’s great you’ve pointed this out to others.

  7. I guess I’ve never taken the word “bureau” to indicate government affiliation. BBB is definitely not the only non-government entity to use the word in a name. Farm Bureau and the Major League Baseball Scouting Bureau immediately pop into my head. So people shouldn’t read too much into the word.

    • Lazy Man says:

      I had never heard of the Farm Bureau or the Major League Baseball Scouting Bureau before that comment. I think if you were to play a Family Feud style game you’d find that the top two answers for “Name a Bureau” would be the FBI and the BBB and take in over 90 of the 100 people surveyed. I’m fairly sure that you’d get an “X” if you put up Major League Baseball Scouting Bureau.

      I looked up bureau on Wikipedia and interestingly the first two items have to do with public administration (not privately held organizations) and government agencies.

  8. […] I was writing about why you shouldn’t trust the Better Business Bureau (BBB), I got an interesting comment from Contrarian about something else consumers should know: city […]

  9. […] 8. Why You Shouldn’t Trust the Better Business Bureau (BBB) @ Lazy Man and Money. […]

  10. […] Why You Shouldn’t Trust the Better Business Bureau (BBB) at Lazy Man and Money: This is certainly a surprising post on a most-trusted organization but it’s a must-read for business owners. […]

  11. Evan says:

    What is that saying? The fox is watching the hen house. It’s nuts! The problem that EVERYONE needs to know about it before it matters…or maybe just google and they push the results way down lol

  12. […] & FRUGALITY Why You Shouldn’t Trust the Better Business Bureau [Lazy Man and […]

  13. Dan says:

    Another excellent post! “Use BBB as a veto, but not a green light.”

    What is your take on Consumer Reports or Angie’s List?

    BTW, A friend of mine was trying to talk me into Monavie a year or so ago and I did some research and discovered your perspective on it. I tried to post a comment on your website to thank you for helping me to avoid it, but your website was incredibly slow at the time and I don’t think the post ever went through. Thank you again!

  14. Dan says:

    No need to apologize. I thought I read something about Monavie proponents possibly bombarding your site with traffic to bring it to a standstill.

    It is fast now.

    We like CR too, especially when researching automobiles. It was eerie how prescient they were at reporting the transmission and electrical problems that we had with a Chrysler several years ago.

  15. TruthWillSetYouFree says:

    When I worked at MonaVie’s corporate headquarters, distributors used to ask me all the time about the BBB rating prior to MV becoming “accredited”. The talking point we were given said something to the effect of “While MonaVie respects the BBB, its approval and accreditation are not required”. The day I found out that MV became accredited, I was surprised. It was always fun to explain to distributors after that why MV had sought BBB approval after all (sarcasm).

  16. Susan Jones says:

    I agree that BBB rating is completely unreliable if it is a good rating – possibly a telling sign though if it is a bad rating.

    As to my first point, “SLEEPYS” gets an A+ (??!!) but they have thousands of unaddressed complaints, mine being just one of them…and BBB closed my complaint saying that it was addressed even though it wasn’t…at all…they suggested I go to small claims court…what a sham.

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