BBB Ratings Under Scrutiny Again

by QuickBooks

3 min read

Here’s a foodie fun fact: Award-winning chef and restaurateur Wolfgang Puck has an F rating with the Better Business Bureau.

The perceived discrepancy between ratings and reality on the BBB’s website is once again prompting small-business owners and others to question how the bureau assigns grades to members and nonmembers, thanks to a recent uproar over the organization’s grading.

FeeFighters, an auction-style business in which credit card processors bid for a company’s accounts through a reverse auction, is among the BBB’s most recent, vocal critics. In a recent blog post, Sheel Mohnot, who handles FeeFighter’s business development, recounted his response to a customer email alleging that one of its credit card processors had received an F rating from the BBB. When FeeFighters researched the matter, it confirmed the negative rating and noticed that the credit card processor had received 11 complaints. FeeFighters asked the company to contact the BBB and rectify the situation.

According to Mohnot, the BBB of Chicago told the credit card processor that if it became a BBB member, the bureau would investigate the legitimacy of the complaints. The processor paid a $760 membership fee and within days its rating rose from an F to a C, and then to an A-. Two phone calls allegedly took place between the credit card processor and the BBB as part of the process of raising the rating, Mohnot wrote.

The BBB says its ratings are based largely on a firm’s responsiveness in resolving consumer complaints, but reports have surfaced that simply becoming a member — paying the BBB’s accreditation fee and agreeing to its rules — can turn a negative ranking into a positive one. (Puck, for the record, is not a member.) Critics argue that, if true, these fee-for-rating adjustments compromise the ratings’ integrity. The bureau, which champions itself as a nonprofit promoter of consumer protection, touts the system’s neutrality.

We asked the BBB about the FeeFighters case specifically. “The whole thing feels like a publicity stunt to me,” says Katherine R. Hutt, a spokeswoman for the Council of Better Business Bureaus. She says FeeFighters became a BBB Accredited Business last March and published the critical post in June. The post contained various inaccurate statements, Hutt says. “In July, they [FeeFighters] ignored numerous calls and letters from BBB Chicago asking them to abide by the BBB standards they had agreed to when they were accredited. They were told their BBB accreditation was at risk and given an opportunity to respond, but they did not respond within the required time. When they got the inevitable suspension letter from the BBB, they published another blog post mocking the BBB decision, this one complete with [images] of their staff trashing their Accredited Business plaque.”

Charges of BBB bias and claims that paid memberships improve a company’s rating are nothing new. In November 2010, ABC’s 20/20 reported that several Los Angeles business owners had paid $425 to the BBB and obtained an A- rating… for a nonexistent company called Hamas. Following the program, Connecticut’s Attorney General Richard Blumenthal vowed to take a closer look at the BBB. Following his investigation, he sent a letter to Alan L. Cohen, vice president and general counsel for the Council of Better Business Bureaus, urging the bureau to de-couple pay from ratings.

As it stands today, the BBB makes it easy for consumers to complain about businesses — but it will only review the validity of complaints if those businesses are accredited (i.e. they pay for accreditation). There is currently no evidence of any plan to change this policy.

The bottom line: All ratings need to be taken with a grain of salt, and if you find your business at odds with a rating organization, the only way out may involve shelling out some cash.

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