What is the BBB - Better Business Bureau?

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What is the BBB?

The Better Business Bureau was founded in 1912 and is an international non-profit organization that provides resources for both businesses and consumers. Despite their name, they are not affiliated with any government agency and thus have no legal jurisdiction.

What does the BBB offer businesses?

From the perspective of businesses, the BBB is best known for its accreditation, which allows you to put the BBB logo on your company website, and for its ratings (A+ to F), which may influence potential customers.

Businesses must pay an annual fee to become accredited and provide proof that they maintain the following business practices:

• Build Trust
• Advertise Honestly
• Tell the Truth
• Be Transparent
• Honor Promises
• Be Responsive
• Safeguard Privacy
• Embody Integrity

Accreditation does not ensure a high rating, and vice-versa, the two are independent. Accreditation, which requires an annual fee of hundreds to thousands of dollars (depending on the company's size), must be initiated and maintained by that company. The BBB keeps (https://www.investopedia.com/what-is-the-better-business-bureau-5024818)track of accredited companies since they have a closer working relationship with them and more regularly gather information about them. Furthermore, an accredited company needs to resolve complaints in a satisfactory and timely manner to maintain its accreditation.

What does the BBB offer consumers?

Though many other sites like Yelp and Google also allow you to write reviews for companies, the BBB allows customers to directly file complaints with companies, which gives the customer more leverage than if they complained to the company on their own. These complaints can directly affect the rating the company receives on the BBB website, thus you may experience a better resolution if the BBB is included in your complaint.

The BBB has recently started providing more resources to small business owners and customers, including scam awareness campaigns, customer advocacy, and other resources.

Is the BBB a scam?

Of course, with any company that purports to neutrally provide reputation ratings of other companies, some people will become suspicious. Many even go so far as to claim that the BBB is a “scam,” meaning that the ratings are either not trustworthy or that the more you pay, the better your company rating will be. But is this the case?

Interestingly, finding concrete information on this topic is challenging because of how modern search engines work. Searches with “BBB” and “scam” in the query are bound to mainly get the BBB's warnings to protect consumers rather than any complaints against the BBB themselves. The main exception seems to be a YouTuber, “Roofing Insights,” whose channel mainly deals with roofing-related content. However, he targets the Better Business Bureau in several videos, calling it out for being a “scam” and hiding “shocking truths.” One of his videos alleges that the BBB requires businesses to “pay to play.” Specifically, he claims that:

• Bigger companies have more complaints than smaller companies but sometimes have higher ratings.
• ABC’s 20/20 investigated and found that the BBB gave higher ratings to companies that paid for accreditation.
• He conducted a case study comparing HomeAdvisor (A- rating) and MyPillow (F rating)
• He mentioned that HomeAdvisor had that rating despite a pending class-action lawsuit against them

On the surface, any of these claims might sound scandalous, but on closer inspection, none of them hold up:

• Bigger companies have more complaints than smaller companies but sometimes have higher ratings.
  • This is simple mathematics: larger companies serve more customers, and thus, even with a low rate of complaints, more negative reviews will be seen on average. Furthermore, most customers do not post neutral or mildly positive reviews, so reviews naturally skew toward the negative. Lastly, smaller businesses lack the name recognition of larger companies, so they rely much more on word of mouth; thus, even a few negative reviews can harm them. This harm may be disproportionate to their size, but that’s not the BBB’s fault.
  • Something else to note: don’t base your opinion of a company on the BBB rating or the customer rating/reviews on the BBB page alone. To ensure a holistic, robust picture of a company’s reputation, look at multiple sites (including Google reviews, Yelp, etc.).
• Pay to play (ABC investigation)
  • The investigation he cited was done in 2010, meaning that as of writing, it is 14 years old. At the time, the BBB factored into their rating whether or not the company paid for BBB accreditation; however, since that exposé, the BBB has ceased to explicitly factor accreditation into their rating, and the two are now separate metrics. This doesn’t mean that their ratings are entirely transparent, but they are not a straightforward “pay-to-win” scam like “Roofing Insights” claims.
• “Case study” (HomeAdvisor vs MyPillow)
  • To be valid, any statistical analysis must include a large enough sample size, generally in the hundreds if not thousands of data points. “Roofing Insights” only compared two companies, one of whom was a competitor that he had a personal vendetta against (HomeAdvisor), and the other has since become politicized (MyPillow). Though comparing these two does technically count as a “case study” of sorts, it is far too limited and risks too much personal bias to be relevant in an analysis of the BBB as an organization.
• Pending class-action lawsuit against HomeAdvisor
  • Once again, active lawsuits are certainly something that consumers should consider when choosing whether or not to use a business such as HomeAdvisor; however, the BBB likely didn’t factor this into their rating as of the date of his video because the lawsuit was still pending. In other words, nothing had yet been decided (for or against HomeAdvisor), so it would have been irresponsible for the BBB to downgrade HomeAdvisor before the case concluded.

What’s a better approach to the BBB?

The refutation of “Roofing Insight’s” video was not meant to exonerate the BBB; many of their rating decisions seem arbitrary, despite the standards they outline on their website. As “Roofing Insights” noted in his video, the BBB does listen to feedback about different companies and can manually change “grades” when relevant information is brought to their attention. Though this might risk making the rating feel arbitrary, such responsiveness should also be seen as encouraging, given that they seem to take complaints seriously.

However, from a business owner’s perspective, the return on investment for BBB accreditation is quite challenging to gauge. Its popularity lies more with older consumers, and certain types of businesses benefit more from accreditation. As mentioned above, newer businesses that don’t yet have many positive ratings may benefit from it; furthermore, in the eyes of some, not attending to your company’s BBB page may give the wrong impression. Just like having an out-of-date or inactive social media presence can harm how younger generations perceive your company, having a lackluster BBB page can harm how older generations view your company.

In conclusion, though the BBB is far from a scam, its reputation varies wildly depending on who you ask. As these lawn and landscaping contractors did, it is worth surveying others in your industry or area of expertise. Ultimately, the choice to become BBB accredited is yours, and accreditation is not required to have a rating on the BBB website. Before making the decision, consider multiple factors, such as how much the annual subscription will cost, who your target demographic is, and how significant your online presence is.