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Trina,
I would like to share something with you. I never use the BBB.
The Better Business Bureau is a business.
You may have to repeat this truth over and over to yourself
until it sinks in. But it IS true.
No, the Better Business Bureau is not a U. S. government watchdog.
No, the Better Business Bureau is not a benevolent not-for-profit
agency who protect ordinary citizens against fraud and lies.
No, the Better Business Bureau is not interested in accurately
reporting information on companies that aren't members.
Again,
the Better Business Bureau is a company that thrives on
membership dues. Period.
Membership dues are $350.00. If you join you will get favorable
mention from the Better Business Bureau. If you decline to join, the
implied message from the Better Business Bureau is that unfavorable
consequences may be suffered by your business. Liberty League International did
not join for two reasons. Number one, the lack of integrity of the BBB and secondly
they wanted to place us under the classification of MLM, which we're not.
I'm not much on threats and I choose to join organizations
because of a perceived, inherent value to me. If the Better Business
Bureau doesn't personally do business with me they really have no clue
how I run my business or how I serve my customers. How could the BBB
even comment on my business should anyone contact them? My suggestion;
go to Dun & Bradstreet and you can pay for an accurate report.
BETTER BUSINESS BUREAUS ARE A BUST
by Leslie M, Marable
Money Magazine
October 1995
p. 106
You need to find a reputable moving company fast. Or maybe the car
muffler you just had installed went, south while you were headed north
and when you dialed the repair shop where you got it, a recording said
"You have reached a number that has been disconnected." Instinctively,
your next call is to the Better Business Bureau. Nobody, except maybe
your own mother, is more likely to have your best interests at heart,
right?
After all, when pollster Roper Starch recently asked 2,000 adults
where they would seek help if they had a problem with a major
purchase, the No.1 choice (40%) was the BBB. Partly because of that
trust, more than 11 million consumers turned to the nation's 138 BBBs
in 1994 to file complaints or seek information, according to the
25-year-old Council of Better Business Bureaus (CBBB, the parent
organization in Arlington, VA.
But hold the phone.
A four-month MONEY investigation reveals that far from being a
protector of the nation's consumers, the CBBB and the local bureaus
are guilty of behavior that we feel deserves an unsatisfactory rating.
To determine how well the BBB serves its customers. MONEY reporters
checked out bureaus in the country's 20 largest metropolitan areas (to
see how they stacked up, see the table on page 108) Posing as
conscientious consumers, the reporters asked for information on five
types of companies that get among the highest number of inquires and
complaints, according to the CBBB: home improvement firms, car
dealers, auto repair shops, movers and home furnishings retailers.
In the course of inquiring about scores of companies across the
country, we discovered that many of the nation's Better Business
Bureaus:
--Employ questionable business practices, such as charging for
providing no information, that could prevent them from becoming
members in good standing of their own organization.
--Frequently care as much about generating new sources of revenue as
about protecting consumers to the point of launching moneymaking 900
phone numbers.
--Provide often outdated information on such a limited number of local
companies that you may need to ask about four firms to get comments
about one.
--Sometimes fail to give unsatisfactory ratings to companies plagued
by a history of serious complaints.
--And lack the clout to motivate unethical companies to shape up even
when the evidence is incontrovertible.
To understand why the why the BBBs are far less effective than they
are purported to be, you need to understand how they operate.
A popular misconceptions that Better Business Bureaus are local
government agencies. They're not. They actually began life 83 years
ago as citizens' vigilance committees formed to warn the public about
shady companies false advertising claims. Today they are private,
independently operated, nonprofit corporations designed to protect
consumers from bad business practices of all kinds.
Each local bureau has its own CEO and unpaid board of directors, who
determine what services will be offered and what dues members are
charged--which range from $120 a year to $5,000.00 or more. The BBBs'
main product is information: They keep files on all their members and
create files for any company that a consumer inquires or complains
about. Most BBBs assign ratings of satisfactory or unsatisfactory to
most companies on file, based on their record of complaints. But
though most bureaus offer formal arbitration and mediation services,
BBBs are not enforcement agencies and cannot order an uncooperative
company to award a refund or even acknowledge a complaint.
The CBBB makes local bureaus sign written agreements on bureau conduct
that lay out guidelines for resolving internal disputes, paying dues
and writing company reports. However, all the umbrella group truly
controls is how the bureaus use the BBB trademark name, which it owns.
The CBBB's lack of clout leaves local BBBs free to operate like
fiefdoms, doing pretty much what they want with little oversight.
One objective of James Bast, the 59-year old formal CEO of Presstek, a
printing equipment supplier, who took over as chief executive officer
CBBB in June 1994, is to address "problems within the bureau system."
In particular, he wants to standardize the way bureaus collect and
report date, by upgrading their computer systems.
The umbrella CBBB, which is perhaps best known as an effective
watchdog of the nation's charities, is largely supported by its 350
national blue-chip members, such as AT&T and Xerox. These companies
pay dues of as much as $80,000 a year to support the CBBB's promotion
of ethical business practices." For instance, the CBBB monitors
national advertising and alerts consumers to misleading claims. Some
240,000 companies pay their local BBB annual dues and the local
chapter in turn pays dues to the CBBB.
In all, the CBBB collects substantial revenue--more than $13.6 million
last year. some $3 million comes from the local BBBs and national
business members. The remaining $10.6 million flows from fees for
educational brochures books, sales training and mediation services.
Its costliest program a free arbitration service known as BBB Autoline
(annual cost: $8.4 million) for drivers stuck with lemons, is financed
primarily by General Motors.
Where does all that tax-exempt money go? In 1994: 9% went to pay
salaries, pensions and insurance for the top 11 officials ($1.3
million), office rent ($700,000) and travel ($660,000). CEO Bast, who
officially took over in June of 1994, was actually put on the payroll
in April and got $151,000 for the year. The outgoing CEO, James
McIIhenny, 67, who formally retired in October after seven years,
cleaned up too, earning $175,000 for six months' work as CEO and four
months as a "consultant." Those salaries are substantially higher than
the $114,814 that CEOs at comparable non-profit earn, according to
Abbott Langer & Associates, publisher of industry compensation surveys
in Crete, Ill. Bast responds that he and other officers "are
reasonably compensated" for the work they do.
To take a close look at how the CBBB and the local bureaus operate, we
randomly picked companies in the five critical industries mentioned
earlier from telephone books, then called the BBB several times,
asking for information on those companies. We made calls until we
received a report on a company from each category. We collected a
total of 100 company reports and then interviewed executives at 69 of
the profiled firms.
Here's what we learned:
FOR THE PAST TWO YEARS, 12 BUREAUS HAVE BEEN USING 900 TOLL NUMBERS
AND CHARGING FEES FOR THE KIND OF INFORMATION THAT THEY USED TO
PROVIDE FREE.
Worse, some callers get charged even when bureaus don't have
information on the company they are inquiring about. As part of an
experiment that ended in mid-September, 12 bureaus (Buffalo, Miami and
Syracuse, in addition to those listed in our table) have been
accepting consumer inquires and complaints on 24-hour 900 lines (95
cents a minute) or by billing a major credit card (typically $3.80 for
three inquires). In July, a CBBB committee overseeing the program
recommended that it be continued, and that all local bureaus be given
the option of charging fees for services. Until a final decision is
reached by the national board, the bureaus who participated in the
experiment will continue charging fees.
Although not illegal or even unethical, these new fund-raising tactics
have upset some consumer advocates for a couple of reasons. Clark
Howard, a respected radio talk show host in Atlanta is one who
questions why BBBs would resort to 900 numbers, the very money-making
tactic often employed by rip-off artists. "Can you imagine what it's
like to complain to the BBB on a 900 number about a 900 number scam?"
he asks. "And to have a pay for that call?" CBBB spokesman Holly
Cherico says consumers aren't getting rooked. "It's wrong to imply
that every 900 number is a scam," she says. "More an more reputable
companies, like Microsoft and Dow Jones, have them. I think it's the
marketing trend of the future."
Perhaps even more troubling: Though the fee-for-service policy is to
refund your money for a call if no information is available, five
offices we tested charged MONEY reporters for their calls even when
they couldn't provide reports on the companies we mentioned. Says Gene
DeSantis, a consumer law instructor at Syracuse University: "To charge
a fee for a service when there's no information available borders on
deceptive telemarketing practices."
Cherico says that if you phone a fee-charging BBB, the operator is
supposed to offer a refund to your account if there's no information.
If the operator doesn't offer to do this, she says you should ask for
it. BBBs have the ability to zero out charges before they are billed
to your credit card or phone company. If you've already hung up or got
a tape instead of an operator, get in touch with the CBBB or call your
local phone company for a credit.
MOST BBBs HAVE INFORMATION ON FILE FOR JUST ONE IN FOUR LOCAL COMPANIES.
In the worst case, out Los Angeles correspondent was forced to name 13
home improvements companies, eight auto repair shops and six home
furnishing stores before finding one in each category that the local
BBB had any information about. The effort cost him $13.3 in phone
bills.
Why the dearth of information? Partly because so few businesses are
BBB members. Atlanta is typical, with about 26% membership. According
to owners of 19 companies we canvassed, more firms don't belong to the
BBB because they believe the dues are exorbitant, the membership
drives are pushy or the services they receive in return are of little
value. Says Robert Murata, president of the Honda Clinic, an auto
repair shop in Chicago, who canceled his BBB membership last May: "If
I felt the money would do me or the consumer any good, I would have
renewed."
You'll find a BBB file for a nonmember company only if another
consumer has called or written in with an inquiry or complaint. So if
a BBB staffer tells you he has no record of complaints against a
particular company, you should not assume that company is reputable.
It may just be that it's not a BBB member or that no one has yet
called the bureau to check it out or denounce it.
BBB OPERATORS ARE SOMETIMES UNCOOPERATIVE, AND MOST BBB COMPANY
REPORTS AREN'T WORTH THE 32 cent POSTAGE STAMP THEY'RE MAILED WITH.
In 13 of 100 cases, operators were misinformed about bureau policy,
and therefore refused to mail reports to our testers even though the
bureau's stated policy called for them to do it. The Philadelphia and
Pittsburgh bureaus fumbled the most, with different operators within
the same bureaus contradicting one another about their policy on
providing reports. At both bureaus we were told by some operators that
we couldn't get any reports in the mail, while other operators told us
we could (The latter answer was correct.)
The reports we did receive from most BBB's were usually brief--just
one page--and of minimal value. A full 80% gave little more than basic
information such as a company's address, its BBB membership status and
a rating--that is satisfactory or unsatisfactory. In some cases--for
example, if a company hasn't yet responded to a complaint--the BBB
refrains from assigning any rating. The ratings, based on the number
of complaints a company has received and how it responds, are vague at
best. At worst, they are dubious.
For instance, a report we got from the Detroit BBB gave a satisfactory
rating to Gardner White furniture, a home furnishings retailer. A call
by MONEY to the Michigan attorney general's office, however, revealed
that the company had received 19 complaints from 1992 to 1994, most of
them reporting its alleged misleading sales tactics. Carmel Weems,
Detroit's BBB spokesman, admits the company isn't fault-free. "We've
had 64 complaints within the past three years against this company"
she says. "But they received a satisfactory rating because they
responded well to each complaint."
There are notable exceptions among BBBs, however. The reports of the
Boston and New York City outfits are standouts, for example. Boston's
reports list a company's return and exchange policy, customer service
contact and the addresses of branch offices. The New York BBB breaks
out the number of complaints for each of the past three years, plus
tells you the nature and status of complaints a company received.
Reports from both bureaus also list contractors' state licensing
agencies whether the company meets state minimum proficiency
standards. In addition, Boston and New York refer callers to
appropriate regulatory agencies for help in resolving problems.
BBBs LACK CLOUT.
Several of the company owners we spoke with admitted that they pay
much more attention to a consumer complaint filed with the state
attorney general's office than with one reported to the BBB. The
reason: The BBB has no enforcement powers and can't take legal action
on a consumer's behalf. Says Honda clinic's Robert Murata: "Most
businesses don't look at the BBB as being a big threat. The state
attorney general's office--now they're a big threat."
In short, BBBs are a bust.
Sincerely,
Michael & Arni Berry
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