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Can You Trust the Better Business Bureau?

The organization's new evaluation system gets a failing grade from many

George Grillo swears he isn't a bad contractor. "I could literally give you hundreds of references of jobs that came out beautiful," says Grillo, whose At Home Remodeling in East Hartford, Connecticut, got a failing grade of F from the Better Business Bureau in 2010 for not responding to a customer complaint. Not long after, he folded the company. "I don't want to have a pissing contest with the BBB, because my livelihood really depends on them," he says, " but to put me at an F — it's just wrong, it's infuriating, and it made a huge difference."

The Better Business Bureau — a private, nonprofit group in its 99th year — is the best-known complaint desk and referral service in the United States. Last year consumers turned to the BBB about a million times for help when they felt cheated by a contractor, retailer, or service provider. And folks checked with the BBB 65 million times to see if a company is trustworthy. Over the past two years, though, the BBB has been dealing with a new kind of complaint: that its own practices are slipshod, biased, and deceptive.

After rating companies as either satisfactory or unsatisfactory for decades, the BBB changed its approach in 2009, instituting a complex point system that results, as in school, in a single grade of A+ through F for each business. Companies that get a B or better — and that pay membership dues of a few hundred to several thousand dollars a year — are "BBB accredited" and can display its torch insignia.

"The goal [of grading] was to provide more information to aid consumers in making purchasing decisions," says Alison Southwick, spokesperson for the Council of Better Business Bureaus, which oversees the 122 chapters in the United States and Canada. "The satisfactory-unsatisfactory way was very black-and-white."

But critics say the BBB isn't equipped to award grades based on its extensive standards: 17 criteria that cover everything from licensing to truth in advertising. "The Better Business Bureau doesn't have the staff to properly evaluate businesses," says George Gombossy, editor and publisher of CTWatchdog.com, a consumer website in Connecticut. "There are 100,000 businesses in Connecticut. I think it's a travesty that they went in this direction."

Critics also say the new system favors BBB-member businesses. Unlike websites such as Angie's List, ConsumerAffairs.com, and Ripoff Report, the BBB doesn't actually publish consumers' complaints. What you'll find in its "reliability reports" on businesses is a summary: mostly tallies of complaints by category and whether they were resolved or merely "administratively closed." This opaque approach makes the grades all the more prominent — and since the BBB rewards members with a half-grade boost (such as from a B+ to an A – ), it has opened the BBB to charges of pressuring businesses to "pay to play."

The BBB's Southwick defends giving higher grades to accredited businesses. "We believe that when businesses make the effort and meet our standards, that should be worth something," she says. Companies in Connecticut, Missouri, and Nevada, however, have started court actions to halt what they describe as biased evaluations, and Connecticut's attorney general, Richard Blumenthal, has been leaning on the local BBB to change its scoring policy, suggesting that any company should get points for committing to BBB standards, whether or not it joins a chapter.

"Any suggestion or appearance of 'pay-to-play,' " Blumenthal said in a September statement, "threatens to undermine the accuracy and credibility of the BBB's ratings, potentially misleading consumers and unfairly tainting nonmember businesses." (At press time the BBB decided to stop awarding points for accreditation.)

Weeks earlier these dangers were exposed when a California BBB fell for a prank pulled by a BBB gadfly. A business calling itself Hamas, just like the terrorist organization, received an A – rating after it paid $425 for accreditation. Only then was this Hamas revealed as a hoax. So what exactly had the BBB accredited?

"We do have a procedure to screen applications," says William G. Mitchell, who heads southern California's BBB chapter. "The idea is that, based on the information available, we want to be able to express an opinion on the reliability of that company." Since the BBB focuses on resolving complaints against the worst businesses, he adds, a nonexistent business is unlikely to prompt much scrutiny.

And public information on any business can be scant. "The vast majority are not regulated," says Mitchell. "There's no government authority that oversees their operation. They're not licensed by anybody."

But if reviewers lack solid information, then what is an A from the BBB — or any rating on any website — really worth? Most consumer sites let the public make the grades, yet many consumer advocates emphasize that grades in general are not as valuable as customers' comments. ConsumerAffairs.com, an online publisher supported by advertising, posts thousands of consumer comments on businesses — almost all of them critical — but no ratings. "When you start running compliments or asking people to give stars, results are much more easily skewed," says editor in chief Jim Hood.

The BBB is listening to critics. By February it will have redesigned its reliability reports "so they include more information and speak more plainly," Southwick says.

George Grillo, meanwhile, is operating under a different business name and still depending on the BBB even as he gripes about it. "If I was a bad contractor, what are they doing for the public?" he asks. "All I have to do is shut down and open up and I have an A – rating. They're not protecting the homeowner at that point."

Kate Ashford writes about personal finance and health from New York City.

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