This article has been reviewed by licensed insurance industry expert Moshe Fishman.
The Better Business Bureau (BBB) has always been a reliable resource for evaluating the trustworthiness of businesses. When shopping for a new car or hiring a plumber, checking with the BBB can provide an extra layer of confidence that the company you’re about to do business with is dependable.
But just how trustworthy is the BBB’s accreditation system? Learning how the BBB evaluates businesses and understanding BBB accreditation standards can help consumers determine its merits and limitations.
Established in 1912, the BBB is a nonprofit organization with chapters throughout the US, Canada, and Mexico. According to the bureau’s mission statement, its goal is to “be the leader in advancing marketplace trust” by “setting standards for marketplace trust, encouraging and supporting best practices by engaging with and educating consumers and businesses, and calling out and addressing substandard marketplace behavior.”
The BBB aims to fulfill its mission statement in two ways: by rating businesses based on their reliability and performance and by acting as a facilitator for the resolution of consumer complaints.
The Better Business Bureau lists more than five million businesses on the BBB website. To qualify for BBB accreditation, a business must strive to meet eight specific standards. These standards include:
Each business is assigned a rating or “grade,” ranging from A+ to F. A company’s grade is based on how they score on thirteen specific factors with a total possible score of 100. These factors are related to both factual information and consumer feedback such as:
Businesses with BBB accreditation have completed a number of steps and been successfully evaluated by the BBB. They’ve applied for BBB accreditation and submitted records about their business including a copy of their business license and paid the BBB’s accreditation fee.
The BBB reviews these documents along with public records to determine the trustworthiness and reliability of the business. Then the letter grade is assigned to the business. According to the BBB website, specific customer reviews aren’t used when calculating a business’s score.
A business must score at least a “B” rating to earn BBB accreditation. It must also maintain its grade to keep its accreditation. Businesses that have been accredited are able to display the “BBB Accredited” logo on their properties and websites. According to the BBB website, 85% of customers feel confident about doing business with a company that has earned BBB accreditation. It is likely to have a positive influence on potential customers.
Each BBB chapter has a fee structure for businesses in that area. The fee each business pays is dependent on several factors including the number of company employees and locations. Fees range from hundreds to thousands of dollars based on these factors.
Consumers can find information on businesses that are accredited and non-accredited on the BBB website. Companies can choose to become accredited which requires that they pay accreditation fees and apply for accreditation. The accredited status is displayed prominently for businesses that have attained accredited status on the BBB website.
Revenue largely comes from accredited businesses through the accreditation fees. Using accreditation in ads by member organizations, for example, incurs a charge by the bureau. If you are a nonaccredited business you can respond to a complaint on a voluntary basis, which will improve your BBB rating.
The BBB is well known for its ability to act as a facilitator for disputes between consumers and businesses. Businesses that have earned accreditation must respond to consumer complaints in a timely manner to maintain their accreditation. Once a consumer files a complaint, the business must submit a response within fourteen calendar days.
Should an initial request to the company not solicit a response, the BBB will then send a second notice. The BBB informs consumers when the business responds to the complaint or if the business hasn’t responded. Complaint outcomes will end up in one of five potential buckets: Answered, Unanswered, Resolved, Unresolved, or Not Pursuable.
Although the BBB recommends that consumers start by contacting the company directly for resolution, this isn’t a requirement. Complainants have a year to file a complaint from the initiating incident although extenuating circumstances may be considered. To file a complaint with the BBB, it must include the following information and meet certain criteria:
When writing up a complaint, it’s important for consumers to maintain a degree of courtesy and professionalism in their account of events. The BBB doesn’t tolerate abusive language in complaints. Although the situation is one you feel strongly about, it’s best to leave emotion out of it and convey the details matter-of-factly.
Because the BBB receives revenue from the businesses it grades, some have argued that this implies an inherent conflict of interest. However, the BBB maintains that accreditation and membership fees do not affect the rating that the BBB gives to a particular business.
Some critics and watchdog groups also claim that the BBB doesn’t monitor non-accredited businesses as closely as those that are accredited. According to the bureau’s website, the BBB “does not routinely check required competency licensing and government actions for businesses that do not seek BBB accreditation.”
A common complaint among consumers is that complaints can be closed and marked as resolved even when the consumer is dissatisfied with the company's response. If the BBB determines that the company has made reasonable resolution efforts, then the mediation process is closed, even if the consumer isn’t satisfied with the outcome.
The Bottom Line
Consumers have several options at their disposal when reviewing a business. Google, Yelp, and social media reviews can help a consumer determine the quality and trustworthiness of a business and its business practices. But despite this wide availability of sources, consumers still hold a lot of name-brand loyalty to the Better Business Bureau.
A Facebook review only goes so far when trying to root out unscrupulous or poorly rated businesses. For consumers, the best solution is to utilize a wide range of sources, especially when making large purchases or hiring for expensive jobs.
5 Minute Insure is proud to be accredited with the Better Business Bureau. Learn more.