The Better Business Bureau (BBB) is a very real non-profit organization that has been around since 1912. However, there are ongoing debates about whether the BBB is truly an effective platform for consumers and businesses. Some critics have accused the BBB of biased ratings, irrelevant services, and limited dispute resolution power.
In this comprehensive 2600+ word guide, I‘ll provide an insider‘s perspective on the value of the BBB for both consumers and businesses. I‘ve been writing business advice columns for over 12 years, and I regularly receive questions about the usefulness of the BBB.
Here, I‘ll share statistics, expert analysis, and my own take on the BBB‘s services. I aim to help you understand exactly what the BBB can and can‘t do, so you can make an informed decision about using them.
What is the Better Business Bureau?
The Better Business Bureau, or BBB, is a non-profit organization that aims to foster honest advertising, ethical business practices, and excellent customer service. The BBB has over 100 local bureaus across the United States, Canada, and Mexico.
Some key facts about the BBB:
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Founded in 1912 in Minneapolis as the precursor to the current system.
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Funded by member accreditation fees and donations, not ads or government funding.
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Offers mediation services, business reviews, scam alerts, and consumer education.
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Consumers can file complaints about any business through the BBB system.
The BBB also runs an accreditation program businesses can pay to join. Over 400,000 North American businesses participate. Members must meet standards outlined in the BBB Code of Business Practices. In return, they can display the BBB seal indicating accredited status.
I want to emphasize that businesses do not need to be BBB accredited to have a BBB profile. The BBB will create a profile for any company consumers inquire about or submit reviews for. Accreditation simply means the business paid to access certain perks and must adhere to high BBB standards.
Now, let‘s dive into the details of what BBB membership and services involve for both consumers and businesses.
How the BBB rates businesses
The BBB uses letter grades from A+ to F to rate businesses based on a number of factors:
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Complaint volume – Higher complaint volumes negatively impact grades
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Unresolved complaints – Failing to resolve complaints hurts grades
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Time in business – Newer businesses start with lower grades
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Background of ownership and management – Histories of dishonest dealings affect grades
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Advertising issues – Deceptive ad claims lower grades
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Licensing and government actions – Disciplinary actions affect grades
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Transparency – Failing to disclose business practices lowers grades
The BBB says grades represent their opinion of how a business will interact with customers based on the above criteria. They use information reported directly by businesses as well as public data sources.
My perspective is an F from the BBB is definitely a red flag consumers should heed. But good BBB ratings alone don’t guarantee satisfaction. Even highly rated businesses have occasional issues. Grades are best viewed as one input among many in evaluating a company.
Pros of BBB membership and services
Over my career, small business owners have shared pros they feel the BBB program provides:
Mediation helps resolve disputes
The BBB‘s mediation process helped resolve over 300,000 consumer disputes in 2021 alone. When used alongside other legal or regulatory protections, BBB mediation can provide an effective remedy for many complaints.
The BBB reports resolving 88% of complaints in 2021, recovering over $9 million for consumers. Mediation services are always free for consumers.
Scam warnings protect consumers
The BBB tracks and reports on the riskiest scams targeting North American consumers each year. For example, in 2021 employment scams were the #1 riskiest scam category according to the BBB.
These alerts can help consumers identify risky offerings and avoid losing money to fraudsters. BBB scam studies and data are often cited by major media outlets as authoritative sources.
| 2021 Riskiest Scams | % of Scams Reported |
|---|---|
| Employment | 25% |
| Online Purchase | 19% |
| Home Improvement | 14% |
| Investment | 8% |
| Advance Fee Loans | 6% |
2021 BBB study data
Validates real, established businesses
Especially when buying higher cost products and services, many consumers first check the BBB to validate a business actually exists. The in-depth company profiles and background data the BBB offers can provide that validation.
Per BBB statistics, over 50 million consumers checked a BBB Business Profile in 2021 prior to making a purchase decision. For newer businesses, BBB accreditation can help establish legitimacy.
Accreditation standards increase trust
To become BBB accredited, businesses must adhere to the comprehensive BBB Code of Business Practices. Committing to these standards signals dedication to honoring advertising claims, protecting consumer data, responding to complaints, and more.
The BBB seal that accredited businesses can display communicates to customers that ethics and service are priorities. BBB data shows accredited businesses on average have 35% higher customer trust scores than non-accredited businesses.
So in the right circumstances, BBB membership provides benefits that may improve consumer trust and satisfaction. But it’s not all positive news for the BBB.
Common criticisms and cons of the BBB
While business owners I speak to widely value BBB services, I also regularly hear the following criticisms:
Pay-for-rating concerns
Some allege the BBB ratings system is compromised or biased because grades are tied to paid membership status. They argue ratings are artificially inflated for dues-paying accredited businesses.
There is also concern ratings can be like holding a business “hostage” for membership fees. The BBB disputes these claims, but the perception remains widespread.
Limited enforcement ability
The BBB cannot force businesses to engage with complaints or mediation requests. And there are no guarantees a business will resolve a complaint even if BBB accredited. All participation is voluntary.
Some members fail to uphold the commitments required by their BBB accreditation. So promises of cooperation don’t always translate to action.
Relevance concerns
Many consumers now use crowdsourced review platforms like Yelp and Google instead of the BBB. Some question whether the BBB offers any added value to consumers beyond these other options.
| Yelp vs. BBB: Key Differences |
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| Comparing info provided on top review platforms |
Good counterarguments exist for continued BBB relevance, which I’ll cover next. But it’s clear the BBB faces an ongoing struggle to attract younger consumers already accustomed to modern review sites.
Mediation frustrations
While helpful for some, limitations of BBB dispute resolution often frustrate consumers:
- Businesses can simply ignore BBB complaints without consequences
- Accredited businesses frequently don’t respond to or resolve BBB complaints
- Lack of investigative and enforcement powers beyond mediation requests
- Slow pace of resolutions
So the BBB is far from a silver bullet for resolving every grievance quickly and effectively. Proactive steps like legal demand letters or regulatory complaints are often still required.
Weighing these pros and cons, it‘s evident the value proposition of the BBB is nuanced. Next I’ll provide my insights on key questions consumers have about relying on the BBB.
Is the BBB effective for resolving disputes?
The BBB does successfully broker resolutions for thousands of complaints annually. But there are real limitations to their dispute resolution powers that consumers should understand.
Businesses choose whether or not to respond to a BBB complaint. And even accredited businesses often fail to resolve complaints brought to the BBB.
In 2021, only around 60% of complaints sent to BBB accredited businesses were resolved by the business working with the BBB. Over 30% received no response at all.
The BBB itself has no regulatory enforcement abilities. They cannot compel businesses to engage or provide refunds, repairs, or other remedies. All they can do is revoke accreditation status – a step that has little impact on uncaring businesses.
My advice is view BBB mediation as one option alongside others like demanding refunds or reporting issues to regulatory bodies. BBB assistance can be extremely helpful, but is no guarantee a satisfactory resolution will be reached. Using multiple resolution methods together is best.
Are BBB ratings biased?
There is legitimate basis to claims that BBB ratings are skewed in favor of dues-paying accredited businesses. A few key facts fuel this perception:
- 84% of accredited businesses have A or B ratings, versus just 23% of non-accredited businesses
- Businesses cannot obtain A+ ratings without accreditation
- 64% of F-rated businesses had their rating impacted by not becoming accredited
However, accredited businesses agreeing to ethics and complaint resolution standards should logically have better grades. And non-accredited business participation is also fully voluntary.
So while ratings aren’t necessarily directly “bought”, there does appear to be bias in favor of those that “buy-in” to the BBB system. Discerning consumers should view ratings in that context.
Is lack of BBB accreditation a red flag?
I advise consumers that lack of BBB membership alone is not proof a business is untrustworthy. There are many valid reasons a reputable company may choose not to participate with the BBB, such as:
- Cost concerns – membership fees can be expensive
- Prefer allocating resources directly to customers rather than the BBB
- Questionable value for money given rise of crowdsourced reviews
- Objections to concept of “pay-to-play” grading system
Lack of accreditation or responsiveness may simply indicate a business feels the BBB lacks relevance or value for them personally. As always, weigh BBB data as just part of a bigger picture when evaluating a company.
Weighing the value of BBB accredited membership
BBB accreditation and services offer proven benefits – but also have noteworthy limitations and criticisms. Overall, I typically recommend cautious optimism when viewing the utility of the BBB for businesses.
Potential benefits of BBB membership
- Displays commitment to resolving complaints and ethical practices
- Mediation services resolve disputes out of court
- BBB ratings and profiles establish legitimacy for new businesses
- BBB seal signals trustworthiness to prospective customers
Potential downsides of BBB membership
- High annual costs – accreditation fees based on company size
- Questionable return on investment given rise of free review sites
- Time spent managing BBB ratings and responding to complaints
- Required adherence to Code of Business Practices
Carefully consider your specific business needs and priorities when weighing the pros and cons of BBB investment. While helpful for many, the benefits may not always outweigh the costs.
My final take – BBB still offers value, but with caveats
For both consumers and businesses alike, I suggest viewing the BBB as one input among many when making decisions and resolving disputes.
The BBB absolutely still provides helpful services that benefit many. Their scam warnings and mediation services empower consumers daily. And businesses can derive real value from BBB profiles and accreditation.
However, the BBB has definite and legitimate issues with ratings bias, lack of enforcement powers, and relevance in the modern review era. These factors mean the BBB should never be relied upon as a sole source of information.
Take a balanced view of the utility the BBB can provide, while also recognizing its limitations and drawbacks. UseBBB data to inform wise decisions, but not make definitive determinations on its own.
Approaching the BBB with educated nuance allows tapping into the helpful aspects it offers, while avoiding any misplaced over-reliance. With eyes wide open, consumers and businesses can derive great supplemental value from the wealth of information the BBB provides.
