BETTER BUSINESS BUREAU

Popularly known as consumer advocates, Better Business Bureaus (BBBs) are private, nonprofit membership organizations that attempt to resolve consumer complaints with businesses. They also publish consumer protection warnings and histories of unresolved complaints against companies. BBB member companies must meet certain requirements and agree to work with their local bureaus to resolve consumer disputes; however, BBBs issue complaint reports on both members and nonmembers.

Some 135 regional BBBs in the United States are affiliated with the Council of Better Business Bureaus, the national umbrella organization based in Arlington, Virginia. The entire U.S. organization consists of 250,000 member companies. The BBB system is supported through membership dues paid by these companies.

The functions and history of BBBs remain vague in the minds of most Americans. A popular belief, for instance, is that a BBB crackdown will force a disreputable retailer out of business. That's false; a Better Business Bureau has no legal powers. Nor do they give legal advice, assist in breaking legal contracts, make collections, or give credit information.

Instead, BBBs collect and disseminate information about companies based on unanswered questions or unsettled complaints. In this respect, the BBB serves as a clearinghouse for consumer complaints. The bureau also provides buyer/seller mediation and arbitration services and monitors advertising and selling practices.

Occasionally, BBBs have themselves been affected by negative publicity and even member attrition. In the 1990s a number of regional BBBs reported declines in membership and the loss of a few high-profile businesses from their ranks. Unhappily for the BBB, one of its own branches (South Florida) also became insolvent and closed in 1997, leaving hundreds of thousands of dollars of bad debt.

HISTORICAL DEVELOPMENT

The advertising watchdog aspect of BBBs reaches back to the very beginning of the organization. As far back as 1915, a BBB prototype group, the National Vigilante Commission, issued a report that stated in part, "There is a threefold responsibility for eliminating objectionable advertising. First, the advertiser; second, the writer of the advertising (especially the agencies); and third, the medium which disseminates the advertising … The media are rapidly realizing that it is to their own selfish interest to have public confidence in their advertising pages."

By the early 1920s, the Associated Advertising Clubs of the World took a major step toward the development of the modern BBB with its book Truth in Advertising — The Better Business Bureau Movement to Protect Reader Confidence. Back then, there were 32 BBB offices operating from coast to coast. Today, the bureaus number about 175, with dues-paying members in all walks of business handling some 11 million consumer questions yearly.

MEMBERSHIP

Many businesses of all sizes, particularly those which deal directly with consumers, seek membership in a BBB organization because of consumers' positive association with the BBB. Large corporations may become national members, but the overwhelming majority of BBB members are registered locally. Membership is often considered a stamp of reputability and legitimacy. Although the purpose of the BBB is ostensibly to be impartial to consumers, members, and nonmembers alike, some believe that membership in the BBB can actually reduce the likelihood of adverse information about the company being published by a BBB. In some cases, members also enjoy the privilege of displaying the BBB logo in their advertising, including on some Internet sites, which can promote sales to wary consumers.

Although they differ regionally, some of the minimum membership requirements include the following:

1. Businesses (or a direct predecessor or parent company) generally must have been in operation for at least six months.
2. When professional or governmental certification is required in their line of business, members must prove they are fully licensed or accredited in their fields.
3. Members must agree to answer all complaints in a timely manner and work to resolve them.
4. They must accept BBB arbitration decisions if they agree to participate in arbitration.
5. They must abide by the BBB's advertising and selling rules.
6. They must not be involved in any government investigation or litigation that substantially implicates their customer relations practices in a negative way.

To maintain membership, beyond observing the rules, companies must pay dues, which vary with the company's size. If a member breaks the rules, its membership can be suspended or revoked.

COMPLAINT RECORDS AND PROCESS

According to BBB statistics, the highest number of business-related consumer complaints are in the category of home improvement services, with general service and ordered-product businesses running second and third. Complaints against vehicle dealers and auto-repair shops round out the top five. In a separate category, the BBB also keeps an eye on charitable organizations and other groups that seek donations. It is with the BBB's help that well-publicized reports of misuse of charitable funds was made available in recent years, leading to widespread reform efforts.

Consumers generally must submit written complaints to the BBB for the region in which the offending business operates. The bureau then presents a formal complaint to the company involved. This process differs somewhat based on whether the company is a member. If a consumer has retained a lawyer to help resolve the dispute or to sue a member company, the BBB may not accept the complaint at all. After the BBB submits a complaint to a business, if the offending company doesn't respond to BBB contact, mediation, or arbitration efforts, a file is created. This negative information may be released publicly, or, in some cases, may be referred to a law enforcement agency. Typically, BBB complaint records, known as "reliability reports," cover the three most recent years, although BBB records also maintain historical data such as when the company was founded.