What Is Better Business Bureau?
The Better Business Bureau (BBB) is a private, non-profit organization focused on advancing marketplace trust between businesses and consumers. Operating as a crucial component of consumer protection within the North American market, the Better Business Bureau provides services such as business profiles, ratings, and platforms for dispute resolution. Its core mission involves promoting business ethics and fostering fair and honest interactions. The Better Business Bureau aims to help consumers make informed decisions and facilitate amicable solutions when issues arise between buyers and sellers. It functions as a non-profit organization and is not affiliated with any government agency16.
History and Origin
The concept behind the Better Business Bureau originated in the early 20th century as a response to widespread deceptive advertising practices. Frustrated by the lack of integrity in sales and the resulting public distrust, a group of advertising executives and local businesses in 1912 formed the National Vigilance Committee. This committee aimed to self-police the industry, combat malpractice, and establish higher advertising standards. These local organizations eventually evolved into the regional Better Business Bureaus. In its early years, the Better Business Bureau primarily handled complaints and worked to stop scams and fraudulent activities, targeting issues such as bait advertising and overcharging. Over decades, these local bureaus consolidated, leading to the formation of the Council of Better Business Bureaus (CBBB) in 1970, which further solidified the BBB system as a prominent force in self-regulation within the marketplace.
Key Takeaways
- The Better Business Bureau is a non-profit organization dedicated to fostering marketplace trust and ethical business practices.
- It provides business profiles and ratings (A+ to F) based on various factors, including complaint history and responsiveness.
- The BBB offers a platform for consumers to file complaints and facilitates dispute resolution between consumers and businesses.
- Businesses can seek voluntary accreditation by meeting specific standards and paying membership fees, which helps fund the organization.
- Despite its widely recognized role, the Better Business Bureau has faced criticisms regarding its funding model and perceived bias.
Interpreting the Better Business Bureau
The Better Business Bureau assigns ratings to businesses on a scale of A+ to F, which consumers often use as an indicator of a company's reliability and integrity. These ratings consider several factors, including the volume and type of customer complaints filed against the business, how those complaints were resolved, the company's time in business, and its adherence to the BBB's Code of Business Practices. A higher rating generally signifies a company's commitment to resolving customer issues and operating ethically.
When reviewing a Better Business Bureau profile, consumers should look beyond just the letter grade. Details such as the number of complaints, the nature of those complaints, and the company's responses provide a more nuanced understanding. The BBB facilitates various forms of dispute resolution, including mediation and, in some cases, arbitration, aiming for fair outcomes for both parties.
Hypothetical Example
Imagine Sarah is planning to hire a moving company for her upcoming relocation. She wants to ensure she chooses a reputable business to protect her belongings. Sarah starts by searching for local moving companies on the Better Business Bureau website. She finds "Reliable Movers Inc." and sees they have an A+ rating.
Upon clicking their profile, she notices they have received three complaints in the past year, all related to minor scheduling delays. Each complaint shows that Reliable Movers Inc. responded promptly and resolved the issues by offering a small discount or an apology. This transparent display of customer feedback and resolution gives Sarah confidence. She compares this with "Budget Movers," which has a C- rating due to multiple unresolved complaints about damaged goods and uncommunicated fees.
Based on her research on the Better Business Bureau, Sarah decides to hire Reliable Movers Inc. The BBB's detailed customer reviews and complaint history helped her assess the potential risks associated with each service provider and make an informed decision regarding her financial services needs.
Practical Applications
The Better Business Bureau serves several practical applications for both consumers and businesses. For consumers, it acts as a centralized resource to research companies before making purchasing decisions, enabling them to check a business's reputation, read customer reviews, and view complaint histories. The BBB also offers a formal avenue for filing complaints and pursuing dispute resolution when issues arise, offering a non-governmental alternative to legal action. Furthermore, the BBB provides crucial scam alerts and educational materials to help the public identify and avoid fraudulent schemes15.
For businesses, achieving Better Business Bureau accreditation can enhance credibility and demonstrate a commitment to governance and ethical practices. Accredited businesses can display the BBB seal, potentially improving consumer trust and attracting new customers14. The organization also offers guidance and educational resources to help businesses maintain high advertising standards and improve their customer service practices.
Limitations and Criticisms
Despite its widely recognized role in consumer protection, the Better Business Bureau has faced various criticisms. A primary concern revolves around its funding model, as the organization generates significant revenue from accreditation fees paid by businesses it rates. Critics argue that this financial relationship creates a potential conflict of interest, leading to concerns about the BBB's impartiality and transparency12, 13. Some studies have suggested that businesses that pay for accreditation may receive more favorable treatment in terms of complaint resolution, even if their actual performance is similar to non-accredited businesses10, 11.
Another point of contention is the complaint resolution process itself. While the Better Business Bureau aims for fair outcomes, some consumers report dissatisfaction when their complaints are closed even if they are not fully content with the business's response, simply because the BBB determines the company made a "good faith effort"9. The BBB's private self-regulation model, while valuable, means it lacks the legal authority of government agencies to enforce its findings or impose penalties beyond rating adjustments8.
Better Business Bureau vs. Federal Trade Commission
While both the Better Business Bureau and the Federal Trade Commission (FTC) play vital roles in safeguarding consumer interests, their structures, powers, and primary functions differ significantly. The Better Business Bureau is a private, non-profit organization that facilitates voluntary dispute resolution and promotes ethical business practices through ratings and accreditation. It operates without governmental authority, relying on reputation and voluntary compliance to encourage businesses to address consumer complaints7.
In contrast, the Federal Trade Commission is an independent agency of the U.S. government. Its core mission includes enforcing civil antitrust laws and promoting consumer protection. The FTC has legal authority to investigate unfair or deceptive business practices, issue regulations, and bring enforcement actions in federal court against companies that violate consumer protection laws6. Unlike the BBB, the FTC does not offer business ratings or accreditation, nor does it mediate individual consumer complaints in the same direct manner. Instead, it uses consumer reports to identify patterns of fraudulent activity and take broader legal action to protect the public5.
FAQs
Is the Better Business Bureau a government agency?
No, the Better Business Bureau is a private, non-profit organization and is not affiliated with any governmental agency. It operates independently to promote marketplace trust and ethical business practices4.
How does the Better Business Bureau rate businesses?
The Better Business Bureau assigns ratings from A+ to F based on various factors, including a business's complaint history, how it responds to and resolves customer issues, its time in operation, and its adherence to the BBB's standards for business ethics.
What is BBB accreditation?
BBB accreditation is a voluntary status for businesses that meet and agree to uphold the BBB's standards of conduct. Accredited businesses pay an annual fee and can display the BBB seal, indicating their commitment to integrity and consumer satisfaction. Accreditation does not guarantee a specific rating3.
Can the Better Business Bureau force a company to resolve a complaint?
While the Better Business Bureau facilitates dispute resolution between consumers and businesses, it does not have legal enforcement powers. It relies on the business's willingness to cooperate and resolve the issue. However, unresolved complaints can negatively impact a company's BBB rating and public perception2.
Does the Better Business Bureau help with scams?
Yes, the Better Business Bureau actively works to combat scams. It provides scam alerts and warnings through its Scam Tracker tool, which helps consumers identify common fraudulent tactics and report them. This helps the BBB educate the public and track emerging scam trends1.