Many businesses boast “A” ratings by the lauded Better Business Bureau (BBB) with pride. A high number of these businesses that have “no business” getting ratings higher than failing, states CNN Money. With ongoing federal lawsuits, misleading claims, and thousands of dollars towards memberships, these A- or higher rated businesses have government regulations yet tout their BBB ratings. How can this be?

Here’s a look at how they operate:

The BBB relies on paying members for the majority of their revenue. As uncovered in an expose by ABC News and CNN Money, the organization says that trustworthy companies can become BBB “accredited,” which can cost anywhere from hundreds to more than $10,000 in membership fees each year. But not every business is eligible – before granting membership, the BBB says it does extensive research and has a laundry list of requirements that prospective members must meet, like responding to all customer complaints, advertising honestly and maintaining ant least a BB rating. In return, members can advertise their rating and logo and receive free dispute resolution. However, many put out customers find the favor goes towards the paying members, rather than fairly resolving the case for the paying customer.

Some examples of questionable grading by the BBB:

  • A non-existent sushi restaurant in California received an “A” grade by paying the $425 fee set by the BBB. The “restaurant” was a cover in an experiment to show that the BBB takes payments for ratings.
  • The same group created a listing for the terrorist militant group named Hamas, which received an “A-” rating. The BBB called this a “mistake” and shut down the Los Angeles bureau, which to date has not been reopened.
  • Celebrity chef Woflgang Puck received an “F” grade for not paying a membership fee.
  • Small business owner “Liz’s Antiques” in Los Angeles had a “C” rating, which changed overnight to an “A” when they paid their fee. A recorded phone conversation with the BBB demonstrates how a timely payment would render their grade moving up.
  • A white supremacist neo-Nazi group “Stormfront” received an “A+” rating.
  • The Boston Ritz-Carlton received an “F” rating after 2 customer complaints among 1 million ratings. The Ritz-Carlton is not a paying member.
  • Foley’s Collision Center of Worcester, Massachusetts received an “A+” rating despite numerous consumer complaints. The company was in fact committing insurance fraud and had kept a customer’s car in pieces after receiving insurance checks. The BBB failed to report the negligence of work to the Attorney General’s Office, which oversees auto body repair shops.
  • A small pest control company in SAn Diego’s “A+” rating fell to an “F” due to a single customer complaint, which the owner was never notified about.
  • AmeriFreight had an “A+” grade despite being charged by the FTC for failing to disclose to customers that it was paying for positive online reviews.
  • The Tulsa, Oklahoma BBB fired its COO after he embezzled over $1 million during his 16-year career. The lawsuit claims he illegally used funds to pay for personal expenses to support a gambling habit.

The list goes on for small and large businesses who’ve been subject to the changing whims of the BBB and their unfavorable ways of doing fair and honest business. At the same time, some of the nation’s largest and most-respected companies (Microsoft, Starbucks) won’t pay for membership and are some of the lowest-rating companies on the BBB list.

Can the BBB be trusted?

Those looking to get assistance from the BBB find their complaints are being ignored in favor of the companies that are paying members. In 2010, the Connecticut Attorney General Richard Blumenthal compared the BBB to a “pay to play” scheme.

“Right now, this rating system is really unworthy of consumer trust or confidence,” said Blumenthal in an interview broadcast in the ABC News Investigation 20/20.

“I think the Better Business Bureau changed course and lost its way by adopting a system of pay to play that maybe enhanced its revenues but also greatly diminished its credibility and honesty,” said Attorney General Blumenthal, who was elected to the United States Senate from Connecticut. “It’s very troubling and it could be illegal because the failure to disclose to consumers could well be deceptive and misleading,” he added.

A copy of his letter can be found here:

Consumers are now becoming aware of these routines and realize that BBB ratings are almost entirely unreliable. It makes sense then, for those looking into the overall health of a business, to look beyond what was once considered the only source of information on customer satisfaction.

Additional sources:

For our take on the Better Business Bureau, visit the ScamSites BBB Review page.