BBB: Making the Grade

Up until 2009, the Better Business Bureau rated companies as either “satisfactory” or “unsatisfactory.” Since then, it has rated businesses on one of 13 grade levels ranging from A+ to F. To stay Accredited, a business must maintain a B rating and a 66 percent complaint-resolution rate. Companies annually submit for accreditation renewal.

Not surprisingly, this Byzantine rating system has been controversial and a sore point for some businesses. “Anytime an organization rates people, someone is going to feel they aren’t being treated fairly,” says Rodney Davis, CEO of the BBB serving Southeast Florida. 

There was a time when the BBB automatically added four points to a rating score of a business that agreed to go through the organization’s accreditation process. But after being pressured by Connecticut’s attorney general, the BBB changed its policy in 2010, and its highest grade is no longer confined to paying companies.

Davis says his bureau now has more A+ and A businesses that aren’t accredited than are. But some remodelers and contractors to this day remain convinced that a business can’t earn an A+ rating unless it’s accredited and pays BBB an annual fee. 

The current rating system is based on 13 criteria for which different point ranges are assigned. The system is weighted toward how a business resolves customer complaints. It also takes into account such things as a company’s longevity and size, truthfulness of its adver-tising, and whether it has ever infringed on a trademark. 

The trustworthiness of the rating system came under scrutiny when a 2015 CNNMoney investigation found that a sampling of more than 100 businesses had received A- or higher ratings from the BBB despite having serious actions taken against them by government regulators within the previous year. CNNMoney also pointed out that the BBB does not factor consumer lawsuits into a business’ grade.

Questions have also been raised about whether the BBB’s system made it easier for Accredited businesses to resolve complaints. 

Mary Power, president of the Council of Better Business Bureaus, has stated that a rating primarily represents the BBB’s opinion of how it anticipates a company will interact with its customers. She also denies that the system is rigged in favor of paying companies, stating that a BBB Accredited business can lose accreditation if it has even a single unanswered complaint. 

Power specifically points to Wells Fargo, which recently had its accreditation revoked for a major government action that resulted in the loss of 25 points, dropping the bank’s rating below B.

Dan Parsons, CEO of the Greater Houston BBB, says the organization’s governance committee, which he sits on, from time to time has mulled over revamping the ratings system to make it simpler to comprehend. Power, though, says there are no plans at this time to eliminate the current system.

Want more info about the BBB? Read about how the BBB is faring in a digital age. Is it still relevant?