When a Better Business Bureau goes bad

The Los Angeles chapter, accused of accepting money for good ratings, gets kicked out of the organization, which is already struggling for relevance.

By Aimee Picchi Mar 13, 2013 2:27PM

Downtown Los Angeles Disney Hall (© Ed Freeman/The Image Bank/Getty Images)Updated 6:40 p.m. ET

The Better Business Bureau was where your grandmother turned when she had a concern about a business' reputation. But the century-old group is no longer the only watchdog in town, and a recent scandal is threatening to ding its own reputation. 

After a series of troubling allegations, the BBB has kicked out its Los Angeles chapter. Among the claims are that the local group demanded payments from local businesses in exchange for good ratings and that it even accepted fake businesses as long as they paid up, reports The Los Angeles Times

The scandal comes at a delicate time for the watchdog, as its influence has waned with the growing popularity of Internet review sites such as Yelp (YELP) and Angie's List (ANGI). 

That's reflected in a steep drop in the number of complaints consumers lodge with the BBB. In the pre-Internet days of 1987, the group received 2.1 million complaints, but by 2012, that number had tumbled to about 950,000, the Times notes. 

The BBB disputed the numbers published by The Times, pointing out that the 2.2 million complaints in 1987 also included informal advice. Excluding advice, the number of complaints actually jumped, from 442,350 instances in 1987 to 984,721 last year, the BBB told MSN moneyNOW.

The watchdog also said it does "not view other review sites as competitors" because the BBB "is a non-profit, and our services and information are free to all consumers."

The BBB opened up about the problems with its Los Angeles chapter, called the BBB of the Southland, on its website. 

The national group said that it had been working to resolve issues with the chapter for more than two years, ever since a "20/20" investigation found that the chapter was accrediting companies without checking their credentials. A blogger working with the ABC news magazine "filled out an application for the terrorist organization Hamas, which briefly appeared on the local website as a BBB Accredited Business with an A+ rating," the watchdog said. 

Carrie Hurt, the parent group's chief executive, said the story was "painful" but that the organization realized it needed to change the troubled chapter or expel it, according to the press release. 

Among those hit by the Los Angeles chapter's behavior was celebrity chef Wolfgang Puck, according to the Times. While he owns several Los Angeles-area restaurants, he didn't belong to the chapter, and his eateries received worse ratings than rivals who were lesser known but had paid $300 in fees, the piece adds. 

The BBB is hoping to regain credibility in the Los Angeles market by starting a "virtual BBB" at la.bbb.org, Hurt said. She added that she appreciates "the patience of businesses and consumers while we rebuild.”

Whether consumers will stick around when they could visit Yelp or other review sites remains to be seen.

More on moneyNOW

Mar 13, 2013 2:45PM

Our business in the Seattle area received a telephone solicitation from the Better Business Bureau to become a member. When we expressed our initial hesitance over cost the representative said "that would be a bad choice. We're not very kind to businesses that don't join."


I hung up the phone, we had a business meeting, and we decided our business would never join the BBB.

Mar 13, 2013 5:49PM
A competitor of mine with over one hundred  and fifty complaints had a rating of an A minus, and we had only three complaints with a B plus rating. I asked why and the lady mentioned that they were a  member in good standing and we needed to become a BBB member if we wanted our rating to improve. I told them that they were a bunch of con artist and that I would never become a member and I would be reporting them to the state board.
Mar 13, 2013 3:43PM

Bribery is anyone really shocked this is the US these days you can only bribe if your famous or rich. Companies will do anything to gain a competitive advantage except bribing the government.



Wait word is in they do bribe the government its called lobbying, Super PACS, and campaign contributions.

Mar 14, 2013 7:44PM
Every Business owner knows the BBB is a scam many use it anyway
Why? public perception is everything,, no matter how ignorant
the public is.
Mar 14, 2013 7:06AM
Every major city's BBB is on the take. Here in New Orleans, it's a joke. Look at everything that consumers are being fleeced for these days. When was the last time you bought a pound of coffee? There is no pound of coffee. It's 12 ounces. Fuel, commodities, building materials have doubled in price in the past five years. How can the BBB be relevant when they allow businesses to gouge consumers, then turn and take fees for ratings? As you can see, it's all about the money, not better or honest business.
Mar 15, 2013 6:06PM
BBB Solicitor pitched us on how our business needed to join because all the major national brand-name competitors in our business (investment advisory services, and financial planning) were members in good standing, and that we should be too.  Reasonable enough.  However...  BBB solicitor also explained their policies to me in a pitch to join.  One criteria she explained would result in being declined membership or even expelled was "government investigation," "fraudulent conduct," and other similar bad actions.  When I asked how Merrill Lynch, Morgan Stanley, Smith Barney, etc. were still "members in good standing" with solid ratings, despite the then current SEC investigation, findings of fraudulent research used to defraud retail customers who are individual investors, and the subsequent 1.4 Billion dollar fine paid in the settlement these firms and criminal investigators agreed to enter in the case, her answer was she did not know how or why they could be members if that were the case.  A quick look at the BBB website at the time indicated Merrill Lynch was a Million Dollar "donor" to BBB.  Of course, NONE of the financial firms that agreed to settle charges of fraud against their ordinary main street clients were ever sanctioned, mentioned, footnoted, asterisked, or otherwise brought to any sort of accountability via any information provided to the consumers and public through the BBB.  On this basis, I explained we saw zero benefit to consumers and the general public, and therefore zero business benefit to us in being a so-called BBB Accredited business. 
Mar 14, 2013 11:49AM
Most of these consumer action/review organizations/sites can be bought.   Today, if you are rolling out a new product or service, you immediately hire another set of people to give you glowing reviews.
Mar 14, 2013 11:24AM

BBB.....Is a joke, when we were in business....The wife dropped suscribe after a year or so..

She built the Company, on the performance and "word of mouth."

Chambers of Commerce are not much better; Depending where you live ??

We had their "pretty little plaque" on our wall..


Many or much of their ratings or info, is not updated and un-reliable...

Same with Dun&Brad...Just a ranking, check...Money maker for them.


Excellent service, performance and product is what built her Business, and everyone new it..

Only complaint, was someone that had spent $40-50 bucks....They were wrong and lied, we gave them back their money...And threw them out of the place or ask them to leave..

They apologized later, but we did not want their business, they were a headache everywhere.

Mar 15, 2013 4:07PM
The BBB and Chambers of Commerce are all a bunch of crooks .
Mar 13, 2013 4:40PM
the BBB has always been a scam , just like dunn&bradstreet  !!!!!!  d&b wants your info for free , but charges you when you want THIER info that was obtained for free from suckers that know no better !!!!!!!!
Mar 17, 2013 12:39PM
Always follow the money.  The business pays the BBB; not the consumer.  Guess who benefits?
Mar 13, 2013 2:51PM
Just have to laugh at all the idiots who voted for these fools. They will be the ones who suffer the most. Unless you work for MSNBC they make a living off the idiots.
Mar 15, 2013 6:18PM
I have had two experiences with BBB.  One in San Francisco and one in Hawaii.  Both times I realized the BBB works for the Business, not the consumer.  I don't bother to contact BBB now since I realized it is a scam.
Mar 15, 2013 6:47PM
Well, any time a co. gets a "walk on water" "A+" rating that implies there's no room for improvement, you have to wonder... .  BBB's new letter grade system lacks credibility, even if they're not skimming from members.
Mar 18, 2013 1:02PM
And don't even think about contacting them about a lawyers' inscrutable activities. They'll almost hang up the phone on you. My sister was renting a home from a slumlord lawyer who was screwing her at every turn. Making her pay for repairs on existing conditions and threatening to ruin her credit report if she didn't. She called the BBB and they told her straight out they don't take complaints about people in the legal trades. She found someone to take over the lease so she could get out of that situation.
Mar 15, 2013 7:58PM
It is protection or a accomplice to and/or a catalyst of the-swindle-cost-phish!             
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