Rating the Better Business Bureau


It's no secret that online reviews have changed the way we shop and interact with businesses large and small. Despite this, the granddaddy of business ratings, the Better Business Bureau, even with its incredibly powerful brand, continues to drift around, seemingly unable to capitalize on this trend.

 

I've read article after article recently in the consumer advocacy column in the New York Times taking the organization to task for policies that appear to help errant members look better than they really are. The newsmagazine 20/20 raked the BBB over the coalsin a blistering expose late last year. Many consumer complaint websites carry numerous complaints about BBB. What went wrong?

 

A lot of it seems to stem from its business model. First, BBB is much closer to a chamber of commerce than a consumer advocacy organization, but by accident or design, BBB has created a consumer advocacy aura around itself. That leaves lots of consumers underwhelmed when they reach out to BBB for help.

 

The second issue is that BBB is supported by its business members, creating an inherent conflict much like we have seen with the big bond rating agencies. BBB thrives when its members are happy, so it has strong incentive to give its business members the benefit of the doubt when complaints arise.

 

Finally, the BBB rating system is poorly understood. New members of BBB start out with a high rating, which may be reduced over time if many complaints are left unresolved. The problem with this approach is than an unscrupulous business can pay the modest membership fee, secure a great rating, and have an extended window to plunder and pillage before its rating gets reduced.

The BBB response? Well, quite recently, it announced that it was going to offer detailed profiles of all its members -- much more than the Spartan contact information it had provided before. It is also going to allow consumers to directly post reviews against these merchant listings, a radical departure from past practice and potentially unsettling to its membership.

 

Will this new approach work? My sense is that this move may be too little, too late, and I still think BBB policies may be too opaque for the consumer-driven world we now live in. At the same time, I've learned never to under-estimate the power of a strong brand, and BBB is one of the strongest. Here's hoping this new positioning will move BBB back to the head of the pack. After all, consumer reviews, third-party ratings and an integrated dispute resolution capability is a powerful set of features.

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