What Is the Better Business Bureau (BBB)?

The Better Business Bureau (BBB) is a nongovernmental organization designed to enhance marketplace trust. The BBB, established in 1912, is a private nonprofit organization that has independently incorporated organizations in the U.S., Canada, and Mexico. Organizations receive consumer complaints and rate the performance and reliability of businesses based on specific criteria. The BBB accredits approximately 400,000 firms.

Key Takeaways

  • The Better Business Bureau (BBB) is a nonprofit organization that monitors and reports the trustworthiness of businesses and tracks scams and frauds that may affect consumers.
  • BBB Accreditation signifies trust and integrity, and an unwavering commitment to consumers.
  • The BBB also collects customer complaints and seeks to resolve many of those complaints.

How the Better Business Bureau (BBB) Works

The BBB aims to promote ethical business practices, leading to an environment in which buyers and sellers can operate under a shared understanding of trust. To encourage better consumer and business practices and highlight proper marketplace standards, the BBB provides educational material regarding general and specific desirable business practices. Firms must adhere to mandated guidelines to receive a BBB accredited business status.

Consumers can file disputes with the BBB about unfair business practices and other marketplace issues. Historically, the BBB successfully resolves 70% of filed complaints through mediation and arbitration. Separate regulating bodies handle complaints against service professionals, such as doctors and attorneys. The BBB does not examine the following issues:

  • Employer-employee disputes
  • Discrimination claims
  • Non-business-related complaints
  • Complaints countering laws
  • Complaints against government agencies
  • Concerns currently in litigation or those previously litigated

A business that has been operational for at least a year may apply for BBB membership, also known as accreditation. To qualify, a company must be transparent in its practices, suitably licensed to conduct its line of service, follow BBB advertising codes, and have no unresolved complaints. Accreditation requires the payment of yearly dues, which are based on the size of the organization and may range from hundreds to thousands of dollars per year. Additional fees are charged for membership plaques and the licensed use of the BBB logo on websites.

The Better Business Bureau (BBB) aims to promote ethical business practices and accredits approximately 400,000 businesses in the United States, Canada, and Mexico.

How BBB Ratings Work

The BBB formerly rated businesses as “satisfactory” or “unsatisfactory.” However, in 2009 it initiated a rating system of A+ to F. Some businesses may receive a designation of “NR,” or no rating, either because the report is being updated, the BBB doesn’t have enough information about the business, or the BBB has found that the business is no longer in operation.

Among the 17 stated factors that will affect a business’s rating are the volume of complaints made against it, the accuracy and promptness of company responses, and the age of the claims. The BBB also reviews the legality of business operations and how long the business has been in operation. It requires transparency in the disclosure of information about ownership and location.

Failure to honor arbitration awards or mediation settlements negotiated by the BBB will adversely impact ratings. Also, dishonesty in advertising, misuse of the BBB name or logo, insufficient licensing, and disciplinary actions imposed by the government will negatively affect ratings.

The BBB awards points based on the 17 factors, which it weights according to their importance. Once the point total is arrived at, a letter grade is assigned based on the point range in which the business ends up. Until 2010, the BBB awarded extra rating points to paid members and restricted its A+ rating to them as well. However, after widespread criticism, the BBB rescinded these limitations on its rating criteria.