DEFINITION of 'Better Business Bureau - BBB'

The Better Business Bureau (BBB) is a private nonprofit organization that receives consumer complaints and rates the performance and reliability of businesses based on a number of criteria.

The BBB aims to promote ethical business practices, leading to an environment where buyers and sellers can operate under a common understanding of trust. By encouraging better practices on the part of the consumer and the business and setting proper marketplace standards, the BBB provides educational material regarding general and specific desirable business practices. Firms that adhere to the mandated guidelines can attain BBB-accredited business status.

BREAKING DOWN 'Better Business Bureau - BBB'

Consumers can file a complaint about a business if they feel that they have not been treated fairly. Historically, the BBB successfully resolves 70% of filed complaints. The organization serves to create a more trusting relationship between businesses and consumers.

Factors That Determine BBB Ratings

Although the BBB used to rate businesses merely with a notation of "satisfactory" or "unsatisfactory," it initiated a ratings system of A+ to F in 2009. Some businesses for which the BBB has insufficient information may receive a designation of "NR," or no rating. Among the main factors that the BBB considers while rating a business are the volume of complaints against it, whether the business responds promptly and appropriately to the complaints, and how current the complaints are. The BBB also looks at whether the business offers products or services that are considered legal, and how long the business has been in operation. It requires transparency in the disclosure of information about ownership and location.

Factors that negatively impact ratings include failure to honor arbitration awards or mediation settlements negotiated by the BBB. It also lowers ratings for businesses that lack appropriate licensing or are subject to disciplinary actions by the government. Further negative issues concern dishonesty in advertising or misuse of the BBB name or logo.

BBB Accreditation

A business that has been operational for at least a year may apply for BBB membership, also known as accreditation. To qualify, it must be transparent, properly licensed, follow BBB advertising codes and have no unresolved complaints. It must also pay yearly dues, which depending upon its size may range from hundreds to thousands of dollars per year as of 2015. The BBB also charges businesses extra for membership plaques and permission to use the BBB logo on websites.

Until 2010, the BBB awarded extra ratings points and restricted its A+ rating to paid members, but after receiving widespread criticism for these practices, it rescinded these limitations on its ratings criteria.

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