What is the 'Better Business Bureau (BBB)'

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

BREAKING DOWN 'Better Business Bureau (BBB)'

The BBB aims to promote ethical business practices, leading to an environment where buyers and sellers can operate under a shared understanding of trust. To encourage better consumer and business practices and to 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 Better Business Bureau (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

Factors That Determine BBB Ratings

The BBB formerly rated businesses as "satisfactory" or "unsatisfactory," however, in 2009, it initiated a rating system of A+ to F. Some businesses with insufficient information may receive a designation of "NR," or no rating. Factors which will affect a business' 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.

BBB Accreditation

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 their practices, suitably licensed to conduct their line of service, follow BBB advertising codes, and have no unresolved complaints. Accreditation requires the payment of yearly dues. Dues have a basis on the size of the organization and may range from hundreds to thousands of dollars per year. Additional fees apply for membership plaques and for the licensed use of the BBB logo on websites.

Until 2010, the BBB awarded extra rating points and restricted its A+ rating to paid members. However, after widespread criticism the BBB to rescind these limitations on its rating criteria.

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