For years the remodeling industry has had a love-hate relationship with the Better Business Bureau. The BBB is a private franchised organization operating under a nonprofit tax status, with more than 100 regional operations in the U.S., each run by its own board of directors. The BBB’s estimated annual revenue of over $140 million is paid by the businesses that join the BBB. For decades it has had the reputation of being an impartial forum in which consumer-to-business complaints can be addressed, and a fair rating on a business’ quality and reliability can be researched.
Whose Best Interests?
But, starting in the 1990s, some contractors began to accuse the BBB of preferential treatment of member businesses and of subjective handling of the BBB’s “private” rating system — especially against home improvers. In 2001, U.S. Representative Connie Brown asked Congress to investigate the BBB, stating: “… one finds that there are Better Business Bureaus that arbitrarily and capriciously exclude and negatively classify those they don’t like. They also frequently rate companies with terrible records as being satisfactory. The process I have described is not in the public’s best interest.”
In 2009 the BBB moved away from its “satisfactory” or “unsatisfactory” rating system and began a complex and, some would say, highly subjective A-to-F rating system based on 17 diverse factors, a number of which have subparts. Interestingly, one of the factors supporting the chances of a higher rating was membership in the BBB. Many critics contended that the BBB changed its rating system due to increased competition from more proactive reporting sites such as Angie’s List. Many contractors have been left in a quandary trying to deal with a regional BBB that the contractor may feel is unfair to, capricious toward, or biased against remodeling companies. Even in the face of obvious bias, suing the BBB over a poor rating or refused membership tends to do little but run up legal fees, in that the BBB will simply defend itself as a private rating agency acting in the “public interest.”
Feeling the Sting
Recently, however, a group of California businesses conducted a sting operation to catch the BBB in the act. The result: the terrorist group Hamas was established as an “A-” rated BBB member in good standing. Questions are now being raised about the BBB engaging in a “pay-to-play” scheme.
Connecticut Attorney General Richard Blumenthal, long a BBB critic and soon to be Senator Blumenthal, commented that “... this rating system is really unworthy of consumer trust or confidence” and called on the BBB to stop using its grading system, which he said was “potentially harmful and misleading” to consumers.
Perhaps, and for the betterment of the remodeling industry, the days of the BBB having an undue negative influence on a contractor may be nearing an end.
—D.S. Berenson is the Washington, D.C., managing partner of Johanson Berenson LLP (homeimprovementlaw.com), a national law firm specializing in the representation of contractors and the home improvement industry. He may be contacted at 703.759.1055 or firstname.lastname@example.org.
This article is for informational purposes only and should not be construed as legal advice.