The Council of Better Business Bureaus expelled its Southern California chapter this week. It was the culmination of a two-year process by the national council to determine whether the Better Business Bureau of the Southland was living up to the organization's standards. So why did L.A. get kicked out, and what does it mean for the future of the 101-year-old organization?
Q: What did the L.A. Better Business Bureau do that got it expelled?
A: It allegedly engaged in "pay to play" schemes, demanding that businesses join the organization and play dues in order to become accredited. In a statement, Carrie A. Hurt, the President and CEO of the Council of Better Business Bureaus, said that "[o]ver a period of more than two years, BBB of the Southern California failed to resolve concerns about compliance with several standards required of BBBs, including standards relating to accreditation, reporting on businesses, and handling complaints.”
ABC News also conducted a sting operation in which a blogger applied for BBB membership using the name of the accused terrorist organization Hamas. This was briefly successful, and Hamas got the L.A. BBB's "A-" rating.
And other L.A. companies, including chef Wolfgang Puck of Spago fame, maintained that businesses that didn't pay received low ratings from the BBB.
Q: So how did the L.A. Better Business Bureau respond?
A: It said that it was having the alleged bad practices imposed on it by the national council and was leaving on its own. Then it changed its name to the Business Consumer Alliance and characterized the Council's decision as the end result of an ongoing dispute over how ratings are handed out. It is the largest chapter among Better Business Bureaus in the U.S., so it may be able to persevere, but for now, the Council of Better Business Bureaus has retained all the businesses that were formerly accredited by the L.A. chapter and will have to go through a process of re-accrediting them.
Q: So the Better Business Bureau is more than a century old? Does it even matter anymore in the age of Angie's List and Yelp and many other online consumer review sites?
A: The BBB is something of a throwback to a time when American business was a lot more local. But the arrival of big national chains in every town, big and small, has reduced the organization's clout. It still accredits and rates numerous businesses, but the BBB seal of approval is just one factor among many that now goes into a consumer's decision to employ or patronize a business.
Peer-to-peer networks that enable people to easily compare businesses have also undercut the BBB model. During its heyday, local BBBs would aggregate information about businesses and formalize it in a way that helped consumers make decisions. But now technology does that, with consumers simply posting the information. The BBB's middleman role is being cut out.
That said, it's still a large organization, with over 100 local Better Business Bureaus nationwide and a still decent amount of mindshare with the public for being a steward of local business standards. It's also been 25 years since a local chapter — Miami — was kicked out.