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Sound Advice: May 1, 2024

THINK TWICE ABOUT BETTER BUSINESS BUREAU RATINGS

 

Although it might be comforting to believe that ratings from the Better Business Bureau are reliable, people would be best advised to avoid betting the ranch on same.  Indeed, there are more than a few reasons not to rely solely on those ratings.

Contrary to popular belief, BBB ratings do not measure how good a business is.  Instead, they are supposed to measure how likely a business is to respond to its customers.

The key factors ostensibly underlying the ratings are things such as complaint history, type of business, time in business, transparency of business practices, willingness to uphold BBB standards, licensing, and advertising.  If, for example, a license is required, but the business is not licensed, the rating would drop.  Similarly, use of the BBB logo without permission from the BBB is a no-no.

But there’s more and that’s often the key.  Although the BBB presents itself as a nonprofit organization, it still needs money to operate.  That’s where accreditation comes in.  One of the ways the BBB earns its money is by charging businesses to be accredited.  If the business is accredited, it can use the BBB’s accreditation logo and customers may view the company as more trustworthy.

Even so, back in 2015, CNN Money found a sample of more than 100 businesses that had ratings of A- or higher despite having serious actions taken against them by government regulators.  Some had been ruled flat-out scams and were shut down, but still kept their high BBB grade.  Some were required to pay multimillion dollar penalties and others were charged in government lawsuits.

It seems clear that BBB ratings can be questioned for a number of reasons.  These would include subjectivity, the role of pay to play, and limited information about the companies.  The reality is that the ratings provided can vary and may not align with what consumers consider important.

Alternatively, one might consider the burgeoning number of ratings available on social media as well as commercial websites.  Here, too, there is a considerable risk, a significant part of which may be attributed to shill ratings (i.e., those posted by paid services or friends of the firm).  In all cases, the best advice is to read between the lines and don’t depend on every note, whether praising or damning.

 

N. Russell Wayne

Weston, CT

Any questions: please contact me at nrwayne@soundasset.com

203-895-8877

www.soundasset.blogspot.com

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