Better Business Bureau (BBB) - Explained
What is the Better Business Bureau?
Written by Jason Gordon
Updated at June 26th, 2021
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Table of Contents
What is the Better Business Bureau?Why is the Better Business Bureau (BBB) Important?How BBB Ratings WorkAcademic research on "Better Business Bureau (BBB)"What is the Better Business Bureau?
The Better Business Bureau (BBB) is a private non-profit organization that focuses on enhancing trust in the marketplace. BBB strives to foster a marketplace where trust exists between customers and businesses. This organization ensures that an ethical marketplace is created where businesses maintain good codes of conduct. BBB was founded in 1912, it comprises of a total of 106 independently incorporated organizations in the U.S., Canada, and Mexico. BBB gathers information about businesses, including feedback from the public, with which the BBB rating is done.
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Why is the Better Business Bureau (BBB) Important?
About 400,000 firms or businesses have been accredited by the Better Business Bureau (BBB). The performances of these businesses are rated by the BBB using the information received from the public including reviews and complaints from customers. The aim of the BBB is to enhance a marketplace whether trusts exists, this means customers feel safe to transact with businesses.
The BBB promotes an ethical marketplace by educating businesses on acceptable and desirable market practices. There are certain guidelines that BBB gives firms in order to maintain a good code of conduct while operating in the market. In certain cases, customers file complaints to the BBB about unethical business practices, while BBB resolves most of the cases filed, some are left unattended to by BBB but are handled by other regulatory bodies.
There is a limit to cases that can be handled by the BBB. For instance, the BBB does not handle discrimination claims, complaints against government agencies, non-business-related complaints, complaints countering laws. A business can have been in operations for a minimum of one year can apply to be accredited by BBB. Such a business must embrace ethical practices and adhere to the rules and guidelines of BBB. BBB has at least 400,000 accredited businesses in the U.S, Canada, and Mexico.
How BBB Ratings Work
BBB rates businesses using the information retrieved about the business, public feedbacks, and complaints as well as customers review. There are two rating categories that BBB uses (either satisfactory or unsatisfactory) before the new rating system was established in 2009. With the new rating system, it is possible for a business to have no rating, especially if there is no information about the business. The number of complaints received about a business can greatly affect the rating of the business. There are 17 points of factors that BBB considers when rating businesses. Aside from these points, there are external factors that affect the rating of a company such as government impositions or disciplinary actions by regulatory bodies.
Academic research on "Better Business Bureau (BBB)"
- How aBetter Business Bureau(BBB) can help BBB accredited small business members, Lacho, K. J., & Mitchell, R. (2010). How a Better Business Bureau (BBB) can help BBB accredited small business members.The Entrepreneurial Executive,15, 99.
- Dissatisfied consumers who complain to the Better Business Bureau, Fisher, J. E., Garrett, D. E., Arnold, M. J., & Ferris, M. E. (1999). Dissatisfied consumers who complain to the Better Business Bureau.Journal of Consumer Marketing,16(6), 576-589. Very little prior research has analyzed the behavior of dissatisfied consumers who complain to the Better Business Bureau (BBB). Therefore, interviews were conducted with dissatisfied consumers who filed complaints with the BBB against companies in three industries auto dealers, dry cleaners, and home construction. The results reveal significant gaps between dissatisfied consumers resolution preferences and companies resolution offers. Further, the results highlight the highly negative wordofmouth communication activity and repeat purchase intentions of dissatisfied consumers who complain to the BBB. Based on these data, complaint resolution recommendations are provided to improve customer service managers handling of dissatisfied consumers.
- International Bbb ratings la eBay: a proposal for an improved online better business bureau to facilitate international business transactions, Webb, L. (2004). International Bbb ratings la eBay: a proposal for an improved online better business bureau to facilitate international business transactions.Cal. W. Int'l LJ,35, 127.
- The debate regarding the better business bureau's commitment to neutrality: An analysis of local better business bureau boards of directors, Garrett, D. E. (2007). The debate regarding the better business bureaus commitment to neutrality: An analysis of local better business bureau boards of directors.Nonprofit and voluntary sector quarterly,36(1), 22-40.The types of information contained in company reliability reports from the Better Business Bureau, Garrett, D. E. (2006). The types of information contained in company reliability reports from the Better Business Bureau.Journal of Consumer Affairs,40(1), 1-20. Consumer requests for company reliability reports from the Better Business Bureau (BBB) have increased dramatically in recent years. However, no prior research has analyzed on a national level the types of information contained in these reports. This study reveals that the BBB had reliability reports for 69.1% of auto dealers, 58.9% of movers, and 43.8% of roofers. No significant difference was found between the numbers of complaints filed against BBB member and nonmember companies. However, significant differences were found in the manner in which member and nonmember companies responded to these complaints. Discussion focuses on the potential usefulness of these reports for consumers, and recommendations are offered for improvements.