Better Business Bureau

Overview

The Better Business Bureau is a private nonprofit organization — not a government agency, despite the official-sounding name — whose self-described mission is to advance marketplace trust (Investopedia). Founded in 1912, it grades businesses on an A+ to F scale, accredits businesses that meet its standards and pay a fee, handles consumer complaints, and evaluates charities — operating as a network of independent, locally run bureaus across the U.S. and Canada, coordinated by the International Association of Better Business Bureaus (IABBB) (Investopedia). The structural tension is baked in: the organization earns the bulk of its revenue from the businesses it grades, and that funding model has twice produced documented pay-to-play scandals — a 2010 agreement with Connecticut’s attorney general to stop awarding rating points for dues, and the 2013 expulsion of its largest chapter (CT AG; Mondaq).

From advertising vigilance to the modern BBB

The BBB began as an industry policing itself. In 1912, a group of local businesses and advertising executives created the National Vigilance Committee to police malpractice and address public distrust in advertising; after organizational name changes it became the Better Business Bureau (Investopedia). Its early work — targeting deceptive advertising, bait advertising, and overcharging — was substantive enough that many of its early standards were later adopted by the U.S. Federal Trade Commission (Investopedia). Today’s structure still reflects those origins: the IABBB sits atop the network, governing local bureaus and setting standards, alongside three sibling entities — the 501(c)(3) BBB Institute for Marketplace Trust (education), the BBB Wise Giving Alliance (charity monitoring), and BBB National Programs (industry self-regulation, accountability, and dispute resolution) (Investopedia). Its services are free to the public; the businesses pay (Investopedia).

How accreditation and ratings work

Accreditation is voluntary and paid. A business must have operated at least six months, resolved all BBB customer complaints, followed licenses and regulations, honored contracts and promises, abided by advertising laws, and run a website that protects customer identities and transactions; if approved after a background check, it pays a fee — scaled to business size — before earning accredited status and the seal (Investopedia). Those fees represent the bulk of the BBB’s revenue (Investopedia). Accreditation and the rating are distinct: a business can carry an A+–F grade without being accredited.

The rating itself runs A+ (97–100 points) down to F (0–59.99), computed from complaint history, adherence to laws, time in operation, transparency, honoring of commitments, and advertising veracity (Investopedia):

Score	Grade	Score	Grade
97–100	A+	77–79.99	C+
94–96.99	A	74–76.99	C
90–93.99	A-	70–73.99	C-
87–89.99	B+	67–69.99	D+
84–86.99	B	64–66.99	D
80–83.99	B-	60–63.99	D-
		0–59.99	F

The pay-to-play criticism, documented

The biggest criticism is the funding model: earning revenue primarily from the businesses it grades, with investigations by ABC’s 20/20 and CNN finding evidence of paying members receiving preferential treatment (Investopedia). The paper trail is unusually concrete. On November 18, 2010, Connecticut Attorney General Richard Blumenthal announced the BBB had agreed to his demands to stop awarding rating points for dues and make other changes to its rating system: “Pay-to-play — or its perception — is unacceptable and unconscionable, as the BBB has rightly recognized. Cash can no longer inflate BBB ratings, as happened under the old system” (CT AG). Blumenthal added that the BBB “lacks the resources to verify much information used to rate, rendering its ratings unreliable and suspect” (CT AG).

The same month, ABC News’s 20/20 aired “The Best Ratings Money Can Buy,” reporting that businesses could obtain A+ ratings only by paying accreditation fees, that non-payers often received F grades — and that Southern California business owners had created fictitious businesses, including a nonexistent sushi restaurant and one named “Hamas,” which received A-minus grades, while Los Angeles owners were told their C ratings could become A+ if they joined (Mondaq). The allegations against the Southern California chapter — the largest in the system — dated back to Orange County Register reports in May 2002, with investigations by the Orange County DA and California’s attorney general; the chapter’s president William Mitchell resigned during the national audit in December 2010, then rescinded his resignation in February 2011 (Mondaq). In 2013 the national organization expelled the chapter. A national BBB spokesperson told ABC News: “They did not meet our standards. It resulted in expulsion” (Mondaq).

Frequently asked questions

Is the Better Business Bureau a government agency? No. It is a private nonprofit organization with no legal enforcement authority — it cannot fine, license, or shut down businesses. Its power is reputational: grades, accreditation seals, and complaint records.

What does BBB accreditation mean? That a business met the BBB’s trust standards (six months in operation, complaints resolved, laws and advertising rules followed) and paid an accreditation fee. Accreditation is separate from the A+–F rating; a business can be rated without being accredited.

How does the BBB make money? Primarily from accreditation and membership fees paid by the businesses it rates — scaled to business size. That funding model is the organization’s biggest and longest-running criticism.

What was the 2010 pay-to-play agreement? Connecticut Attorney General Richard Blumenthal secured the BBB’s agreement to stop awarding rating points for dues, saying “cash can no longer inflate BBB ratings, as happened under the old system,” while warning the ratings remained “unreliable and suspect” for lack of verification resources.

Why was the Southern California BBB chapter expelled? After years of allegations — including a 2010 ABC 20/20 sting showing fictitious businesses earning A-minus grades — that the chapter required membership fees for top ratings, the national organization expelled it in 2013: “They did not meet our standards.”

What this profile does not claim

This profile does not state the BBB’s exact tax designation or headquarters address — only “headquartered in Virginia” per Investopedia, since the widely repeated 501(c)(6)/Arlington details were not verified from a citable source. It does not state the number of local bureaus, the accredited-business count, or network-wide revenue — all vary across unverified sources. It does not date the nationwide introduction of the A+–F system. It distinguishes the IABBB (the bureau network’s umbrella) from the BBB Wise Giving Alliance (charity evaluator) and BBB National Programs (self-regulation programs) — three separate sibling organizations. And it states the criticism in sourced terms: the documented 2010 agreement and 2013 expulsion, not a general claim about current ratings.