How does bbb rate businesses

It may be as easy as making changes or additions to your web page or to business information that you supply to consumers. To increase your BBB rating, make sure you provide customers with a complete description of products and services that you offer. Sometimes a matter between a business and a customer winds up going to mediation, with a decision rendered by the BBB.

But if and when there are government actions, or a licensing organization takes action against a business, the BBB can take action to reduce the business rating. Here are examples:. There are also actions that involve competency licensing. The BBB defines competency licensing as licensing that can be taken away due to misconduct by a business. A foundation of the BBB rating system is truth and accuracy in all business dealings.

This is especially important in regard to advertising claims. Many advertising issues stem from misuse of common phrases. As a consumer, you may commonly see such phrases, but not give much thought to their literal meaning. Wholesale or At Cost. These words can only be used in advertising if the item is offered for sale at the same price it was obtained by the business. Factory to You, or Factory Outlet. These words can only be used if the advertiser is the manufacturer of the product.

A less common advertising complaint is the misuse of the BBB name or logo by a business which is not qualified to do so. For more information, take a look at BBB code of advertising. The Better Business Bureau uses a point scale to assign a business rating.

The point scale is matched to a letter grade scale. An A rating is the top level in the BBB rating system. There are 13 categories where points are calculated by the BBB and businesses must excel to get to that A rating. In 5 of those categories, points can be earned or deducted on the letter rating scale. In the remaining 8 categories, points can only be deducted. The Better Business Bureau will look at complaint volume while considering the size of the business or company and the age of the complaints , unanswered complaints, unresolved complaints, delays in complaint resolution and length of time in business.

How does your business earn points? And others have recently been rocked by big government lawsuits. Federal prosecutors claim the company bilked Medicare out of millions of dollars by repeatedly providing therapy to patients that wasn't medically necessary -- and in some cases, potentially harmful to patients.

One of the patients highlighted in the government lawsuit: an year-old man who was immediately subjected to intensive physical, occupational and speech therapy upon being admitted to one of the company's Illinois facilities. After a month, he was barely eating and told the nurses that he "hurt all over. The government lawsuit is ongoing, and HCR Manorcare denies the allegations. Through its investigation into the organization and its practices, CNNMoney found that the BBB's rating system is seriously flawed -- resulting in grades that appear to be arbitrary and change erratically.

And it's not just paying members that receive high ratings even though they are facing government actions -- non-member businesses were also on CNNMoney's list. But the BBB claims to keep a closer eye on its paying members, holding them to a higher standard. In many cases, more weight is placed on companies addressing complaints through the BBB's own system than any other factor -- even government lawsuits alleging practices that directly violate the BBB's principles of membership like misleading advertising.

Meanwhile, consumer lawsuits aren't factored into grades at all, no matter how many there are against a single company. And when it comes to government actions, the BBB sometimes deems a penalty so minor that a company can still maintain its A rating.

Military Credit Services of Norfolk, Virginia, for example, recently settled government charges that it went after service members with illegal debt collection lawsuits. In other cases, government actions don't appear to be factored into the grade at all -- possibly because the BBB isn't aware of them.

And in cases where the action is still pending, the BBB often leaves the grade untouched and notes that no wrongdoing has been proven.

The organization also acknowledges that grades are based on the information it has at the time -- making it extremely difficult to provide accurate ratings for more than 4 million companies nationwide. Related: How the Better Business Bureau rakes in millions. Here's how this massive ratings machine works: The BBB rates companies ranging from small town plumbers to Wall Street banks. Nearly , of these businesses are paying members -- which the BBB relies on for the majority of its revenue.

But not every business is eligible -- before granting membership, the BBB says it does extensive research and has a laundry list of requirements that prospective members must meet, like responding to all consumer complaints, advertising honestly and maintaining at least a B rating.

It says that grades are calculated using more than a dozen factors, including the type of company, length of time in business and complaint volume in relation to its size. In return, members get to flaunt their membership with the BBB, use its name and logo in advertising and gain access to free dispute resolution services. While many people view the BBB as a consumer watchdog or even a government agency, the BBB itself says this is a misconception.

Instead, it views itself as a mediator between frustrated consumers and the companies they do business with, receiving nearly 1 million complaints each year from consumers hoping to achieve resolutions like refunds and repairs.

These complaints are handled by more than independent bureaus across the country, which are overseen by the national Council of Better Business Bureaus.

The BBB touts its work with law enforcement agencies to shut down fraudulent companies and insists that money has nothing to do with the grades it gives to paying members. It is also proud of the complex algorithm it uses to grade companies -- the inner workings of which it closely guards. While some businesses likely deserve their bad ratings and others are worthy of their A grades, even the BBB will admit its rating process isn't perfect.

It says that its ratings are not endorsements and that they don't mean that a business' products or services have been evaluated. Instead, the organization told CNNMoney in a written statement that the ratings represent the "BBB's opinion about a business's trustworthiness and how it is likely to interact with its customers.

Yet, millions of American consumers are counting on them to be reliable and reputations of businesses all over the country are depending on them. He notified the BBB about the ruling but says the organization still did nothing to help or warn other consumers by including the ruling against Jack's on its website or factoring it into its grade.

So DiPiero turned around and sued the BBB itself, alleging that the nonprofit violated consumer protection laws by allowing paying members to retain membership and high grades even when they broke the organization's own rules.

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