The Better Business Bureau is a SCAM!

Is the Better Business Bureau a Scam? Unpacking Accusations and Examining the Evidence

The Better Business Bureau (BBB), established in 1912 as a private nonprofit, has long touted itself as an impartial arbiter of business ethics and a defender of consumer interests. Many Americans have grown up hearing that a good BBB rating is proof of a reputable company, while a failing BBB grade is a bright red flag. In theory, consumers turn to the BBB to find honest businesses, while companies seek accreditation to enhance trust in their services. Yet critics have alleged that the BBB functions more like a “protection racket,” pushing businesses to pay accreditation fees or risk damagingly low grades—an approach some equate to a “mafia-style protection scheme.” Since at least 2010, multiple investigations and anecdotal accounts have amplified accusations that the BBB sells better ratings to paying members, leaving the public to wonder whether the entire rating system is essentially a scam.

To read a forum-based discussion that delves further into whether the BBB is a scam, including individual experiences and links to noteworthy articles, see this conversation on Renovation Reviews. The ongoing debate revolves around whether the BBB’s revenue model inevitably undermines its mission or if isolated, rogue chapters caused scandals that the national organization has since addressed. While the Bureau denies the pay-to-play allegations, pointing to reforms made over the last decade, a closer look at relevant case studies, lawsuits, and media exposés shows a complicated history that continues to raise doubts in the public eye.

The BBB’s essential purpose is to encourage ethical behavior among businesses and facilitate dispute resolution between companies and unhappy consumers. Unlike the Federal Trade Commission (FTC) or state Attorneys General, the BBB is not a government agency with legal authority to investigate wrongdoing or impose fines. The voluntary nature of BBB participation is central to many criticisms. Businesses that cooperate with the BBB—especially those that pay to become accredited—are more likely to respond to consumer complaints that the BBB forwards to them, thereby increasing their chance of earning and keeping a high letter grade. This leads skeptics to argue that the grades do not necessarily reflect impartial judgments of quality and ethics but may instead hinge on whether businesses keep the BBB on their good side. The BBB maintains that paying accreditation fees does not directly impact letter grades, but critics highlight examples that appear to contradict that claim.

One of the most widely known exposés was an ABC News “20/20” investigation in 2010 revealing that a fictitious business called “Hamas,” as well as other made-up or suspect entities, could obtain A-range BBB ratings simply by paying the necessary membership dues. The ABC News (2010) undercover team documented how the local BBB branch in the Greater Los Angeles area (historically referred to as the BBB of Southland) swiftly granted high scores to paying members, even if they had no legitimate track record to speak of. During the same investigation, prominent chef Wolfgang Puck stated that some of his reputable restaurants were awarded F ratings after he refused to pay for accreditation. Observing that these incidents arose at the largest BBB chapter in the country, ABC News declared that a pay-for-play practice seemed to be at work. The revelations became part of a national scandal and led multiple state Attorneys General, including Connecticut’s Richard Blumenthal, to launch probes into the BBB’s rating methodology.

In Connecticut Attorney General press releases from 2010 (highlighted in mainstream coverage but also found at the official CT government website), officials accused the BBB of using a potentially misleading rating formula that awarded extra points for accreditation while penalizing businesses that declined membership. The national Council of Better Business Bureaus quickly announced it would overhaul these practices and stop awarding rating points merely for becoming accredited. Yet the controversy persisted, and in 2013, the national BBB expelled the Los Angeles BBB chapter under allegations of pay-to-play corruption, resulting in that branch rebranding itself as the Business Consumer Alliance. Consumerist published a story titled “Better Business Bureau Tosses LA Chapter Over Allegations of ‘Pay To Play’–Just Like The 2010 20/20 Report,” pointing to the seriousness of these internal disputes.

Even though expelling a rogue chapter demonstrated an attempt by the national BBB to restore credibility, critics note that core questions remained unanswered. For example, some asked why the BBB had not discovered or addressed the problems sooner, or whether other local BBB offices might still employ questionable tactics. Another recurring complaint centered on the fact that the BBB lacks enforcement power. Critics argue that a business with consistent unethical conduct might keep an A rating as long as it resolves direct BBB complaints or pays to maintain good standing. Meanwhile, a major brand that doesn’t engage with the BBB might see a low rating simply due to unanswered inquiries. In this context, consumer advocates often assert that, for a letter grade to hold any weight, it must account for significant lawsuits and government actions. Yet a CNN Money report in 2015 found numerous businesses with strong BBB grades, despite active lawsuits or serious regulatory actions against them. According to CNN Money (2015), the BBB frequently neither monitors nor integrates these legal details into its grading formula unless a consumer complaint references the lawsuit.

Another notable lawsuit was filed by TicketNetwork, as described by TicketNews in 2010, alleging that the BBB defamed it by awarding a “C-” rating that the company felt was unjustly low. TicketNetwork contended that it was pressured to pay accreditation fees to improve its letter grade, claiming that a non-accredited business could never achieve an A+ in that particular BBB office’s scoring system. Whether or not one accepts the company’s side of the story, the litigation underscored the frustrations of businesses believing that paying the BBB was the only way to avoid a reputation hit. TicketNews (2010) summarized the allegations that the BBB’s rating apparatus essentially demanded “insurance fees” for a favorable grade.

The post-2010 reforms at the BBB included ceasing the practice of awarding automatic points for accreditation. Yet some investigations found that A+ ratings still seemed overrepresented among accredited (dues-paying) businesses compared to nonmembers. It is possible this correlation reflects self-selection: companies opting to join the BBB might be more customer service–oriented, responding quickly to complaints, and thus scoring higher. But critics persist in suggesting a structural conflict of interest when the BBB’s budget hinges on membership fees. Time Magazine published an analysis in 2013, often cited as “Why the Better Business Bureau Should Give Itself a Bad Grade,” that called attention to the dual role of the organization as both a paid membership club and a ratings entity. The article portrayed the BBB’s revenue scheme and rating system as inherently contradictory: the BBB needs members to pay, yet it must also maintain credibility by showing that paying does not improve a business’s rating. According to Time (2013), that is a precarious balancing act.

Moreover, the mere fact that the BBB lacks legal or regulatory authority complicates matters. Even if a company draws a flurry of complaints, there is nothing the BBB can do beyond assigning a poor rating or revoking accreditation. Some consumer watchdogs have compared this to a toothless guard dog. Indeed, the organization’s disclaimers often emphasize that the BBB relies on voluntary cooperation from businesses, and that consumers must temper their expectations: the BBB cannot force refunds or punish unscrupulous actors, nor can it independently confirm all the data behind each rating. Summaries on Investopedia note that a BBB rating is not a guarantee of ethical conduct, simply an indicator of how a business responds to customer complaints filed through the bureau’s system. HowStuffWorks likewise clarifies that the BBB is not a government-affiliated watchdog, stressing that consumers too often assume it wields more legal power than it does.

What further complicates the issue is inconsistency between local BBB chapters. Different chapters are responsible for investigating complaints, awarding ratings, and collecting membership dues in their geographic territories, while the national Council of Better Business Bureaus offers overarching guidelines. Critics claim that some regional chapters do better than others at scrutinizing questionable businesses or verifying whether certain complaints reflect systemic problems. The fiasco with the Los Angeles BBB, detailed in that Consumerist piece, showed how a large, influential chapter could deviate significantly from national standards. For consumers looking for a consistent measure of business ethics, these discrepancies can cause confusion and erode trust.

Yet, it would be oversimplifying to dismiss everything about the BBB as a sham. The bureau’s national leaders do address consumer complaints lodged against businesses by sending them to the companies in question. Many disputes are resolved in this way, especially in small-scale matters such as billing errors or misunderstandings, because a business eager to preserve its rating will often make amends. Figures cited by the BBB itself, at bbb.org, suggest that hundreds of thousands of consumer complaints each year result in some form of solution. Investopedia (2020) acknowledges that a portion of these customers might not have found restitution otherwise. From that perspective, the BBB can and does function as a dispute resolution facilitator. It is also true that some of the negative publicity spurred improvements in the bureau’s practices after 2010, including stricter internal controls for local chapters. The modern BBB stands by its commitment that membership fees do not directly influence letter grades, and that disreputable local chapters—like the Los Angeles one—can indeed be expelled to preserve the organization’s integrity.

Nevertheless, every so often, new media reports emerge, such as the CNN Money investigation of 2015, revealing fresh examples of businesses sporting high BBB ratings while simultaneously facing serious regulatory actions or even lawsuits alleging fraud. Over time, this recurring pattern has convinced many people that, at a minimum, the BBB’s rating framework fails to incorporate significant data points (e.g., legal actions, lawsuit records, or state-level enforcement orders). According to CNN Money (2015), the BBB acknowledged that it does not systematically track such details unless they are directly brought to its attention. That reactive approach, critics maintain, creates a false sense of security for consumers who see an A+ rating and assume thorough due diligence has been conducted.

Some consumer anecdotes suggest that certain BBB chapters can even mark a complaint “resolved” or “closed” if the business makes what it deems a “good faith” gesture, regardless of whether the customer is satisfied with the outcome. On consumer forums such as RipoffReport or the discussion found at Renovation Reviews, people share stories of filing detailed grievances with the BBB only to see them summarized in a way that benefits the company or fails to capture crucial context. Others say they faced demands from their local BBB office to pay a fee for mediation services, which they found surprising since the bureau’s original premise was providing free complaint resolution. Although these stories are anecdotal, the frequency of such claims across multiple platforms indicates that public skepticism remains significant.

The phrase “mafia-style protection scheme” has become a pithy insult lobbed by some angry business owners who suspect that paying the BBB membership fee is the only sure path to a good letter grade. While the BBB vehemently denies this, historical investigations reinforce that this description was at least partially accurate in certain regions, especially before the reforms. Even if the modern BBB no longer openly ties membership to rating points, the mere fact that accredited businesses are more engaged with complaint resolution can lead to systematically higher grades. Businesses that ignore the BBB or refuse to pay fees might see negative ratings, which ironically might be more reflective of how the business interacts with the BBB itself than how it treats its customers in general. In a digital era where platforms like Yelp, Google Reviews, and social media offer consumers a more direct line to share experiences, the BBB’s somewhat antiquated system sometimes struggles to capture the nuanced reality of every business’s track record.

Investigative news outlets like ABC News, CNN Money, and Time have all come to similar conclusions regarding the BBB’s major weaknesses: The bureau relies on membership fees for funding, it has no regulatory authority, and its local chapters sometimes fail to consistently evaluate businesses. HowStuffWorks also observes that some consumers and small businesses misinterpret the BBB as a government affiliate, which adds another layer of confusion when they discover the BBB’s limited powers. Worse, these misunderstandings can create a sense of betrayal among consumers who believe the BBB is an official regulator, only to find that it cannot impose penalties or forcibly shut down fraudulent businesses. The organization’s own disclaimers, which clarify it is not a government agency, are often overlooked by the general public.

Some critics conclude that the BBB is not exactly a “scam” in the classic sense of a deliberate swindle or fraudulent scheme. Rather, they describe it as a “flawed gatekeeper” whose structural issues and historic controversies undermine its credibility. Businesses that genuinely uphold ethical standards and see value in complaint resolution may benefit from accreditation, while others accuse the bureau of favoritism. The question of how an entity that collects money from businesses can impartially rate those same businesses remains unresolved in the eyes of many. Experts suggest that the organization’s disclaimers about the voluntary nature of the process, and about how it cannot verify all aspects of a business’s legal standing, serve as a reminder that the BBB rating is not comprehensive proof of integrity or customer satisfaction. Consumers should thus look to multiple sources, from government consumer protection sites to review aggregators, before making purchasing decisions.

From the vantage point of consumer advocacy, the most valuable role the BBB can play is facilitating direct communication between companies and disgruntled customers. In numerous cases, contacting the BBB about an unresolved refund or warranty dispute prompts a swift reaction from a business that might otherwise ignore an individual’s complaint. Yet the controversies remain compelling because so many recognized companies have exhibited widely divergent BBB experiences depending on whether they engaged with the bureau’s system. Large corporations that ignore BBB complaints often rack up poor ratings, while smaller businesses that pay fees and respond meticulously tend to earn higher marks, even if their broader reputations elsewhere are not as strong. The correlation between accreditation and better ratings may not prove causation, but it has certainly fueled accusations of impropriety.

In conclusion, the idea of the Better Business Bureau as a scam arises from credible examples of abuse, including local chapters that blatantly offered improved grades in exchange for membership dues, plus highly publicized sting operations (like registering “Hamas” as a paying member) that confirmed pay-to-play vulnerabilities. Although reforms and expulsions indicate that the BBB’s national leadership attempted to curb these problematic chapters, critics argue that the bureau’s dependence on membership fees continues to cast doubt on its ability to be fully impartial. Meanwhile, a history of ignoring or overlooking major lawsuits unless they appear through BBB channels has ignited skepticism that a high rating guarantees anything beyond a willingness to engage with the BBB. For an in-depth conversation and user-reported experiences, the thread at Renovation Reviews provides additional insights.

Ultimately, calling the BBB a “scam” may be an oversimplification. Yet persistent stories of pay-to-play practices, combined with a lack of regulatory authority, have discouraged a segment of the public from relying on the BBB’s letter grades. Consumers, therefore, are best advised to use BBB ratings as just one data point in their research, cross-referencing reviews, government records, and personal recommendations. In that sense, the BBB can still serve a function, but it is ill-advised to treat the bureau’s grades as gospel, especially given the controversies of the past decade. Each consumer must decide for themselves how much weight to give those familiar letters—A+, A, B, C, D, or F. Regardless of the final verdict, this long-standing institution has undergone significant scrutiny, some of which has exposed legitimate concerns over its ability to impartially hold businesses accountable without the powerful incentive to keep its paying members content.