HARTFORD, Conn. - Connecticut's attorney general is pushing the Better Business Bureau to stop what he calls a pay-to-play system that gives its members a ratings boost over nonmembers.
Richard Blumenthal, who will soon leave his state job to replace Christopher Dodd in the U.S. Senate, sent a letter Friday to the Arlington, Va.-based Council of Better Business Bureaus about its letter-grade system, a method it adopted last year in place of the previous satisfactory/unsatisfactory ratings.
He said his review found that BBB members' grades include extra points unavailable to nonmembers, a practice he called unfair to consumers who assume the companies are being judged equally.
Blumenthal wants the organization to either stop linking ratings to membership or, failing that, to tell consumers when a company's grade was influenced by joining the BBB. Dues range from a few hundred dollars to more than $5,000, depending on a business' size.
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"This financial influence is potentially harmful and misleading to consumers," said Blumenthal, who wants the group to change its rating system by mid-December.
Alison Southwick, spokeswoman for the national BBB, said its officials have been talking with Blumenthal and believe they can satisfy his concerns.
"We disagree with his characterization that BBB does not adequately disclose the fact that accredited businesses financially support BBB," she said. "However, we are always interested in hearing from our partners in consumer advocacy, and are pleased to accept constructive feedback from his office and other consumer advocates."
Blumenthal's letter came Friday, the day ABC News was airing an investigation into BBB ratings on its "20/20" news-magazine program.
The network said it had videotaped instances in which two Los Angeles business owners were promised, and later given, A-plus ratings if they paid $395 membership fees. ABC also reported that a group of Los Angeles business-owners paid $425 to join the BBB as a fake company called Hamas - named after the Islamic militant group - and secured an A-minus grade.
The Los Angeles Times, several consumer-oriented websites and other media outlets also have reported on questions over the rating system since it was introduced last year.
Steve Cox, BBB national president and chief executive officer, told ABC News that the instances its reporters found were caused by errors and sales violations by employees and did not reflect the BBB's policies.
TicketNetwork Inc., an online ticket exchange, recently sued the Connecticut Better Business Bureau over the rating method, saying it constitutes a deceptive business practice. The case, filed in September, is pending in a Connecticut court.
Howard Schwartz, a spokesman for the Connecticut BBB, said that he could not comment directly on the Connecticut lawsuit, but that much of the information they receive about companies comes directly from consumers.
"The (Connecticut) Better Business Bureau never has, does not and never will exchange rating points for dues," Schwartz said. "There are companies on a monthly basis which we refuse because they do not embody our ethical standards or standards for trust. It's not a situation where someone just says, 'I'd like to be accredited by the BBB.' "
The Better Business Bureau announced in 2009 that it was adopting the letter-grade system.
It says the method gives better information to consumers as they seek details on companies' service, response to complaints, quality of products and other factors.
Local bureau: Grading is fair; members uphold standards
Better Business Bureau of Southern Arizona member businesses receive additional points for being accredited by the bureau, but the number of points is marginal compared to their total score, said Kim States, president of the local organization.
Businesses are graded based on 17 factors, ranging from having the appropriate state licenses to keeping contact information up-to-date.
Being accredited accounts for four points in the bureau's ranking system, while keeping contact information current is equal to five, States said.
The bulk of the points assigned by the bureau are related to other factors, such as the volume of consumer complaints, States said.
Points for membership amount to about a half a letter grade, so it is possible not to be a member of the BBB and earn a higher score than a member, she said.
It is, however, impossible to earn an A-plus without joining the Better Business Bureau, States said.
She said the grading is fair because joining the bureau represents a significant commitment to upholding BBB standards. "We believe that accreditation, and the standards it comes with, should allow a company to become distinguished from a company that hasn't been accredited," she said.
States said businesses are thoroughly vetted before being allowed to join the Better Business Bureau of Southern Arizona.
The process takes about six to seven days as the bureau verifies the company's application information. Potential members also must be licensed by the appropriate agencies and have been in business in the state for at least one year, she said.
States said she couldn't speak to incidents documented in California by "20/20" and the Los Angeles Times (see accompanying story), but noted her bureau's application process is designed to prevent mistakes and abuses.
"I can assure you those types of mistakes would be very hard to make at this BBB because of the process applications go through," she said.
In regard to the ranking system, States said that consumers have generally found the letter grades more useful than the previous pass/fail system.
"The feedback we've been getting from consumers is that the new rating system is much more informative," she said.
Contact reporter Alex Dalenberg at adalenberg@azstarnet.com or 573-4224.