Business Review & Rating firm BBB CEO Resigns after “Pay for Play” scheme revealed

Today, the CEO of the largest chapter of Better Business Bureau (BBB) resigns after ABC NEWS and a large group of business owner in L.A. revealed the “pay for play” scheme story. ABC has first followed and find that BBB is actually asking business to pay to raise their ratings with BBB. The news shows fact is provided and proved.

• A fake company called Hamas, with a fake address is created. Immediately after paying $425 to BBB, the bogus company receives a rating of A-
• BBB telemarketer (who are paid 45% of the first year membership fee as commission) told an undercover ABC investigator that a company’s C grade could be raised to A+ if they pay to join BBB.
• A manager at an hardware store said their C grade was replaced by A+ the next business day they pay $565 membership fee, and the only complaint against the company has been wiped off.
• Another company that provides clowns for parties’ C- grade becomes an A+ after they pay $395 membership fee.

William Mitchell, the ex-CEO of BBB’s LA chapter is the grand inventor of this scheme, the chapter brings in 6.2 million membership fee per year and pay the CEO over $400K in salary. The scheme is adopted nationally and it is reportedly that BBB is removing this practice (a PR stunt?).

So, for a company that is over 80 years old and highly recognized in the industry for business reviews, is selling rating for cash. What sort of world is this? In my opinion, the leaders in BBB is capitalizing on the reputation of BBB and make some cash for themselves.

BBB is a large company, as well as Angie’s list and others, are built and run on the concept of false security. I think it is a problem, and it is a difficult problem.

One way to this problem is to increase the transparency of these companies on rating, ranking, recommendations. The transparency should be at least at a level of FICO Score, which is highly transparent to users and third parties to verify. I wish I will have time to write a separate post on this solely.

Another way to the problem is to include professional reviewer in the process, instead of relying on layman like myself or my aunt Mary to rate a business. I have some ideas about it, and I also wish to write future posts on this point as well.