Why Consumers Shouldn’t Rely on the Better Business Bureau

Whether you are looking for a reliable service provider or trying to choose the best product among a field of options, you may be inclined to look to the Better Business Bureau to help you choose. A new report from CNN Money explains why that might be a bad idea.

A CNN Money investigation recently revealed more than 100 businesses facing serious legal trouble from government regulators, but still maintained at least an A- rating from the Better Business Bureau. Here’s a sample of the companies that made the list:

What did all these companies have in common that let them maintain their high ratings? For one, they are all paying members. In 2013, the BBB had nearly 400,000 paying members, resulting in nearly $200 million in revenue. “Accreditation” is something that companies can purchase through membership fees.

The Better Business Bureau is a non-profit company with a set of internal criteria that it uses to rate companies – both members and non-members. But even when the BBB issues “red flags” against a company, it can still maintain a high rating based on long-time membership. Companies can also receive higher ratings for addressing complaints through the BBB system than for any other factor – including not having any complaints at all.

At the same time, government lawsuits and penalties may have such a small impact that a company can maintain an A rating while paying regulators thousands of dollars in fines. Consumer protection lawsuits rank even lower: they aren’t a factor at all.

The Better Business Bureau isn’t a consumer protection agency. Instead, it is in the business of offering paid endorsements to companies, even in the face of regulatory penalties. Don’t get fooled by their ratings. Make sure you know whether any review is paid for before you put your money on the line.