Better Business Bureau's grading system stirs debate

NORFOLK

Haynes Furniture Co. has an A-plus.

Budget Plumbing & Home Repair gets an F.

S. Ray Barrett Dry Cleaners rates a B-minus.

Like a teacher trying to better distinguish students, the Better Business Bureau in January switched from a pass-fail system to letter grades to give more detailed assessments of companies.

Some companies and consumers, however, criticize the system as arbitrary and inaccurate. The grades, they say, don't fairly reflect businesses' practices and their hand-ling of complaints.

The owners of S. Ray Barrett said they had no idea why they got a B-minus, with two complaints in the past three years listed as resolved on their BBB report card. Budget Plumbing's F also confused the owner of that Norfolk business.

The grading system has fueled debate about the Better Business Bureau's effectiveness in policing local businesses and helping consumers resolve problems with those businesses.

Leonard Bennett, a Newport News attorney who specializes in consumer protection cases, said the public mistakenly believes the BBB exists to assist them.

"The problem is they market to us - to you and me, John and Jane consumer - that if you have a Better Business Bureau seal of approval," it guarantees a company's reliability, Bennett said. "That seal of approval doesn't mean anything except you've signed up and paid your dues."

But Irene Leech, president of the Virginia Citizens Consumer Council and a professor of consumer affairs at Virginia Tech, said the BBB provides valuable assistance to consumers, particularly as the state has cut funding for its consumer advocacy offices.

"We're a lot better off because we have them," she said of the bureau.

That's the way C.C. "Bud" Shelton, president and CEO of the Better Business Bureau of Greater Hampton Roads, sees it.

"Our real thrust is to bring to the marketplace businesses that you can trust, so you don't have to register complaints, and to make the marketplace an ethical and honest place so consumers have what they're paying for," Shelton said.

Before the new grading system, the BBB assessed companies only as "satisfactory" or "unsatisfactory."

"It became apparent people wanted more information," Shelton said. "They wanted something else to make their judgment on."

The grades, just like in schools, range from A-plus to F. They are based on a 90-point scale, with points awarded or deducted for a variety of factors.

A company, for instance, gets more points for age and can lose points if it's too new. The longer the company's track record, the more confidence a consumer can have in dealing with that business, Shelton explained.

A company's complaint history carries the most weight in the system, accounting for 85 percent of its grade, Shelton said. A large number of complaints won't necessarily lower a grade. It depends on how large the company is, its volume of business and its responsiveness to complaints.

That's how Haynes has an A-plus, even with 56 complaints cited by the BBB in the past 36 months - its standard reporting period.

"The volume of consumer transactions is enormous" at Haynes, said Rosemary Nye, the local BBB's vice president of operations. "They do resolve all of their complaints."

A business cannot receive an A-plus unless it is a BBB member, or what the BBB calls an "accredited business." The highest grade a business that is not accredited can get is an A.

An accredited business will have no lower than a B-plus. Accredited members must sign a pledge to "promptly respond" to complaints and agree to mediation or arbitration if a consumer complaint remains unresolved.

"We hold accredited businesses to a lofty standard," Shelton said. "Not only is their name out in front of the public, but our name is out in front of the public. We think that merits a bigger spotlight."

The BBB of Greater Hampton Roads is based in Norfolk and has about 2,000 accredited members in southeastern Virginia and northeastern North Carolina and on the Eastern Shore. They pay between $400 and $5,000 a year, depending on their size. Shelton wouldn't disclose revenue for the private organization but said 95 to 98 percent comes from membership fees.

For Albano Cleaners, which has an A-plus grade, BBB membership sends a message to consumers, said Jamie Albano, president of the 33-year-old business.

"I think it's something that gives our customers confidence, to know there's a certain level we're striving for," she said. "It tells them that they're kings."

The local BBB has reports on about 20,000 of the region's businesses.

After five people contact the BBB to ask about a particular business that's not rated, it sends the company a questionnaire to get basic information. Failure to provide information can lead to a lower grade on that company's report.

The reports for many local businesses graded in the B range say the BBB "does not have sufficient information" about the company or its history. That was the explanation given for the grades for multiple Farm Fresh supermarket locations, which ranged from B-plus to B-minus, though they had no complaints.

"It could be that we sent a questionnaire to Farm Fresh and they chose, for whatever reason, not to provide the information," Nye said.

Susan Mayo, a spokeswoman for Farm Fresh, said she never received any BBB request for information, and all such inquiries usually would come to the Virginia Beach corporate office. The retailer planned to meet with BBB officials, she said. Late last week, the BBB changed the Farm Fresh report to "no rating" and said it was updating it.

Other B-rated businesses - including S. Ray Barrett in Norfolk, S.B. Ballard Construction Co. in Virginia Beach and The Dickerson & Smith Law Group in Virginia Beach - also said they never received any paperwork from the BBB before they were graded.

"They did not solicit information from me," said Mary Keywood, president of S. Ray Barrett, adding that she opens all mail and would have answered that kind of inquiry.

Steven Mann, owner of Budget Plumbing, said he received notice of only two complaints from the BBB, but its report cited three against the Norfolk company - including one deemed "serious." The F grade resulted from the company's failure to respond to or resolve them, according to the BBB.

Mann said he believed he resolved one complaint and tried to resolve the other. In each case, he said, he alerted the BBB but never heard back.

Nye didn't address Mann's specific concerns but said the BBB forwards every complaint in writing to a company and asks for a response in writing to make sure it has documented information. Companies also receive written notice if they are getting an F grade - in a letter sent by certified mail - and a draft of their report before it is posted, Nye said. They can contact the BBB anytime to correct or update their information, she said.

Mann said he never received any notice or certified letter about his grade.

"It is not a fair system," he said.

The local BBB processes 400 to 500 complaints a month, and more than 90 percent are resolved, Nye said.

Complaints filed with the BBB go to its Conciliations Department, which has four employees who review the information, request documentation from the consumer and send the paperwork to the business.

The business gets a couple of notices within about a month to answer a complaint. Its response goes to the consumer, who has 10 days to file more information, which again is forwarded to the company. The BBB aims to resolve a complaint within two months.

"It's a back-and-forth," Nye said. "At some point, the BBB has to make an evaluation on the dispute."

The BBB has helped Gloucester resident Dallas Clark. In one case, he complained about a shoddy repair of a leak on the wood-burning stove in his home. The company ended up redoing the work and refunding his money.

"The Better Business Bureau made them back down and take care of the problem," he said.

Some BBB reports list complaints as resolved even if the consumer "failed to acknowledge acceptance" of the business's response or remains dissatisfied. The bureau has closed complaints after finding that the company made a reasonable effort to resolve the problem or provided documentation that it was n't obligated to do so.

None of those scenarios necessarily tarnishes a company's grade.

"We will find many times in evaluating it that the consumer is wrong," Shelton said. "The consumer is demanding something that's unreasonable."

He cited a consumer who had a problem with a vacation time-share arrangement. The time-share operator agreed to give the customer a four-day stay for free, but the consumer wanted a full week, Shelton said.

"The problem is the Better Business Bureau retains someone as a clean member so long as they participate in that process," said Bennett, the consumer attorney. "There's not a requirement that they resolve the problem in favor of the consumer."

Allegra Frazier filed a complaint with the BBB in August 2008 on behalf of her daughter, who had paid $365 to an employment-services company, Virginia Personnel, that she said never provided her any help finding a job. Virginia Personnel is one of three related companies the state attorney general's office has sued, alleging they misled consumers. It is out of business and no longer has a BBB rating.

The company's president disputed Frazier's claims. Frazier submitted a rebuttal. Three months later, the BBB closed the case and listed it as "assumed resolved," though Frazier wrote in a follow-up that she had no resolution.

"I think they should contact the person who has been complaining and say, 'Do you feel this has been resolved?' " Frazier said.

Nye said the bureau mailed Frazier a copy of Virginia Personnel's rebuttal, but never heard back from her. The BBB, she said, closed the case in November 2008. Four days later, Nye said, the bureau received "more information from the consumer, but we didn't feel like it was any additional information that would have warranted further response from the company."

And Frazier "did not ask for any additional response," Nye said.

Carolyn Shapiro, (757) 446-2270, carolyn.shapiro@pilotonline.com

Philip Walzer, (757) 222-3864,phil.walzer@pilotonline.com