Recently the Florida Trends Magazine wrote this article after hearing about our concerns with the BBB and small business.

Thank you Florida trends for not taking sides or falling for the rhetoric. It takes a strong Editorial Staff to stand up to the Better Business Bureau. The FTC would not address these issues, too much of a political football, but Florida Trends did. See why.

www.FloridaTrends.com

DECEMBER 2002 ISSUE

Better Business Bureau Calling ...
The Better Business Bureau was founded in part to support truth-in-advertising. Ironically, some business owners now complain its telemarketing campaign to sell memberships is confusing and misleading.
By Cynthia Barnett

BETTER BUSINESS BUREAU

Founded: In 1912 as a truth-in-advertising watchdog.
Organization: Non-profit - 142 offices in North America operate as franchises under oversight of the Council of Better Business Bureaus in Arlington, Va.
In Florida: Five offices - Pensacola, Jacksonville, Orlando, Clearwater and West Palm Beach.
Credo: The majority of marketplace problems can be solved fairly through voluntary self-regulation of business and consumer education.
Top duties: Business reliability reports; dispute resolution; truth-in-advertising; consumer and business education; a Wise-Giving Alliance that evaluates charities.
On the web: The BBBOnline is one of the top business-reliability programs on the internet.
Membership costs: Vary office to office but start at $300 and can range upward of $1,000 a year depending on how many employees a company has.

Roger Brunswick, president of J&M Air Conditioning of Fort Myers, has a complaint about a company’s telemarketing. But Brunswick can’t call the Better Business Bureau about it - the BBB is the company that’s annoying him.

Brunswick, a former BBB member, complains that he’s been besieged by telemarketers from the non-profit organization’s branches in Clearwater and West Palm Beach trying to get him to renew his membership. He says the BBB has kept calling even after he asked them to stop. He also believes the BBB, an organization devoted to ethics and honesty in business, uses a misleading telemarketing pitch. "I think they are making up information to get me to join the Better Business Bureau," Brunswick says. The BBB employees who pitch membership in the organization use a carefully worded script informing business owners that membership is "by invitation only.’’ The script refers to "positive interest we have in your company" and says the invitation comes because of this activity and the fact that "we have no unanswered complaints on file against your company" ("The Script," below).

The script leaves unclear what "positive interest’’ and "this activity" mean. As for "invitation only," the BBB welcomes any qualifying business owner who calls an office or signs up on a BBB website. In any event, the "invitation only" pitch hardly results from a rigorous selection process based on a company’s business practices. In fact, BBB telemarketers get leads on companies anywhere they can, according to sources familiar with the west Florida BBB operation in the Yellow Pages, even on their way to work when they see business phone numbers on the sides of pickup trucks along U.S. 19.

Another part of the script says the west Florida office receives "roughly 2,000 calls a day," most from consumers seeking reliability reports on area businesses. The number appears exaggerated: Using the west Florida office’s own numbers, combined consumer inquiries and complaints over the past five years would average about 775 a day.

Brunswick and some other owners, as well as University of Florida business professor Robert W. Emerson, say the script can leave the impression that the BBB is calling because of consumer inquiries into the business. Emerson, who teaches students about the ethical issues involved in getting one’s foot in the door to make a sales pitch, reviewed the entire BBB telemarketing script and called it "problematic."

"People can pretty quickly draw some erroneous conclusions," he says. "There are definitely better ways to make this pitch."

Telemarketing is not the first problem for BBBs in Florida, which is home to five of the nation’s 142 Better Business Bureau franchises. In 1997, the national council that oversees local BBBs shut down the south Florida office because of poor management and high debt ["Watch Dog Turns Lap Dog," October 1997, FloridaTrend.com].

That prompted some former employees of the south Florida BBB Fort Myers branch to form a competing consumer-protection group. After a legal wrangle with the BBB over use of the name Better Business Council, the group now calls itself Consumer Fraud Awareness. Its founder, D.J. Petruccelli, president of the Greater Fort Myers Beach Chamber of Commerce for the past 17 years and a former board member of BBB chapters in Indiana and Florida, is so disenchanted with the BBB that he calls it "despicable."

Increased competition

Petruccelli sees the telemarketing as an attempt by some BBB franchises to maintain membership in the face of competition from local non-profit organizations like his and government agencies that provide similar services more cheaply. One competitor, Angie’s List, founded in Ohio seven years ago, charges a membership fee to consumers and uses their referrals to rank businesses. That group is now in 12 major metropolitan areas, including Tampa Bay. Meanwhile, the Florida Department of Business and Professional Regulation offers a successful Alternative Dispute Resolution Program that has awarded consumers more than $4 million in its four years of existence.

Sandra Schofield, who runs Consumer Fraud Awareness, says she has received more than 100 complaints from southwest Florida business owners about the BBB’s practices. Several owners, Schofield says, complain that BBB telemarketers tell them they’re calling because of consumer inquiries into their companies, then pitch membership. Other owners say the BBB led them to believe it had an office in their city when, in fact, the closest BBB offices are in Clearwater and West Palm Beach.

"The BBBs clearly don’t want us here, yet they won’t open an office here because they think they can rake in money without one," Schofield complains. "But you cannot be in Clearwater and know what’s going on locally in Fort Myers, in Naples."

Petruccelli says many of North America’s 142 BBB offices continue to do good work. But he believes that the franchise structure and loose oversight by the National Council of BBBs allow some offices too much rein. "In my opinion, they are totally focused on selling memberships and don’t seem to care about (potential members’) reputation," he says.

Response

The BBB script in question was written by John Ponder, a former marketing executive for the BBB of Detroit and Eastern Michigan who started his own firm, JP Marketing Associates of Northville, Mich., to help BBBs around the country beef up membership. BBB employees in the west Florida, Jacksonville and Orlando offices use Ponder’s scripts and services, including training. The southeast Florida office writes its own telemarketing scripts, and the BBB’s Panhandle office relies on traditional sales visits to businesses.

Ponder maintains that his scripts are honest and ethical. He says it’s crucial to get across vital information about the BBB’s mission at the beginning of the call. He wrote the "positive interest" line, he says, to reassure business owners who feared the BBB was calling because of consumer complaints. Ponder says he’s now cut that sentence from all BBB scripts in favor of a new line that says: "We’re calling in regard to your company’s business record with the bureau."

Pat White, president of the BBB’s Clearwater office, where she’s worked since 1975, canceled an in-person interview for this report and would respond only to written questions. She said her branch began using telephone solicitors in 1988. "The cost of doing business today is considerable, and even though we’re non-profit, we must maintain our budget demands and service to stay in business," she wrote. The west Florida office has nearly 5,000 members and handled 1.3 million consumer inquiries over the past five years, according to White.

As for competition, White pointed out that the BBB’s mission "is very different from law-enforcement, government and private consumer organizations. Our name recognition is a plus, and our retrieval of information from inquiry calls and complaints is shared with many organizations and provides cases for government action. No one of us is the answer in every case, and the cooperative effort is vital in the marketplace today."

Ron Berry, senior vice president of the Arlington, Va.-based Council of Better Business Bureaus, acknowledges that his members face more competition and costs these days. Nationwide, membership continues to grow between 4% and 8% a year, he says, but consumer calls to BBBs are growing so much faster that membership dues are lagging operations costs in some markets.

As a result, some franchises employ telemarketing to boost membership, while some others now charge consumers via 900 numbers or fees when they check on companies or file complaints. Berry says the majority of the 142 franchises do not use telemarketing but that a growing minority have found it more effective and efficient than the in-person visits traditionally used by the organization.

The national council has telemarketing ethics guidelines that all offices must adhere to, though he admits he’s received a few business complaints about some offices’ tactics over the years. "We realize that telemarketing is a legitimate form of marketing," says Berry. "It’s as honest a way to get in the door as any that I know of as long as it’s true."

Meanwhile, Berry says that an unprecedented amount of fraudulent business practices around the nation makes the BBBs as essential as they were when founded nearly 100 years ago. "As far as I’m concerned, there is more than enough mediation and arbitration around for everybody," Berry says. "There will be plenty for us all to do."

THE SCRIPT

Here’s the introductory part of a telemarketing script being used by BBB employees in some parts of Florida. The BBB recently reworded the part of the script that refers to "positive interest."

"This is _____ with the Better Business Bureau. I’m calling as a result of some positive interest we have in your company. At the BBB, we receive roughly 2,000 calls a day.

Most of these calls are from prospective customers who call to get a Better Business Bureau reliability report on a company before they do business with them.

Basically they want to make sure that the company they intend to deal with is honest and ethical and that they are going to be serviced properly. Because of this activity and the fact that we have no unanswered complaints on file against your company, I have been authorized to invite you to apply for membership into the Better Business Bureau. However, I do need to make one thing clear membership in the Better Business Bureau is by invitation only."

Here below is our founder's original article bring this to the attention of Business Owners and News Outlets across this Nation.

Better Business Bureau Fraudulent Sales Practices

Have any other small businesses had a problem with the BBB and there sales practices? We have for quite some time. Our franchisees are required to join the local Chambers of Commerce as part of their franchise when one exists in their exclusive territory. But as soon as they do the BBB calls up and says;

"We have been getting a lot of calls about your service, but we did not know what to tell those customers who inquired about you with The BBB?" Then the pitch goes on "for about $300 plus dollars you will receive".

Our franchisees join the chamber prior to the commencement of their business while their mobile car wash service trucks are being built to get to know the communities they will be serving. Inver ably they will get the call from the BBB from the new member directory from the chamber of commerce before any advertising goes out, so in fact no one had ever called the BBB at all. This has happened to our franchisees in Carson City, NV; Palm Desert, CA; Agoura Hills, CA; Camarillo, CA; Sacramento, CA and Houston, TX. I realize that this is "telemarketing fraud" and I am concerned. I am told that many of the 128 BBBs across the country pay their salespeople either all or part commission. So perhaps this is an individual problem, yet their sales people have done this. I personally have had it happen five times to me as the franchisees signed up at the Chamber of Commerce and did not have phones yet, so they called me at Corporate. As a franchisor I am responsible for any verbiage of any sales person given during a sale, shouldn’t the BBB also be liable for these falsehoods?

Today I contacted the Washington D.C. head office of the BBB and they denied that any such incident has ever occurred and referred me to the fact that they are a 90-year old organization. Maybe, but as it stands today they are breaking the law. This has occurred five times in sales calls to me personally from BBB representatives.

Today, I also contacted the Los Angeles BBB and was told that yes their sales people often use Chamber of Commerce lists of new members as well as look up names of anyone who has had a complaint filed against them. I was told of this off the record, yet I am using this information too. In other words they use the list of companies who had customers call in whether it was a valid complaint or not as a sales tool. Interesting since accounting firms cannot also be consultants these days. The hypocrisy of the BBB is a little unnerving and of course unethical if not out right fraudulent.

I was told at the L.A. office that "MOST COMPANIES" join the BBB. Impossible since there are over 1.6 million businesses throughout the greater LA, Orange County, Riverside, San Fernando Valley area and most could only be over 51%. This is an exaggeration by any stretch. This would mean they would have a minimum of 800,001 business members, when in fact they have less than one tenth that number in all of Southern California. Yet these same BBB offices take complaints about franchising and on many of their web sites tell buyers to be aware of exaggerations; https://www.bbb.org/library/fran.asp . This is quite appalling and shows that both franchisors and franchisee attorneys should stand up and take notice.

But this is not just a franchise business issue, it is a small business issue. All small business people are subjected to this and maybe harassed. Chambers of Commerce across this country sign up their new members with public trust, yet this is being abused by another organization the BBB.

I was also told today by this sales person in Los Angeles that 9 out of 10 calls coming into the BBB were consumers looking for references of businesses for service or products. This is also an exaggeration and a falsehood (lie). If you call any BBB the answering machine usually states; "If you would like to make a complaint press 1" There is no mention of getting a reference and certainly few incoming calls result in new business for its business members. One of the benefits you receive is instant credibility from the consumer, yet the organization issuing the stamp of approval lacks credibility and ethics of it’s own.

Also of grave concern is the fact that even if you join the BBB and appear in the BBB phone book they produce in some markets, if you are disreputable you are still in print for the remainder of the year. And therefore we have the BBB promoting disreputable businesses for as much as 12 months. If someone files a complaint against your company whether real or imaginary (trying to get free stuff) you must settle the said complaint before you can renew, once again extortion.

I feel these sales techniques are fraudulent and disreputable. I am also concerned with the "Boomerang" closing techniques when the BBB sales person gets a negative response to join. "We will not be able to tell the people who call us that you are a reputable company." Implying that the consumer will assume the opposite, that you are disreputable company. This in itself maybe good for BBB sales, but it is an extortion technique. I have heard this extortion technique myself many times and phrased many different ways all-leading to the same tactic. Asking small companies to fork over $300 plus dollars is unnecessary and they will receive little if any benefit for their BBB membership. Perhaps the plaque displayed may be of value to customers in a store, but the way in which they attempt to sell it is dishonest. The BBB works closely with the FTC and after contacting the BBB to make a complaint they told me I was wrong, and that I did not know what I was talking about and that the BBB would never do such a thing? Which is also a falsehood since I have experienced it first hand. When I told them that I might have to contact the FTC in this matter, they said go-ahead knowing their strength in alliance with the government

The BBB preys on small businesses of all types as well as franchised businesses for membership using these techniques. We called the FTC as well and they would not take the complaint. Perhaps this is because they work with the BBB in secretly using entrapment techniques to get franchisors to make unsubstantiated earnings claims. The FTC has also worked with the BBB to catch franchisees of various systems in consumer fraud such as automobile repair, advertising claims and telemarketing techniques. So for this reason the FTC will not do anything about this issue.

The BBB is above the law. They often lie to prospective members to make sales, meanwhile attack franchisors using entrapment techniques from the inside while preying upon franchisees to prove self worth in conjunction with other agencies in the media and also use extortion tactics to make money for membership fees. Imagine the money they have extracted from all the franchise systems of this country. Just imagine the number of small businesses who are struggling right now to make payroll as cash flow has lessened due to economic forces beyond their control. Over 10% of all Americans own some type of small business and can be subjected to these terrorizing and extortion sales tactics. Most franchisors have many franchisees that are members of the BBB; this costs franchisees each year and cuts into the profits of the franchised units.

We have put this line of text in our franchise agreement:

5.1 You may not join the Better Business Bureau as a business member as part this franchise with us.

I am very serious about this issue, having been lied to by BBB representatives for the last five years and today when I called to see if things had changed. I was hung up on by the BBB in Washington D.C. when I called to discuss this issue. The FTC will not do anything about it for fear of losing a partner. If the FTC will not look into this, why do we need an FTC or a BBB?

I have received several emails from concerned business people;

Bob writes:

That's really interesting, isn't it? One government bureaucracy is using what is "supposed" to be a free-market entity to do the dirty work that they themselves don't have the Constitutional backing to do in the first place. Then, by not holding the BBB accountable for its fraudulent practices, it is basically saying to them, "you are a brother government agency - one of us -, free to terrorize whomever you want".

I always thought that the BBB was basically a private organization that served as a watchdog, with a membership of businesses that could self-police. Apparently, I was wrong.

This is a nationwide problem not just a few rouge sales people in one part of the country or one of the BBBs 128 locations. In Atlanta Mr. Lee writes:

It’s not just with franchises. We get calls at our company stores in Atlanta, NYC, Chicago, and Birmingham with the exact same sales pitch "blah blah .. we’ve been getting a lot of calls about your company from your prospects, and we don’t know what to tell them because you’re not listed with us.."

It seems like a total scam. I often feel strong-armed by them. Do you mind if I share your email with our attorney?

Other people are also concerned with these issues, iCop

You certainly don't need to convince me! I know first hand that everything you're reported here is true. I have personally received the exact same treatment from the BBB in California. I had to threaten to sue them to get them to stop calling with the threats and harassment.

A few years ago, when I had a complaint about one of their big name "sponsors" who ripped me off to the tune of several hundred dollars, the only response from the BBB was, "They said they didn't so it." This in spite of the fact that I had sent them undeniable proof! What is wrong with THIS picture?!

Unfortunately, I have no idea that anything can ever be done about it. They are protected by the government - as you have already found out. I did write a series of articles on it a couple of years ago. Maybe it's time to rerun them! Apparently, the only thing we can do is educate people and warn them.

Pretty much like the Mafia making you pay for protection under threat, eh? But then when Quest is listed as one of their corporate sponsors, you have to know something's very wrong!

Sorry we can't be more help but it's way too big a scam for iCop! When a government supported company like the BBB acts like nothing more than thugs, it's hard to be surprised at situations like Enron and WorldCom.

But that is not all the smallest of small business also have been harassed, Greg Spunk writes about this from San Diego and an office now in Phoenix:

We have not joined the BBB in either the Phoenix or San Diego locations for similar reasons. You just verified what I already felt was happening. They are of no value to us and we have not missed them.

In Pittsburgh a small manufacturer writes in to us and says:

the same thing to me. "someone is calling about your business and we aren't able to tell them anything since you aren't a member....

It was $465 dollars to join, and they called and called and called. I declined since I didn't see the point.

How are things on your end?

Get that article published somewhere, it is great info.

We received this from Albuquerque, NM;

It happened here for 6 months, same spiel, We have been getting calls for your business etc. Finally I told them that I was not interested and to stop calling or I would call Santa Fe and talk to the DA. Susie

I received this email from one of our own franchisees this week:

The BBB has called us and even after telling them I was too busy to make an appointment (after several calls), they dropped in when I wasn't home and told Gino I had made an appointment. NOT TRUE. What's up with them, I told them we were too new to join yet, we had to watch our cash flow. What's up with them?

Franchisees coming into the market and having been laid off need to watch ever penny they spend, if the BBB uses forceful tactics, then they are of detriment to the success of a new franchisee that is on a budget to get their businesses going. Then they show up at a personal residence without an appointment? The sales people are so aggressive and hound small businesses. What happened to privacy? Is the BBB resorting to new tactics after the recent telemarketing law became effective? The BBB was told by our franchise that they were not interested after several calls, so they show up at their house? I am sorry but isn’t this pushing it a little, general harassment? Yet no one will enforce these issues.

If any other Small Business Person, Chamber of Commerce, SBA office, SBDC or franchisor are having this problem, I would sure like to know. Yes we are busy too, but that does not mean we can allow this injustice to continue. This is unacceptable behavior and the BBB should be disgorged of these ill-gotten gains. These monies should be rightfully returned to the businesses and the FTC should not get a dime since they are in cahoots with the BBB and are allowing this to continue for years on end. The FTC and the BBB should stop throwing stones at franchisors and their franchisee team members.