The Better Business Bureau, one of the country's best known consumer watchdog groups, is being accused by business owners of running a "pay for play" scheme in which A plus ratings are awarded to those who pay membership fees, and F ratings used to punish those who don't.
To prove the point, a group of Los Angeles business owners paid $425 to the Better Business Bureau and were able to obtain an A minus grade for a non-existent company called Hamas, named after the Middle Eastern terror group.
"Right now, this rating system is really unworthy of consumer trust or confidence," said Connecticut attorney general Richard Blumenthal in an interview to be broadcast as part of an ABC News investigation airing tonight on 20/20.
In an official demand letter sent to the national headquarters of the Better Business Bureau Thursday, Blumenthal called on the BBB to stop using its grading system, which he said was "potentially harmful and misleading" to consumers.
"The BBB accreditation and the BBB ratings systems is not about generating money," said BBB national president and CEO Steve Cox. He said the A minus grade for Hamas was given in error. "Plain and simple, we made a mistake," Cox told ABC News.
Errors seem to abound at the Better Business Bureau. As reported by an anonymous blogger the BBB also awarded an A minus rating to a non-existent sushi restaurant in Santa Ana, California and an A plus to a skinhead, neo-Nazi web site called Stormfront.
Each listing cost $425.
"They ran the credit card and within 12 hours they were an approved, accredited member," said the anonymous blogger, who runs a site called bbbroundup.com.
"They're more interested in the money than their credibility," he said.
The BBB's Cox said the three listings were all mistakes made by sales people.
"That's an inaccurate statement that business people are able to buy A's," Cox said. "We have more than 500,000 non-accredited businesses who have A ratings," he added.
Yet, as part of the ABC News investigation, an ABC News producer with a camera was present as two small business owners in Los Angeles were told by Better Business Bureau tele-marketers that their grades of C could be raised to A plus if they paid $395 membership fees.
Terri Hartman, the manager of a Los Angeles antique fixtures store, Liz's Antique Hardware, was told only a payment could change her grade, based on one old complaint that had already been resolved.
"So, if I don't pay, even though the complaint has been resolved, I still have a C rating?"
Hartman then read off her credit card number and the next business day the C grade was replaced with an A plus, and the one complaint was wiped off the record.
In a second case, Carmen Tellez, the owner of a company that provides clowns for parties was also told she had to pay to fix her C- grade, based on a two-year old complaint that she says had already been resolved.
The C minus became an A plus the very next day after she provided her credit card number for the $395 charge.
"If I'm paying for a grade, then how are the customers supposed to really trust the Better Business Bureau?" she asked.
Cox said the examples provided by ABC News were violations of sales policy and not a standard way of doing business.
"The BBB is not operating fraudulently," Cox said.