The Ritz Carlton may be synonymous with service, but the Better Business Bureau gave the Boston branch of the luxury chain a failing grade.
"I was perplexed," said Erwin Schinnerl, general manager of the Ritz-Carlton on Boston Common. "To be rated an F is very severe."
Suzan Griffith, the owner of a Boston boutique called Sooki, was just as confused by the rating her small business received.
"A C-minus? Ha!," Griffith exclaimed, looking at her store's BBB profile on her computer. "Actually it's horrifying. It's hurting my business and it's just not fair."
The Better Business Bureau, one of the country's best known consumer watchdog groups, is being accused by some critics 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.
In an investigation that aired on 20/20, ABC News chief investigative correspondent Brian Ross found that a fictitious company named after the terror group Hamas was able to win high ratings under the BBB's rating system, while other businesses, including parts of famed chef Wolfgang Puck's culinary empire, seemed to have been slapped with failing grades because they hadn't paid up.
ABC stations in a half-dozen different cities also conducted their own investigations of the BBB, and found a similar connection between membership fees and ratings in a grading system that Connecticut Attorney General and Senator-elect Richard Blumenthal has blasted as "potentially harmful and misleading" to consumers.
In Boston, John Atwater and the investigative team at WCVB-TV found that BBB ratings for local businesses varied greatly, and that companies with very few consumer complaints to the BBB still sometimes had low ratings. WCVB also found that after reporters raised questions about grades for specific areas businesses, the BBB raised those grades.
According to the BBB's on-line database, in the past three years the BBB received two complaints about the Ritz-Carlton, which received an F grade.
But the Colonnade Hotel, a luxury hotel in the city's Back Bay neighborhood, scored an A plus despite having one complaint. Unlike the Ritz, the Colonnade pays to be accredited, just like all other BBB members.
Boston Celtics Get A D Minus
WCVB asked the BBB if accreditation always leads to a higher grade.
"Accreditation affects your grade," said Kevin Sanders, CEO of the BBB serving the Boston area. "It doesn't make you earn an A plus."
He added that the Ritz's grade plummeted because the hotel didn't respond to one of the two complaints and didn't give enough information to the BBB about the hotel.
Schinnerl told WCVB that he was unaware of the BBB's grade or the complaints until contacted by the station.
"A million customers served, two complaints, resulting in an F rating," he said. "Seems to be somewhat unusual to say the least."
But Sanders stood by the failing grade.
"Many academic studies show that one or two complaints is usually indicative of a much larger issue with a business," he said.
But WCVB found that BBB gave an A to Waltham, Massachusetts-based Care.com, Inc. -- an accredited member -- despite receiving 60 complaints about the company in the past three years.
Care.com told WCVB that it earned the A by responding to all complaints within one day.
WCVB asked Sanders if the BBB believes businesses with failing grades are unethical.
"The BBB rating system specifically states why they have an F," he said. "And ethical is not the reason it would state."
In fact, the BBB said 17 factors can influence the grade it gives, so Griffith, owner of Sooki, called the BBB to find out the rationale behind the C minus for her store.
After giving some details about her business, but not discussing any complaint history, Griffith was surprised to discover that her store's rating jumped two letter grades.
"You're giving me an A minus now?" Griffith asked the BBB representative on the phone.
That was the case with several businesses WCVB asked the BBB to double check.
The famed Boston Celtics basketball team, who have won 17 NBA championships, had received a D minus.
Days after being contacted by WCVB, the BBB had raised the grade for the Celtics to a B. The BBB told WCVB that the grade went up because it was able to get more information about the business.
The Ritz also went from a failing grades to the top of the class. It now has an A, and one complaint was deleted from its profile.
North Carolina Caterer Gets An F
In Raleigh, North Carolina, caterer Vaughn Williams was saddled with an F rating until a reporter from ABC owned-and-affiliated station WTVD asked the local BBB for an explanation.
"You know, the world view of [an F] is failure," Williams told investigative reporter Steve Daniels of WTVD, the ABC owned-and-operated station in Raleigh-Durham. "So they look me up and they see that, and maybe not give me a call. So, it's a problem."
Vaughn had two complaints on the BBB website after eight years of running Urbana Catering. He says he resolved the issues with his customers, but the F remained. He was afraid it was hurting his business. "If you go to the website and see someone who has an A and someone who has an F, you're going to go with the A," he offered.
Investigative reporter Steve Daniels of WTVD asked Beverly Baskin, director of the Better Business Bureau in Raleigh, about Urbana Catering's rating.
Baskin said that Williams got an F because he did not respond to the BBB after it asked for his position on the two consumer complaints.
"We have since called the consumers to say: 'Did you ever receive the resolution you were seeking?' And in both cases, they actually had - one seven months later and one three months later – so now he has a C plus. Thanks to your intervention," said Baskin.
Daniels asked Baskin to respond to critics who say that the BBB's grading system sounds like "a teacher saying to a kid, 'Slide me some cash and I'll give you an A.'"
"There are always going to be critics," Baskin offered. "There are basically 17 elements that go into a rating … it is the Better Business Bureau's best effort to put forth a meaningful rating that it makes sense to a consumer that says whether or not they are likely to have a good experience with that business and whether or not that business is going to work with the Better Business Bureau to resolve a complaint - a problem - if one arises."
Baskin says the Raleigh BBB operates independently from other BBBs across the country and she stands by her sales people and the accreditation process in Raleigh.
"Is there an inherent conflict in asking a business to pay you for a grade, for accreditation?" WTVD's Daniels asked Baskin.
"But they're not paying for a grade. They're paying…" said Baskin.
"In some cases they are. They get a better grade if they are an accredited business," Daniels responded. "They get a few additional points that may move them from a half, a B to an A-minus, or from an A-minus to an A, or from and A to an A-plus, that is true," said Baskin.
Williams says with his new C plus rating he only appears to be average, and still says that's unfair.
"In this climate, everybody wants to be in good standing because everyone wants to continue doing business, continue to eat, to take care of their employees," he offered.
Better Business Bureau Investigation
WCVB and WTVD were among a half dozen ABC stations that aired reports on the Better Business Bureau as part of a joint investigation with the Brian Ross Investigative Unit. CLICK HERE to watch WABC New York's report, CLICK HERE to watch KGTV San Diego's report, CLICK HERE to watch KATU Portland's report and CLICK HERE to watch WCPO Cincinnati's report.
The Better Business Bureau, a non-profit group that began 98 years ago, instituted its A plus through F grading system just two years ago, replacing a "satisfactory/unsatisfactory" ratings system.
In an interview broadcast on 20/20, Connecticut attorney general Richard Blumenthal told ABC News that the BBB's rating system, as currently constituted, "is really unworthy of consumer trust or confidence." In an official demand letter sent to the national headquarters of the BBB Thursday, Blumenthal called on the BBB to stop using its grading system.
"The BBB accreditation and the BBB ratings systems is not about generating money," said BBB national president and CEO Steve Cox.
"[It'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."