Better Business Bureau Says It Will Stop Awarding Good Grades for Cash

Photo: Steve Cox, national president of the council of Better Business BureausPlayABC News
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Under fire for its controversial rating system, the Better Business Bureau has announced that it will no longer automatically give better grades to its member businesses. The action comes on the heels of an ABC News investigation into allegations that the BBB is running a "pay to play" scheme in which A plus ratings are only awarded to those businesses that pay membership fees, and lower grades are given to those who don't.

However, Connecticut Attorney General Richard Blumenthal, a prominent critic of the BBB's rating system, said he remained "troubled" by the system and wanted the BBB to make more extensive changes.

Steve Cox, the CEO and President of the Council of Better Business Bureaus, announced that by next week the BBB ratings system will no longer give extra points to businesses that pay for accreditation. Under the current system, extra points are awarded to member businesses and only those that are accredited can receive the coveted A plus rating. In addition, the BBB announced that it will conduct a review of its accrediting process and "as soon as possible, make changes that will apply system-wide." The BBB says an "independent third party" will assist in the review process.

"While we do not agree with all that's been said," said Cox, "we acknowledge that public trust in the BBB and its business reviews can be adversely affected by any business practice that gives even the appearance of being unfair."

Cox said the BBB was making the changes "to better serve consumers and small businesses and eliminate any attempts to question BBB's fairness. Any attempt to question the integrity of the entire BBB organization is completely without merit."

The ABC News report, which aired on 20/20 Friday, showed how a group of Los Angeles business owners paid $425 to their local BBB and were able to obtain an A minus grade for a non-existent company called Hamas, named after the Middle East terror group. In another case, the BBB also awarded an A minus rating to a non-existent sushi restaurant in Santa Ana, California and an A plus to a white supremacist website called Stormfront.

CLICK HERE to read about the Ross Unit's investigation of the Better Business Bureau, and CLICK HERE to watch the 20/20 report

Blumenthal Still 'Troubled' By BBB Rating System

Last week, Attorney General Blumenthal sent an official demand letter to the BBB calling on the organization to stop using its grading system, which he said was "potentially harmful and misleading" to consumers.

Click Here To Read Blumenthal's Letter

In a statement today, Blumenthal said he was "pleased that the BBB is heeding my call to sever ratings from dues" and that "cash can no longer inflate BBB ratings, as happened under the old system."

However, Blumenthal expressed concern that the BBB is not going further with changes to the ratings system. In his announcement, Cox said the BBB will continue to use its existing system to generate letter grades for accredited and non-member businesses alike.

"While I applaud this significant step, I remain troubled by the BBB's rating system," said Blumenthal. "The BBB lacks the resources to verify much information used to rate, rendering its ratings unreliable and suspect. The BBB cannot rely on the word of businesses about licenses, state laws or other information; objective and independent confirmation is vital to accurate ratings. At the very least, the BBB has an ethical -- and perhaps legal -- obligation to clearly and prominently inform consumers of the severe and significant limitations of its rating system.

CLICK HERE to follow the ABC News Investigative Team's coverage on Twitter.

"I will continue working with the BBB to help assure its rating system is consistent, factual and fair," said Blumenthal.

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