A Better Better Business Bureau

While online "gripe sites" can help wronged customers blow off steam, the BBB now wants to help companies solve problems before they start

Joan Murphy needed a new computer for the billing service she was operating from her apartment in Queens, N.Y. So when she saw an ad for a Dell (DELL) computer that could be hers after making six weekly payments of $99, she contacted the company, BlueHippo. As a reward for full payment, BlueHippo promised Murphy a free printer. "I remember the ad pretty clearly," Murphy says."It said if you didn't have good credit, paid over time, you could get the computer."

Murphy did get the computer. But after $2,379 in payments, she was still waiting for the free printer. "It was a big mistake to trust them," she says. BlueHippo didn't return calls for comment.

Frustrated, the 44-year-old Murphy embarked on a telephone campaign, calling the company from October, 2005 until well into April, 2007. "I was getting the same story each time," Murphy recalls. "Someone would tell me that my printer was going to be sent and it would never come." After getting nowhere with the company, she decided to contact the Better Business Bureau.

Catching Up with the Digital Age

Murphy is one of thousands of consumers who turn to the Better Business Bureau to act as referee in their disputes. Operating with an annual budget of $22 million, the national, nonprofit organization works with local branches that handle complaints. Last year, the BBB received 1.2 million complaints through 114 local offices from fed-up consumers across the country, up from just over 1 million the year before. This year, with reports of lead toys and tainted beef, the BBB expects that number to rise again. "The Better Business Bureau is the ombudsman of the marketplace," says Charlie Mattingly, president of the unit serving Louisville, Ky.

That's what the BBB has been doing for 95 years. But now the nonprofit is trying to remake itself for the digital age where there has been an explosion of Web sites and blogs devoted to airing customer service disputes and concerns. The challenge for the BBB is to become known as the place consumers can go to find information to help them make the best choices—not simply the place to go after they've have had a bad experience and stacks of grievances.

The Process

For consumers like Murphy who have routine but nagging disputes, the BBB has a well-oiled procedure for tackling complaints. First consumers fill out a form on the Web site. After the complaint is submitted, the organization contacts the company and requests a response within 14 days. Kimberly Evans was pleasantly surprised by how easily she was able to lodge her complaint with the BBB. She filed a complaint when a magazine subscription service refused to allow her to cancel her membership. Within a week of filing her complaint online, the company had cancelled her subscription. "It was so swift and easy," she says. "I wasn't expecting a response that quickly."

According to Mattingly, 90% of consumer complaints receive some kind of company response. If a company fails to respond, it will get an unsatisfactory record, which is essentially a poor rating in the BBB's database of company performance. The scarlet letter of bad customer service serves as a warning for other consumers, and will appear in the reliability report, a compendium of information the BBB keeps about a company. "These reports are the levers we have to motivate companies to act well," Mattingly notes.

Only a handful of complaints go through a protracted negotiation. The BBB offers consumers arbitration where a trained specialist acts as mediator between the company and the consumer to resolve the disagreement. Arbitrators are drawn largely from pools of volunteers who are trained during three-day sessions by the national council. "It's in the company's best interest and the consumer's best interest to satisfactorily deal with these disputes," Mattingly says.

Look Before You Leap

The BBB also wants to convince consumers that it's in their best interest to check in before making a purchase.

Since October the organization has spent over $1 million dollars on an ad campaign, complete with a new logo, "Start with trust," that is aimed at firmly placing the BBB at the start, not the end of the consumer advocacy process. Along with a new tag line, the BBB commissioned a national radio advertising campaign which runs on National Public Radio. "Competition has only made us better," Mattingly notes.

Other Internet sites like Complaints.com, GetSatisfaction.com, and Yelp have sprouted up in recent years to offer consumers space to vent about company misdeeds and demand better customer service. Matthew Smith, the founder and president of complaints.com, which he started in 2000, describes his site as a companion to the Better Business Bureau. "The BBB is a great help to so many people." Smith says his site is a forum for consumers to readily share information about bad corporate actors and failures in customer service. "It's a new way for consumers to share information and solve problems," he says.

The BBB also strives to share information with consumers by offering what it calls reliability reports compiled through a combination of consumer research, complaints, and company literature. These reports can guide consumers toward companies with feckless track records and help them avoid the ones that don't have a good record. "The reliability reports are the front line for consumers to avoid disputes," says Nora Carpenter, a senior vice-president with the Council of Better Business Bureaus.

The BBB offers consumers reports on over 400,000 companies. The reports are based on a company's history of service, its responsiveness to consumers, and an evaluation of whether its advertising is truthful. "Now I know that I should read up on a company ahead of time," notes Evans.

Trouble is, too few consumers actually know about reliability reports and, like Evans, only rely on them after a dispute has already arisen. Only 22% of consumers had contacted the BBB prior to making a purchase, according to a 2005 study commissioned by the organization. "We know consumers are well aware of the BBB, but associate us as complaint people," says Steve Cox, vice-president of communications. "We want consumers coming to us before the fact."

If Murphy had requested a reliability report from the BBB after seeing that commercial, she might have had a different experience. Murphy finally received her printer over a year after her final payment. Murphy now says she'll request a reliability report before making a similar purchase. "I can be a more educated consumer now."

Silver-Greenberg is an editorial assistant for BusinessWeek

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