Better Business Bureau Definition

The Better Business Bureau (BBB) is an organization that helps consumers and businesses build trust by providing information, ratings, and dispute resolution services to ensure ethical and reliable business practices.

Starts at $0 + state fees and only takes 5-10 minutes

Excellent 4.8 out of 5 stars 15,678 reviews

Information is one of a new business owner’s greatest assets. Furthermore, customers benefit greatly from unbiased statistics about a company’s credibility and performance. The Better Business Bureau (BBB) is a national nonprofit organization dedicated to giving the public the information they need to evaluate businesses. Understanding how the Better Business Bureau assesses companies is essential to proving your business’s mettle as you get it off the ground. Read on to learn more about the Better Business Bureau, its definition, and what it means for your company.

What Is the Better Business Bureau?

Dictionary.com’s definition of the “Better Business Bureau” is “any of a nationwide system of local organizations, supported by business, whose function is to receive and investigate customer complaints of dishonest business practices.” However, this definition of the Better Business Bureau fails to mention that the organization, started in 1912, is both private and nonprofit. 

And there are over 100 branches of the BBB within the United States. Collectively, these branches work to rate businesses for the benefit of customers and businesses alike. Today, almost 400,000 North American businesses have received accreditation from the BBB. And the BBB has created profiles for over 6.3 million businesses.

How Does the Better Business Bureau Rate Businesses?

The Better Business Bureau uses a simple grading system to evaluate businesses. Business grades range from A+ to F. As you can imagine, A+ is the best grade, and F is the worst. There are seven specific elements that go into the BBB’s final grade rating. 

  • Complaint history. Several factors play into this element, like the number of complaints against the company and the size of the business. 
  • Business type. The BBB may provide a low rating of this element if a business “raises marketplace concerns” or violates the law. 
  • Failure to honor commitments. Companies receive a lower rating if they refuse to honor commitments like mediation settlements and arbitration awards.
  • Time in business. The longer a company has been active, the more positive the rating for this element.  
  • Advertising problems. Companies that misuse the BBB’s name or falsely claim to have BBB accreditation will have a poor score here. Businesses making false or misleading advertising claims will experience a negative impact on their rating.
  • Transparent business practices. For this element, the BBB examines whether businesses are forthcoming about their contact information. False or incomplete contact information will obviously reduce the business’s rating. 
  • Licensing and regulatory history. Every commercial legal entity (including limited liability companies and corporations) needs licensing. If a business fails to obtain necessary licensing or loses it for misconduct, the BBB will lower its rating.

Each one of these elements affects a final point system. Positive factors add points and negative signs reduce points. The final point tally is graded along a scale of 0-100 and assigned a letter rating.  

Better Business Bureau Membership Advantages and Disadvantages

Many business owners should consider joining the Better Business Bureau. Yet there are both benefits and drawbacks to BBB membership. BBB membership will improve your business’s reputation and standing among consumers. But Better Business Bureau membership has disadvantages, including a monthly cost of $30-$500. Small and new businesses may not be able to justify this cost. 

Summary

The Better Business Bureau is a nonprofit organization committed to rating the transparency and behavior of businesses. 

We Can Help

It’s best to do everything you can to get the best BBB rating possible. With our vast selection of products, we can help you improve your BBB score. For example, we can help you get started on the right foot with our Business Formation Services. We can also help you obtain all the licenses and permits you need, and we can remind you of all your compliance requirements with our Worry-Free Compliance Service. Finally, we can give you a better grasp of your company’s finances with ZenBusiness Money. Time is of the essence. Let’s get started!

Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.

zenbusiness logo

Written by Team ZenBusiness

Start Your LLC