.floatimg-left-hort { float:left; } .floatimg-left-caption-hort { float:left; margin-bottom:10px; width:300px; margin-right:10px; clear:left;} .floatimg-left-vert { float:left; margin-top:10px; margin-right:15px; width:200px;} .floatimg-left-caption-vert { float:left; margin-right:10px; margin-bottom:10px; font-size: 12px; width:200px;} .floatimg-right-hort { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 300px;} .floatimg-right-caption-hort { float:left; margin-right:10px; margin-bottom:10px; width: 300px; font-size: 12px; } .floatimg-right-vert { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px;} .floatimg-right-caption-vert { float:left; margin-right:10px; margin-bottom:10px; width: 200px; font-size: 12px; } .floatimgright-sidebar { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px; border-top-style: double; border-top-color: black; border-bottom-style: double; border-bottom-color: black;} .floatimgright-sidebar p { line-height: 115%; text-indent: 10px; } .floatimgright-sidebar h4 { font-variant:small-caps; } .pullquote { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 150px; background: url(http://www.dmbusinessdaily.com/DAILY/editorial/extras/closequote.gif) no-repeat bottom right !important ; line-height: 150%; font-size: 125%; border-top: 1px solid; border-bottom: 1px solid;} .floatvidleft { float:left; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} .floatvidright { float:right; margin-bottom:10px; width:325px; margin-right:10px; clear:left;}
Ever wish you could simply look up a letter grade on a company’s reliability before you do business with it?

The Better Business Bureau (BBB) has granted that wish. Last month, the BBB launched a nationwide system in which it assigns letter grades ranging from A+ to F as part of its online reports on companies. In Iowa, the organization has graded approximately 13,000 businesses as part of an electronic database of more than 1 million companies across the country.

Particularly in tough economic times, “literally, people can’t afford to make bad buying decisions,” said Chris Coleman, president and CEO of the Better Business Bureau of Greater Iowa. “These reports make it extremely easy and convenient for consumers to research and compare local businesses before they buy.”

The letter grades add a new component to the BBB Reliability Reports, which are searchable by company name at www.bbb.org. The grades replace a rating system that classified businesses as either “satisfactory” or “unsatisfactory.” The letter-grade system uses an algorithm that adds or subtracts points for 16 criteria to reach a percentage that is converted into a letter grade. The grading scale, like most academic grading systems, assigns an F to percentages of 59 percent or less. And under the new system, member companies must maintain a grade of at least a B to keep their status as BBB-accredited businesses.

The BBB has also changed the way businesses affiliated with the BBB are designated, from “BBB Member” to “BBB Accredited Business.” The accredited designation highlights that the businesses have signed an agreement that they will meet and uphold the BBB’s standards when dealing with customers.

Currently, about half of the 13,000 businesses graded in Iowa have grades of A- or higher. More than 5,000 have grades between B+ and D-, and about 1,000 have Fs. Approximately 1,000 currently fall into a “not rated” category, which includes companies that have gone out of business or whose ratings are in flux.

Coleman said he has already received positive feedback from both consumers and businesses about the system.

“It’s an impressive algorithm, and it’s something I’m confident in enough to say that the more people look at it, the more they will value these ratings because they’ll see that it really means something,” Coleman said.

Healthy balance

Coleman, who also serves as a Des Moines city councilman, assumed leadership of the BBB’s Iowa operations just over four years ago, following 12 years with United Way of Central Iowa.

“I’ve really enjoyed the work,” said Coleman, who heads a staff of 13 at the organization’s downtown headquarters. “It’s really a healthy balance with what I hope I’m doing to help make our community and state a stronger place by helping people. And it’s real entrepreneurial. We don’t have any government grants or any kind of stable funding. Our funding is from the businesses that see value in what we do and want to be affiliated with us.”

With about 3,200 member businesses, the Better Business Bureau of Greater Iowa serves all of Iowa with the exception of Council Bluffs, which is included in Omaha’s BBB. The Iowa organization also serves Rock Island County in Illinois as part of the Quad Cities, where it has a one-person office, plus five counties in the Siouxland area in Nebraska and South Dakota. Annual BBB dues in Iowa range from $320 per year for companies with up to three employees, to $4,000 annually for businesses with 5,000 or more employees.

On average, the BBB Reliability Reports for Iowa companies received more than 15,000 online visitors per month in 2008, compared with about 10,000 monthly visits in 2007.

Though the national organization was founded in 1912, its roots extend back to the passage of the Pure Food and Drug Act in 1906. That law led to a series of court cases against companies challenging the truthfulness of their advertising, among them the Coca-Cola Co. Subsequently, companies formed advertising federations and wrote a truth-in-advertising code, a version of which is still adopted by BBB members today, Coleman said.

“Today, the cornerstone of our work is public information – free, reliable information,” he said. “Those public reports tell the BBB story as to consumer satisfaction and issues related to the track record and dependability of those businesses. So we seek all kinds of ways to make sure that our database is thorough, useful and effective for consumers. If it’s useful to consumers, it’s going to be a huge benefit to businesses, because quality businesses will grow as consumers seek them out.”

Agree to cooperate

Handling consumer complaints is a key component of how the Better Business Bureau gathers information about companies. Last year, the Greater Iowa bureau processed nearly 9,000 complaints, an all-time record, Coleman said. However, that number doesn’t represent every complaint that comes in. For instance, the BBB doesn’t handle landlord-tenant disputes, employment disputes and pending court cases.

“The complaints we take are ones we think we can have a positive impact on,” he said. “We work with those parties to learn whether a resolution is possible.”

Coleman said his staff also gauges when a consumer’s complaint is unrealistic, and in some cases closes a complaint as resolved even if the consumer is still dissatisified. “In that case, you might just have an unrealistic consumer,” he said. “We spend a good part of our day trying to make sure consumers know the difference between being scammed by a business or a mistake they made in their purchase. We can’t fix mistakes that people make.”

Each accredited business signs an agreement that it will cooperate with the Better Business Bureau and follow its advice on whether it needs to take action to resolve a complaint, Coleman said. Failing to respond to a complaint or to calls from the BBB can result in the bureau revoking the company’s membership. On average, Coleman said, he revokes three to four businesses’ memberships every month.

Additionally, “we have a list of 2,000 companies that we know of that do business in Iowa today that we won’t allow to be members, and that number grows every day, he said. “Oftentimes, those are the first ones to call our office to say they want to be an accredited business.”

In other cases, a company may work to resolve customer complaints, but will still receive a low grade because of their pattern of complaints. An example, Coleman said, was the See Clearly Method Co. of Fairfield, a company Iowa Attorney General Tom Miller prosecuted several years ago.

“The (See Clearly) guy flat out told me, ‘We’re not operating unethically; everybody who wants a refund gets one,'” Coleman said. “But about 47 percent of customers who were sold the product asked for refunds and got them. So it must not be what they were claiming it to be, so we gave them a negative rating, and that’s helped thousands of consumers.”

Under the new grading system, businesses that were already accredited that have grades below a B will have up to a year to raise those grades before facing revocation. In Iowa, only eight member businesses fit into that category, none of which have an F, Coleman said.

In addition to the letter grades, another significant enhancement has been the linking of all state bureaus into a North America database within the past two years. “So if it turns out the company isn’t headquartered in Iowa but in Tennessee, our system will reroute you to that report in Tennessee,” Coleman said. “It’s a really slick thing that’s helping consumers tremendously more than in the past.”

Coleman said he believes industries that have a bad reputation with consumers may embrace the new grading system the most. “Over the last couple of years, complaints against cellular telephone companies have increased dramatically because people get upset with the hidden charges, how long they’re locked into a plan,” he said. “Those companies that want a higher grade will begin addressing some of those problems that have frustrated consumers.”