Why are non-BBB businesses getting bad grades?

November 12, 2010 6:32:03 AM PST
The Flannery Hardware store in the Bronx has been in business for 15 years.

Its owner, David Flannery, says that does not happen unless you put the customer first. So, he was surprised to learn that the Better Business Bureau had given his store a grade of D-minus for "failure to respond to one complaint."

Flannery says he's being punished for not joining the BBB.

FLANNERY: The whole thing is a scam!
EYEWITNESS NEWS REPORTER JIM HOFFER: What do you mean it's a scam?
FLANNERY: They just want your money and they give little stickers to put on your storefront to say that you're a member of the BBB.

The owner of Dogs and Divas in the Bronx says the Better Business Bureau is hurting his business by giving it an F because of one unresolved complaint in 36 months. It's a complaint that he says he didn't even know about.

ALBERTO BAJANA : This is going to affect my business greatly, severely.
REPORTER: One complaint?
BANAJA: That's one complaint in 6 years. That is terrible. Horrible.

Compare the "F" grade of Dogs and Divas, a non-member of the BBB, with a dog grooming shop of similar size nearby. It, too, has one complaint, supposedly resolved. They're a paying member and they have the highest grade - an A-plus.

REPORTER: So what do you think the grade is based on?
ALBERTO: Payment. They paid. I didn't.

A flower shop in Long Island is a Better Business Bureau member. It has three complaints, but still gets an A-plus. Tuckahoe Florist, which is not an accredited member, has one unanswered complaint, but it gets an F.

"Why should I have to pay to get a good grade when I know I'm a good florist and I only have one complaint?" owner Donna said.

Eyewitness News found business after business with just one unresolved complaint, all receiving F grades. None of them were BBB members.

REPORTER: How is that fair?
CLAIRE ROSENZWEIG/NEW YORK BBB: It's a fair system in our opinion.
REPORTER: How is that fair? One unresolved complaint and they flunk after 82 years in the business?
ROSENZWEIG: With 17 different elements in this rating system, whether you're accredited or not, you're held against those criteria.

The president of New York's BBB says the grades are earned, not paid for, and each of the 100,000 businesses they've graded have been evaluated on 17 elements from number of complaints to years in business, to licensing and advertising issues.

REPORTER: It's fair to say that a business that gets an F by the BBB, in this day an age of the internet, it can be extremely damaging?
ROSENZWEIG: I would say that if a company gets an F, we have lots of education programs and lots of things that we offer in terms of info so they can take a look at why they're getting an F.

"If you're not a member, you do one thing wrong, you're an F student. What kind of credibility does it have?" Donna said.

The New York BBB says that 48-percent of non-accredited businesses have received an A or A-minus grade.

Friday night on 20/20, ABC's Brian Ross will further investigate the BBB rating system.

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