Consumers get cloudy picture of complaints

By Peter Lewis
Seattle Times consumer-affairs reporter

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It's practically a mantra for consumers: Check with the BBB.

Advice columnists, consumer advocates, even law-enforcement types tell us to consult the Better Business Bureau when poised to select a cellphone company, hire a plumber or buy a car.

And consumers obviously take the advice to heart: They seek information from the local bureau 6,500 times a day.

But a closer look shows that while the BBB of Oregon and Western Washington is one of the most prosperous in the nation, it provides only minimal information to consumers.

BBBs are designed to be neutral third-party organizations that report on marketplace conditions and hold businesses to high ethical standards. That mission, in turn, benefits consumers.

Bureaus across the country have found themselves pounded by both sides, with consumers and businesses sometimes complaining the BBB is too protective or too harsh.

Increasingly, especially in major metropolitan areas, BBBs are buying into the notion that sharing more information from their files is the way to go.

Inquiries and complaints to the BBB (in 2003) Top 10 inquiries, BBB of Oregon and Western Washington Roofing contractors Work-at-home companies Construction and remodeling services Contractors, general Windows, installation services Auto dealers, new cars Siding contractors Auto repair and services Heating contractors Plumbing contractors Top 10 complaints, BBB of Oregon and Western Washington Cellular-telephone service Computer software and services Internet services Internet shopping services Banks Auto dealers, new cars Consumer-finance and -loan companies Books, new Credit services Credit card, secured credit companies (which issue credit cards to people who may have bad credit) Top 10 inquiries, nationwide Mortgage companies Work-at-home offers Roofers Movers General contractors Home remodelers New-car dealers Home builders Auto-repair shops Plumbers Top 10 complaints, nationwide Auto dealers (franchised — new and used) Mobile-phone service and equipment Credit-card offers and plans Computers — Internet services Credit-collection agencies Mortgage and escrow companies Computers — dealers Home-furnishing stores (mattress, window, floor covering) Telephone companies Banks Inquiries from consumers Nationwide in 2003, consumers contacted bureaus by phone or on the Web about 49 million times before making a purchase, up 28 percent from the year before. The BBB of Oregon and Western Washington says it receives inquiries at the rate of 6,500 a day, or more than 2.3 million a year. Number of reports about businesses Nationwide, the BBB maintains roughly 2.2 million "business reliability reports," which typically are generated as a result of consumer inquiries and complaints — whether or not a business belongs to the bureau. The local BBB maintains reports on roughly 75,000 businesses. Source: Council of BBBs and the BBB of Oregon and Western Washington

About a third of the roughly 120 bureaus around the country have switched to a system known as "matrix reporting" that lists the number and nature of consumer complaints, as well as their outcomes. Supporters maintain it gives a more three-dimensional picture of consumer experiences with businesses.

Matrix backers, including Boston-based BBB chief Bill Williams, swear by it and say it provides vital information for consumers trying to make sound decisions.

The Oregon and Western Washington BBB provides much less. In the reports it makes available to consumers, it simply summarizes a company's complaint history, showing consumers only a "satisfactory" or "unsatisfactory" rating.

Bob Andrew, president of the local BBB, says he is not ready to adopt matrix reporting because the system could confuse consumers and alienate businesses. He also cites liability concerns, suggesting the bureau might expose itself to lawsuits from upset companies.

Ron Berry, a national BBB official, said anxieties such as Andrew's have lingered for years about matrix reporting, but "the sky hasn't fallen."

"I think the momentum is definitely toward widespread use of it," said Berry, adding it could become mandatory as early as next year.

Difference in depth

BBBs are largely autonomous organizations — funded by business-member dues — and answer to their own boards of directors. They differ in how they report on businesses, which is their core service.

Compare, for example, reports on two BBB-member Ford dealerships, one in Kirkland, the other in Foxboro, Mass. The former was prepared by Andrew's BBB, the latter by Williams'.

Both begin with a narrative describing customer experience. Each says the company has a satisfactory record, which means it has been around for a year, responds to bureau inquiries, has not drawn an unusual volume or pattern of complaints and is free of law-enforcement actions regarding marketplace conduct.

The brief report from the local BBB says it has processed an unspecified number of complaints about the dealership during the past 36 months. And although the customer wasn't necessarily satisfied, the bureau concluded the dealer addressed all issues.

The report by the Boston-based BBB begins with a similar narrative on the Foxboro dealership. But it's just the hors d'oeuvre. Up next is a set of grids that detail the number of complaints, subject of the complaints — advertising, repairs, credit or billing, customer service and product quality, for example — and whether and how they were resolved.

The Boston report also puts the business's complaint record in context. In the case of the dealership, the table compares it with all businesses of the same type in the bureau's database, including new- and used-car dealers, truck dealers, auto-leasing companies and oil and lube services.

No matter what form reliability reports take, consumers should not base their decisions about a business only on the BBB data, bureau officials acknowledge. That's because reports are only as good as a bureau's information, which may be incomplete.

Early last year, for example, the local BBB had nothing negative to say about a Woodinville-based household mover — Nationwide Moving Services — even though consumers were complaining to the BBB about the company's business practices.

By July 2003, federal prosecutors had charged the company's owners and employees with conspiring to extort customers by offering artificially low prices for household moves, then dramatically raising them when the move took place.

Harnessing technology

The sharp discrepancy in what individual bureaus disclose reflects the latitude they have under the BBB system's loose governance.

Matrix reporting, however, offers a glimpse of the power of technology, specifically the Web, to push reforms.

Bob Hurdman, president of Salt Lake City-based Hurdman Communications, says he provides computer-programming services to about 80 percent of the country's BBBs, including Andrew's. Switching to matrix reporting is neither a lengthy process nor an expensive one, he said. In essence, he said, skimpy reports could be converted to richer accounts at the flip of a digital switch because bureaus already collect all the necessary information.

The Arlington, Va.-based Council of Better Business Bureaus (CBBB), the system's governing body, approved matrix reporting as a local option for bureaus in 1999.

Alienating business

Andrew said he wants to wait until matrix reporting is "more refined." He said he has resisted "because it confuses people ... and makes businesses mad."

For example, he said a business may have been operating for decades and been the subject of only a couple of complaints. Putting those on display might give consumers the wrong impression, "only because they don't understand" the big picture, Andrew said.

Andrew is not the only BBB leader with misgivings about matrix reporting.

"I've got a very archaic mindset among some businesses in my area," says Russ Behrmann, who heads the Salt Lake City BBB. The mere mention of a complaint can alienate some businesses, he said.

But "to go from that to a situation where I'd be displaying every single complaint may be a step farther than I want to go all at once," he added.

At the same time, Behrmann and other bureau leaders acknowledge that the simple satisfactory / unsatisfactory system they use is flawed.

"We're trying to make a judgment based on what we see versus letting the consumer try to make that judgment," Behrmann said.

On the other hand, if he shifts to a matrix system without providing context, "we're just throwing raw data at them," he said.

Most consumers "are a little brighter than that," says Sharon D'Amico, who runs the BBB in Silicon Valley, home to major companies such as Hewlett Packard and eBay. D'Amico, a matrix-reporting enthusiast, says people are smart enough to factor in a company's size while absorbing complaint data.

And she warns that bureaus will become irrelevant if they fail to give consumers what they want and need. If bureaus sit on information instead of sharing it, "we're not going to be viable," she predicted.

Instead of using grids, D'Amico's BBB uses a narrative style in its reports. The reports put data in context by noting that a company's size, volume of business and number of transactions "may have a bearing on the number of complaints received by the BBB."

They also state that "complaints filed against a company may not be as important as the type of complaints, and how the company handled them."

"A strong leader"

Andrew, who has run the local bureau for a decade, said he has never put the matrix-reporting question before area consumers in a systematic way. He said he presented it as an option to his nine-member executive board two years ago and it got a cool reception.

Five of the members who would have attended that meeting returned phone calls; only one — Paul Mitchell of Bon-Macy's — vaguely remembered such a presentation.

"It was hard for me to figure out what he was talking about," Mitchell recounted, adding he was neutral on switching to matrix reporting. Andrew, Mitchell said, has great influence over the board. "If he wanted it (matrix reporting) bad enough, I'm sure he could have got it past the board. He's a strong leader."

Meantime, Bill Mitchell, who runs the L.A.-based BBB, thinks he's onto something superior to matrix reporting. He is excited about a new, "more scientific" reporting system that he hopes to roll out tomorrow that will rate businesses from "AAA" to "F."

It also will allow consumers to blog, or write comments, on the site, although their comments won't be used to rate the company and will be accessible only by the company and the BBB.

He said he has spent two years and paid developers more than $1 million to produce a formula that takes 11 factors into account, including the kind of business; its size; government actions; advertising issues; how it handles complaints; and the seriousness of complaints.

For example, a consumer complaint about being forced to wait 45 minutes for an appointment would get less weight than a complaint about a willful attempt to cheat a customer out of money. Consumers will be able to drill down into the complaints — stripped of personally identifiable information — to see specifics.

Rather than attempting to pigeonhole complaints as "resolved" or "unresolved" as matrix reports do, his system will report the company's response — or lack of one — to a complaint.

Mitchell described as "skimpy" the information available in traditional pass / fail reports and contends consumers are "a better judge than some operator at the BBB who's trying to put some spin on this thing ... I just don't see where any of this stuff is any huge secret."

Mitchell predicted some negative repercussions from businesses but added that in his 20 years with the BBB, most businesses join not "because they think we're doing terrific work. ...

"The sad truth is, in this day and age, people join the BBB because they think it's going to make their cash register ring. ... If we create a reporting system the public embraces, that will drive the businesses to support us. They'll do what they can to help their own business."

Peter Lewis: 206-464-2217 or plewis@seattletimes.com

Copyright © 2004 The Seattle Times Company

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