1 In a narrative format discuss the key facts and critical i

1. In a narrative format, discuss the key facts and critical issues that pertain to the unethical conduct of the Better Business Bureau. Using valid peer-reviewed sources on the Internet, update any dated facts in this case with more current information.

Solution

It has been reported that the BBB encourages and solicits money from the very businesses they monitor which, again, raises the question of neutrality. The BBB states that they hold their Accredited businesses to a higher standard, as outlined in their Accreditation standards.

On December 22, 2010, William Mitchell, CEO of the Los Angeles BBB, and originator of the BBB Letter Grading System, resigned as a result of an internal investigation conducted by the CBBB.

The resignation was rescinded shortly afterward, however, with Mitchell claiming that his health prompted him to resign, and criticizing the National Council for attempting to take over the Southern California chapter.

Last week, the Better Business Bureau announced that it had officially expelled one of its local affiliates, the BBB of Southland, which served the greater Los Angeles area.

The expulsion stems back to a pay-to-play scandal unearthed in 2010 by the ABC News show 20/20. The investigation showed extortion-type practices applied to local businesses: Those that paid annual dues to the BBB were handed accreditation and A ratings, while those that didn’t play along were given subpar grades, even if they hadn’t received complaints. Most disturbingly, investigators were able to get accreditation and an A- grade for a fake, totally nonexistent business after paying a $425 fee to the local BBB. (The name of the dummy business was Hamas—yep, the same as the Middle Eastern terrorist organization.)

A mortgage broker charged by federal regulators with discriminating against minority borrowers. A financial firm accused in an ongoing federal lawsuit of preying on seniors. A medical testing company that settled charges of paying kickbacks to doctors. And a vitamin maker that allegedly misled parents with claims that its supplements could treat symptoms of autism.

All of these companies boasted the BBB\'s coveted A+ rating when CNNMoney started investigating the BBB\'s rating system earlier this year. (Soon after CNNMoney inquired about these grades to the BBB, all but one were changed).

And this group is joined by other questionable businesses, many of which pay thousands of dollars to the BBB each year for membership. Some even have founders or former CEOs facing years behind bars. Meanwhile, respected Fortune 500 companies, like Microsoft and Starbucks, don\'t pay the organization\'s membership fees and are among the BBB\'s lowest-rated companies.

Through its investigation, CNNMoney found a sampling of more than 100 businesses that had ratings of A- or higher despite having serious actions taken against them by government regulators in the past year. Some have been ruled flat-out scams and were shut down, but still kept their high BBB grade. Some have already been required to pay multimillion dollar penalties. And others have recently been rocked by big government lawsuits.

Take HCR Manorcare, a paying BBB member which operates hundreds of nursing homes across the country, and has an A+ rating. Federal prosecutors claim the company bilked Medicare out of millions of dollars by repeatedly providing therapy to patients that wasn\'t medically necessary -- and in some cases, potentially harmful to patients.

One of the patients highlighted in the government lawsuit: an 84-year-old man who was immediately subjected to intensive physical, occupational and speech therapy upon being admitted to one of the company\'s Illinois facilities.

After a month, he was barely eating and told the nurses that he \"hurt all over.\" Even when his doctor ordered the therapy to stop, he was put into a group session the same day -- where therapists noted in his chart that he wasn\'t breathing properly and wasn\'t speaking.

He died approximately five days later.

The government lawsuit is ongoing, and HCR Manorcare denies the allegations. When asked about its BBB rating, HCR Manorcare said that \"the BBB has set criteria that our facilities have met.\"

But meeting these \"criteria\" doesn\'t always mean much.

Through its investigation into the organization and its practices, CNNMoney found that the BBB\'s rating system is seriously flawed -- resulting in grades that appear to be arbitrary and change erratically.

In many cases, more weight is placed on companies addressing complaints through the BBB\'s own system than any other factor -- even government lawsuits alleging practices that directly violate the BBB\'s principles of membership like misleading advertising.

Meanwhile, consumer lawsuits aren\'t factored into grades at all, no matter how many there are against a single company.

And when it comes to government actions, the BBB sometimes deems a penalty so minor that a company can still maintain its A rating.

Military Credit Services of Norfolk, Virginia, for example, recently settled government charges that it went after service members with illegal debt collection lawsuits. The BBB clearly acknowledges on its website that the company\'s settlement -- which required Military Credit Services and two other companies to refund $2.7 million to thousands of borrowers hit with these lawsuits -- has been factored into the company\'s grade.

But even with this black mark Military Credit Services, a paying BBB member, still boasts an A-.