The BBB and NARC – Advertising Watchdogs: Bark or Bite?5 Apr, 2011 By: Cathy Polisoto, Jeffrey Richter
The Better Business Bureau (BBB) is more ubiquitous and powerful than people realize: there are122 BBBs in the U.S. and BBBs in many cities in Canada. The Council of Better Business Bureaus is the national umbrella organization that provides the strategic vision and leadership for the BBB brand, products and services. According to the website www.labbb.org, “BBB’s mission is to be the leader in advancing marketplace trust. BBB accomplishes this mission by:
• Creating a community of trustworthy businesses
• Setting standards for marketplace trust
• Encouraging and supporting best practices
• Celebrating marketplace role models
• Denouncing substandard marketplace behavior.”
It is common knowledge that the BBB offers accreditation for a fee to businesses that satisfy its standards. One representative Accreditation Standard requires a company to: “Respond to all complaints presented by the Bureau promptly and in accordance with the Bureau’s dispute resolution procedures and cooperate with Bureau efforts to eliminate the underlying causes of patterns of customer complaints.”
Accreditation benefits include, but are not limited to, use of the BBB logo in your advertising in accordance with the Seal Program, a BBB plaque to display, a listing as an accredited business on the BBB website, free mediation and arbitration of non-complex customer disputes, and tax deductibility of accreditation dues.
The BBB combines forces with other agencies and self-regulatory bodies, such as the National Advertising Review Council (NARC). If the BBB sends you a consumer complaint for resolution or a request for information, the inquiry may be part of an expansive, powerful network. Any lack of responsiveness may have far-reaching implications.
What is the best strategy for responding to an inquiry from the BBB or NARC? Do not disregard it. Seek the guidance of a qualified advisor who understands the BBB’s procedures. Adhere to the procedures set forth in the BBB correspondence. Prepare a detailed, timely response and do not submit it without review by a qualified advisor.
A primary reason the BBB initiates inquiries is to request substantiation for advertising claims that its staff believes do not comply with the BBB’s Code of Advertising (posted on its website). For example, in connection with a review of advertisements for dietary supplements, NARC and the BBB require elaborate scientific substantiation of implied as well as express claims of a product’s safety and efficacy. They generally are not satisfied with supporting studies of one or more of the individual ingredients and prefer studies of the actual end product.
To avoid negative publicity that may persist for years, it is worth cooperating with the BBB and NARC to satisfy their inquiries and resolve consumer complaints. Generally, the BBB keeps consumer complaints on file for at least 36 months. The BBB offers free Reliability Reports on companies, and severely negative public relations may result when anyone can click on “Check Out a Business” on the BBB website, type the name of a company, and the first thing they see is an “F” rating and one out of five stars on the BBB’s “TrustLink” rating. Worse yet, failure to satisfy the BBB or NARC can result in either of them reporting your company to a government agency, such as the Federal Trade Commission (FTC), which, unlike the BBB, has broad regulatory power to impose monetary fines, injunctions and other remedies.
Occasionally, we have dealt with an overzealous BBB investigator. In one instance, such an investigator, without ever discussing it with us, copied the state Attorney General on her correspondence replying to our initial response on behalf of our client. We were ultimately able to persuade the BBB to close the case, but this example illustrates how a seemingly trivial inquiry can morph into something much more serious.
Jeffrey Richter is a partner and Cathy Polisoto is an associate at Los Angeles-based Finestone & Richter. They can be reached at (310) 575-0800, or via E-mail at [email protected] and [email protected].