Can the BBB Shut Down a Business?

Many consumers believe that the Better Business Bureau (BBB) can “shut down” businesses that receive excessive complaints. While this assumption is common, it is incorrect.

There are many factors at play; however, the most significant is the BBB’s lack of regulatory power. The BBB is a private, nonprofit organization and therefore does not possess the same authority as government agencies. As such, it is unable to revoke a business license, fine a business, close a business, etc.

The reasons behind this misconception are generally based on results rather than authority. When a business receives multiple complaints through the BBB, its public reputation may suffer. Additionally, a business may lose its BBB accreditation status for failing to comply with the BBB’s guidelines.

Finally, negative BBB pages tend to appear near the top of search engine results, which can lead to a decline in customer traffic, revenue, and, potentially, even closure.

However, while a business may ultimately close, it was not the direct result of the BBB taking legal action against it. Rather, the business likely closed due to lost consumer trust, or perhaps even due to the involvement of a governmental agency.

The BBB is essentially a consumer trust organization. Its purpose is to collect complaints about businesses, to encourage businesses to respond to those complaints, and to create a transparent environment for the public. Essentially, the BBB serves as a reputation indicator rather than a regulatory body.

Think of the BBB as a third-party information provider, as opposed to a regulatory agency.

What the BBB Cannot Do

The BBB is prohibited from exercising any type of legal authority over a business.

Some examples of things the BBB cannot do include:

• Closing a business
• Issuing fines or penalties
• Enforcing contracts
• Compelling refunds
• Revoking business licenses

These are all responsibilities of governmental agencies.

What the BBB Can Do

While the BBB may not have the authority to enforce the law, it does have other avenues of influence.

One example of how the BBB exerts influence is by publishing ratings that reflect a business’s complaint history, its responses to those complaints, and the level of transparency it demonstrates. Many times, a business’s BBB rating appears in search results and influences consumer confidence.

Additionally, the BBB can remove a company’s accreditation if it finds that the company failed to adhere to BBB guidelines. Losing accreditation does not necessarily mean a business will cease operations, but it could damage its credibility and reduce consumer trust.

Finally, the BBB identifies recurring patterns of misconduct and reports these issues to regulatory bodies such as the Federal Trade Commission (FTC) or a state attorney general’s office. Regulatory agencies have the authority to conduct investigations and, if necessary, bring civil or criminal actions against businesses that engage in wrongdoing.

The BBB can also serve as a dispute-resolution forum. The BBB acts as a neutral third party to mediate disputes between consumers and businesses. Both parties are free to participate, but many businesses choose to do so due to the public display of unresolved complaints.

Is BBB Accreditation Important?

BBB accreditation is not mandatory to operate a business. A business can choose to operate without BBB accreditation. However, when a business obtains accreditation, it demonstrates to consumers and other stakeholders that it has committed to meeting specific ethical standards and will respond to consumer complaints.

Once a business loses its accreditation, the consequences are primarily reputational. Consumers may be less likely to trust or do business with the company.

What Happens If a Business Fails to Respond to BBB Complaints?

If a business fails to address BBB complaints, the BBB may downgrade the business’s rating and/or indicate that the company is uncooperative.

As the number of complaints against a business grows, the BBB may begin to notice patterns of unresponsiveness. In extreme cases, the BBB may report the business to regulatory agencies.

Failing to respond to the BBB will not cause a business to close, but it may make more information available to the public about the business’s poor customer service practices and attract the attention of regulatory agencies.

How Are Government Agencies Different From the BBB?

Government agencies have regulatory and enforcement authority.

Examples of government agencies that have authority include:

• FTC
• State attorney general offices

Examples of actions that government agencies can take include:

• Investigating consumer fraud
• Imposing fines
• Taking civil or criminal action
• Revoking business licenses
• Closing businesses

The BBB does not replace these agencies but rather provides an early warning system that highlights possible problems.

Why Does the BBB Continue to Have Value?

Despite the BBB’s lack of regulatory authority, it remains an important resource for consumers and regulatory agencies alike.

Consumers rely on BBB ratings to determine where to allocate their resources. Search engines frequently display BBB pages. Journalists and regulatory agencies track complaints.

Therefore, while the BBB does not have the authority to regulate businesses directly, it creates a framework for holding businesses accountable through reputation.

Final Thoughts

The BBB cannot close businesses. The BBB does not have the authority to enforce regulations.

The BBB can document business behavior, influence public perception, and inform regulatory agencies of patterns of misconduct.

Recognizing this difference in authority helps consumers know where to submit complaints and allows businesses to better understand the BBB’s role.

The BBB is not a regulatory agency. The BBB is an accountability and reputation platform that operates between consumers and regulatory agencies.