Business

Better Business Bureau L.A. chapter changes name after expulsion

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The just-expelled Better Business Bureau of the Southland has no plans to end its mission of fighting for southern California consumers.

The former Los Angeles affiliate of Council of Better Business Bureaus has renamed itself the Business Consumer Alliance and is going on the offensive after being booted from the council Tuesday over allegations that it strong-armed businesses into paying cash for inflated ratings.

As a result, the new group can no longer use the BBB name or logo.

Kiry Peng, chief executive of the Business Consumer Alliance, defended the BBB of the Southland. In a statement, Peng said the chapter had followed all BBB policies. Peng said it followed the practice of awarding an A-plus rating only to accredited businesses.

"It is ironic that the BBB accuses us of failing to follow organizational policy on the one hand, and then labels us a ‘bad apple’ when we do," Peng said. "The reality is very simple: The pay-for-play policy was the BBB’s, not ours."

The rare move by the Council of Better Business Bureaus, based in Arlington, Va., follows a two-year investigation into the Southland chapter's alleged "pay to play" culture.

"Over a period of more than two years, BBB of the Southland failed to resolve concerns about compliance with several standards required of BBBs, including standards relating to accreditation, reporting on businesses, and handling complaints," Carrie A. Hurt, president and chief executive of the Council of Better Business Bureaus, said in a statement.

The saga began unraveling in 2009 when The Times' consumer affairs columnist, David Lazarus, wrote about chef Wolfgang Puck, who owns several restaurants in Southern California. Puck's non-BBB restaurants were rated poorly, while lesser-known eateries paid roughly $300 in dues and were graded A-plus.

A year later, a group of Los Angeles business owners that had been critical of the BBB conducted a sting operation by paying dues for fake companies, including one named after the Palestinian organization Hamas, which the U.S. government considers a terrorist group.

The fake businesses were all accredited and given ratings, according to an ABC News report. Hamas received an A-minus rating.

Hurt said in a statement that the national group will operate a "virtual BBB" until a local group is established and running again. Other BBB staff from around the country will take on local responsibilities in the interim.

In a Friday letter to the national group, Jerry Dominguez, chairman of the board of the BBB of the Southland, defended his chapter's record and resigned its membership in the Council of Better Business Bureaus.

"Our board has endured repeated, unjustified criticism that we haven't been exercising our governance responsibilities as the auditors believe we should," Dominguez wrote.

In the letter, he detailed what he called the group's accomplishments and handling of consumer complaints.

"Frankly, we're disgusted with the actions of Council and we find resignation to be not just the only, but the best, course of action for us," he ended the missive.

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ricardo.lopez2@latimes.com

Copyright © 2014, Los Angeles Times
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