LONA LUCKETT and WILLIAM MITCHELL : Veracity's Their Business Goal : BBB Monitors Firms and Charities to Protect Consumers

Times staff writer

For close to a century, the Better Business Bureau has tried to help consumers recognize the difference between a good buy and a gimmick. With more than 200 chapters across the country, the BBB keeps a record of customer complaints against a wide range of companies and offers an arbitration service to resolve disputes. The private, nonprofit organization also keeps data on advertising claims and charities.

The BBB traces its roots back to Samuel C. Dobbs, former president of the Coca-Cola Co. When the soft-drink manufacturer found itself in court in the early 1900s, facing allegations of misleading advertising, Dobbs was shocked at his company's defense: "Why, all advertising is exaggerated. Nobody really believes it." This kind of attitude caused Dobbs to form one of several organizations, including a group called the Vigilance Committee, which eventually came together to form the BBB.

The organization's Cypress office handles all inquiries and complaints for the Southern California region, which encompasses Orange, Los Angeles, San Bernardino and Riverside counties.

Lona Luckett is the BBB's director of operations in the Cypress office. She joined the bureau in 1983 as a telephone inquiry operator and was manager of the complaint department before her current job.

William Mitchell is the BBB's president for Southern California. He joined the agency in 1984, after being director of its Inland Cities chapter. He became the agency's head in 1987, when the inland operation merged with the Los Angeles and Orange County office.

In a recent interview with Times staff writer Gregory Crouch, Luckett and Mitchell discussed the BBB's operations and consumer protection topics.

Q. What is the Better Business Bureau?

A. Luckett: Seventy-nine years old, the Better Business Bureau is a nonprofit organization funded by dues of our member companies. Our functions are numerous, including public inquiries about specific companies and arbitration of filed complaints. We respond to approximately 57,000 inquiries every month in this office alone, and we process between 2,000 and 2,300 complaints monthly.

Mitchell: Our purpose is to promote business self-regulation. We encourage businesses and consumers to work out any problems they have between themselves without involving any kind of governmental agency. Typically, we receive many pre-purchase inquiries; people are thinking, for instance, about buying a car, and they want to know what kind of experience we've had with a particular dealer.

Q. What number should consumers call to inquire about a company?

A. Luckett: (714) 527-0680. Our inquiry system is computerized, so consumers can call 24 hours a day, seven days a week. Anyone with a touch-tone phone can simply call our number and receive a report, which is part synthesized speech and part recorded speech.

Q. What kind of information is the caller provided?

A. Luckett: Depending on what we have, the report could contain statistical information on when the company was established, who the owners or principal officers are, what our experience has been with the company, whether or not they have received complaints, whether or not they have responded to their complaints, whether there has been a pattern of complaints, etc. And we provide general information about the industry the company is doing business in.

Q. What if a company has more than one phone number?

A. Mitchell: If we know about all of these different numbers, those are entered in our system. The same thing is true with the company's trade names or (the names it does business under). In other words, a lot of companies have a number of different names, and we enter those into the computer system. The address is always listed, so the customer knows he or she is getting the report on the correct company.

Q. Do you have public reports on member companies only?

A. Luckett: No. The reports are the same, except for the fact we report membership on a member company. We have a database of about 100,000 companies, and that's made up probably of about 90% non-member companies. The non-member companies keep us the busiest, both in terms of complaints and inquiries.

Q. What are some typical consumer complaints you hear?

A. Luckett: Unfulfilled contracts, non-delivery of products, companies unwilling to give refunds. Refunds and exchanges is probably one of the most misunderstood categories because many consumers don't realize businesses aren't required to give a refund just because they want their money back. There are no laws regarding refunds and exchanges, and stores make their own policies, so we just educate the consumers, and hopefully next time they'll know better.

Mitchell: We get a lot of complaints in this area on advertising specialty companies. These companies sell their services via telemarketing, and they'll offer small businesses a gross of pens or something with their name on it for $300 or $400. These are grossly inflated prices. We also have a lot of phony office supply companies around, selling off-brand (photocopier) toner and other copy supplies at ridiculous prices. They imply to the people they are talking to, usually a secretary, that they are the regular supplier for this company.

Q. Have you seen an increase in scams during the recession?

A. Luckett: We're seeing more and more complaints pertaining to advanced-fee loan companies and credit repair firms. Companies offering money from out of heaven--to people with no credit history--should be dealt with cautiously. Call the BBB to see if we have any information on the company. If we have nothing specifically on the company, we do have general information, including guidelines to follow to make their own determination on whether or not they want to do business with the company. We focus on consumer education.

Q. What kinds of consumer education pamphlets are available?

A. Luckett: I've got a list about five or six pages long. But we cover everything: how to install a kitchen sink, car repair, beauty pageants and Hong Kong tailors. Everything from A to Z. And they are all free.

Q. Please explain how the complaint process works?

A. Mitchell: Consumers send us a complaint, which is then forwarded to the business in question. The company is given about 10 days to respond. If the consumer is happy with whatever the proposed resolution is, then that's the end of it. On the other hand, if they are not satisfied, then usually the customer will write back and say what else they desire. Hopefully, these two parties will come to some middle ground, but if they don't then we'll attempt to arbitrate the case. Otherwise, we recommend consumers contact another agency or file an action in small-claims court.

Luckett: Of course, whatever the outcome, all of these complaints are used to prepare the BBB reliability reports that we give to consumers when they call in to ask about a company's reputation.

Q. How serious is it for a company to get customer complaints filed with the BBB?

A. Mitchell: Just because a company gets complaints, it shouldn't necessarily be construed negatively. We understand a company doing any volume of business is likely to experience problems with customers from time to time. The important thing is that they take care of those things. What we look for are patterns of particular problems. We report any patterns so the next guy who calls up with a question about a company is going to know what other people's experiences were. We also report criminal complaints and other actions by the government.

Q. You have a program to deal with customer complaints about new cars, right?

A. Mitchell: Our Autoline program brings together automobile manufacturers and consumers, so we can arbitrate and mediate lemon-law complaints. In California, there is a statute requiring every manufacturer to have some sort of third-party mediation process to resolve problems with new cars, and most of these manufacturers have selected the BBB to handle this. The results of the arbitration are binding on the manufacturers. So, if the arbitrator orders the company to buy back that vehicle, they must write out a check. This service is also free to the public. Autoline's phone number is 1 (800) 955-5100.

Q. How does Autoline differ from your regular arbitration?

A. Mitchell: The main distinction is that in our regular arbitration program, it's binding on both parties. Neither party has the option to reject the decision. If the consumer isn't satisfied with an Autoline arbitrator's ruling, he or she can take the matter to court.

Q. Who are the arbitrators?

A. Luckett: They are from all walks of life--housewives, attorneys, retired people, teachers, etc. Just about anyone who would like to volunteer. They have to attend a two-day seminar and get certification as an arbitrator in order to work for us.

Mitchell: The reason we don't insist anyone have a particular background is because the theory of these arbitration proceedings generally is that a person of average intelligence should be capable of listening to a dispute and deciding the right thing to do. Usually, the decisions are excellent. They are every bit as good as what you might expect in a court of law, yet you don't have the expense and time that would involve.

Q. Since you handle the complaints for all four counties, do you have a breakdown on which regions of Southern California have the biggest problems?

A. Luckett: Los Angeles County, probably, then Orange County, followed by Riverside and San Bernardino counties.

Mitchell: We get a lot of inquiries and complaints from other parts of the country, because a lot of (telemarketing) boiler rooms in Orange County market mainly to other states.

Luckett: Probably at least 60% of the inquiries are from out-of-state consumers.

Q. How does this region compare in terms of traffic to other regions around the country?

A. Mitchell: This is the largest BBB in the country in terms of the number of reports we issue, the complaints we process and membership. The complaint activity and the inquiries--the reporting activity--is heavy, because Orange County seems to be the boiler room capital of the United States.

Q. Do you refer cases to law enforcement agencies?

A. Luckett: We work very closely with several government agencies, and if we determine there is a pattern of a problem or we get a large volume of activity, we call them.

Q. Besides the complaint and inquiry services, what are some other types of consumer protection you offer?

A. Mitchell: We report on charitable organizations. We have a set of standards that we apply in those cases. Basically what we're looking for is the amount of money that actually goes toward charitable purposes, as opposed to administrative and fund-raising expenses. We don't suggest or recommend anybody give money to any particular charity.

Luckett: We also review advertising. We will question ads if someone brings to our attention an unfair ad claim. We write to the company, questioning their advertising, and ask them to substantiate their claims, whatever they might be.

Q. What if they can't?

A. Mitchell: We report that. Our ad review activity also becomes a part of the report that we give out on the company.

Q. Are there any types of complaints you won't accept?

A. Luckett: We can't take any complaint that is above the price of the product or service. For instance, if someone writes us and says, 'I bought this and it cost $500, but I think the business should pay me back $1,000 because of my mental anguish,' we couldn't accept that complaint. And generally we won't take a complaint if it's more than a year old.

Q. What kind of response rate do you get from companies?

A. Luckett: We get back about 60% to 70%.

Q. What are the bureau's weaknesses?

A. Mitchell: I'd like to see us have a lot more companies in our database and probably some more in-depth information on these firms, but unfortunately the preparation of these reports is very expensive and labor intensive. And another deficiency I think exists is the fact that there are some 200 separate BBBs across the country. Each one is financially independent, and we all do reporting on companies within the area we serve. What I would like to see is a central database. Unfortunately, if an Orange County resident wants a report on a company in New York, it now takes several days, unless they call the BBB in New York directly.

Q. How much is a membership?

A. Mitchell: The fees really vary, depending on the size of the business. It's really based on the number of employees, but in this county the minimum is about $330 a year.

Q. What are some of the larger companies in Orange County who belong to the BBB?

A. Mitchell: Some of the bigger companies include Sears, Norwest Financial Chain, the Broadway, May Co., Mailboxes Etc.

Luckett: Our membership in Southern California is about 10,000.

Mitchell: Of that, about 3,500 are in Orange County.

Q. How does a company become a member?

A. Luckett: You have to agree to BBB standards. You have to agree to the advertising and selling principles that we set forth, believe in a free enterprise system and agree to respond to all customer complaints. Members are required to supply upon request any selling or advertising claims that they are using. They are required to respond to any and all customer complaints presented by the bureau. They must be in business for six months.

Mitchell: If they are pledged to arbitrate--meaning they have an agreement with us to arbitrate consumer complaints--they must abide by the decision of the arbitrator. One of the other standards is that they not use our name and logo in their advertising. We really don't permit any business to use us to promote their own products or services.

Q. Any concluding remarks?

A. Luckett: Businesses should know they're responsible for their own BBB reports through their own actions. If they disagree with our report, they should change the way they operate. We are not a pro-consumer organization; we are not a pro-business group. We're here to be a fact-reporting agency

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