Flawed Better Business Bureau Rating System on Debt Settlement Companies

Debt Settlement is a superior bankruptcy alternative. The debt elimination procedure has helped millions of Americans to avoid bankruptcy. It is recognized by major creditors and J. Thomas Rosch, Commissioner of the Federal Trade Commission (FTC) who states, "It is a viable and needed service for consumers." Despite its wonders, debt settlement companies have been given a bad rap by the Better Business Bureau's confusing and unfair rating system.

The Better Business Bureau's rating system "represents BBB's degree of confidence that the business is operating in a trustworthy manner and will make a good faith effort to resolve any customer concerns filled with BBB." Furthermore, according to the organization, its ratings are determined by a proprietary formula, representing the Better Business Bureau's opinion on seventeen different elements.

Based on the following chart, each element is assigned a score per each category. The chart also shows the maximum number of points awarded or deducted for each element:

(Each score above represents a percentage of the highest element score attainable.)

The chart below shows the final rating grade that the Better Business Bureau gives a company based on the percentage of what they call, the perfect score:

Above rating system grade is based on a percentage of the perfect score of 90 points from a rating of A to F with pluses and minuses. A+ is the highest grade and F is the lowest grade.

Example:

• A score of 90 out of 90 points = 100% = “A+” rating
• A score of 60 out of 90 points = 66.66% = “D” rating

In the Type of Business (TOB) element (see 1st chart above), a debt settlement company is automatically downgraded to Category 2: "The BBB believes the inherent nature of the products/services offered by businesses in these TOBs, the businesses are likely to generate trade practice concerns and/or a high level of customer dissatisfaction."

Based on the above category, debt settlement companies can suffer a maximum 41 point deduction. As a result, even a company with no customer complaint history can receive a D- or F grade. For example, on February 2, 2010, we were given an "F" rating on our company's BBB Business Reliability Report (http://www.bbb.org/san-diego/business-reviews/credit-debt-consolidation-services/debt-free-league-in-san-diego-ca-171991042/). However, our Customer Complaint History stated: "BBB has processed no customer complaints on this company in its three year reporting period."

Additionally, there are numerous debt settlement companies that had ZERO customer complaints in a three year reporting period the Better Business Bureau has branded most with a D or F rating. The handful of debt settlement companies that were given a C rating had their rating grandfathered prior to the enactment of the BBB rating system.

Strangely, the BBB has given BBB-paying members with much worse customer complaint histories an A or B rating. In fairness, the Better Business Bureau adds the following caption on all Business Reliability Reports: "The rating is not a guarantee of a business' reliability or performance, and readers should consider a business' rating in addition to all other available information about the business." Thus, when weighing the value of a Business Reliability Report, what really matters is if the company has a bad history of customer complaints and/or unresolved complaints."

The Better Business Bureau attacks the debt settlement business model assuming it "results in creditors not getting paid as agreed to by the consumer and educates consumers not to pay their debts." However, ethical debt settlement companies do not advocate not paying a debt. Generally, their customers are having difficulty making the minimum payment due to a financial hardship. The Office of the Comptroller of the Currency (OCC) also confirms this stating that "financial circumstances justify for a consumer not to not pay as agreed."

Nevertheless, the BBB rating bias dissuades consumers with financial hardships from seeking essential financial relief from legitimate debt service settlement providers. Without the assistance of a debt settlement service provider, debtors can remain delinquent on their financial obligations, which could lead to creditor lawsuits, judgments, and creditor harassment. This can also cause creditors to run the risk of never getting paid if these debtors sought bankruptcy protection.

In conclusion, debt settlement companies do offer consumers a legitimate bankruptcy alternative. They also maintain high customer service standards as in the case of Debt Free League. Being pioneer of the National Debt Relief Stimulus Plan, our fees are about one third less than the industry average. While no government bailout exists for small business owners, we give the self-employed effective business debt relief. We surpass the typical 3-day rescission period of most of our competitors, allowing new customers to cancel from our program within 30-DAYS of enrollment to get back 100% of their deposit. We're also the only debt settlement company that allows customers who cancel due to a financial hardship and reenroll in our program with a credit of up to 100% of the fees they previously paid.

However, you would never get to enjoy any of the above benefits if relying solely on the Better Business Bureau. What's most important is well-rounded research, which can start with an easy Google search. You can also verify a company's customer complaint record with Ripoffreport.com. Unlike the Better Business Bureau, they do not require membership dues from any company. They also give the public 100% unbiased reporting.

About Debt Free League:

The debt settlement company and provider of the Debt-to-Freedom Plan provides a bankruptcy and debt consolidation alternative that negotiates discounted payoffs on unsecured debts, including credit cards, signature loans, medical debt, business debt, corporate credit cards, vendor contracts, and corporate leases. The company hosts the "How to be Debt-Free without Bankruptcy" radio program and can be reached at 1-800-213-9968.

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