Smart consumers know the rule: before you spend a lot of money with a company you're not familiar with, check it out with the Better Business Bureau. But these days you need to make sure it's the real Better Business Bureau you're calling. CBS News Consumer Correspondent Herb Weisbaum explains why.
Those clever con artists who make a living by ripping you off have another trick up their sleeves. They know they've got to win your trust to take your money, so they've figured out a sneaky way to get a good report from the Better Business Bureau.
They don't accomplish this by running an honest business. They do it by setting up their own Better Business Bureau!
John Callender, of Columbus, Ohio was looking for a loan. He wanted to get some work done on his car, consolidate his bills, and buy birthday presents for his son. An ad in a Columbus newspaper caught his eye. It promised "no-fee loans."
When Callender called the number, he was referred to a company called Caribbean Financial Services.
Caribbean Financial said it would give him the money, but only after he paid the standard fee: US$200 up front. Before he was willing to do that, Callender wanted to make sure the company was legitimate. "No problem," Callender says he was told, "Just check with the Better Business Bureau in Barbados." And the helpful salesperson gave him a toll-free number.
According to Callendar, when he called that 800 number someone did answer the phone with "Better Business Bureau." Callender was told the company had a five-star rating. "And I knew the Better Business Bureau doesn't rate by stars. That was a red flag right there," says Callendar.
The real Better Business Bureau doesn't rate or endorse companies.
At the Columbus Better Business Bureau, they've seen this slick trick before. Ron Miller of that bureau says, "No question in our mind, it's a definite fraud."
It turns out that calls supposedly going to the Bureau in Barbados were really going to a warehouse in Toronto, Canada. Miller says there is no Bureau office in Barbados, and never has been. "I'm sure there are some people in the BBB system who wouldn't mind having a BBB in Barbados. But no, there is not a Better Business Bureau in Barbados," says Miller.
And this isn't the only fake Better Business Bureau. When the Federal Trade Commission investigated a company offering bogus business opportunities Â— a company called Prestige Fragrance Â— an agent posed as an investor. He was told he could check out the company by calling the NBBB: the National Bureau of Better Business. He was told that "Prestige Fragrances has no complaints, and they are a member in good standing with this bureau."
Charles Harwood of the Federal Trade Commission says, "This was an organization that the bad buys set up, that they were paying. They were essentially buying a good reference from this organization... When consumers called the NBB, or the National Bureau of Better Business, what they got was a glowing reference about this company."
If you can create your own Better Business Bureau, why not create your own phony references? Well, they're doing that, too.
Ask for references and you might be put in touch with people fraud experts call "singers." Those are actors who are paid to play the role of successful investors or satisfied customers. So you've got to be careful with that as well. People have lost a lot of money because a "singer" assured them a scam was a legitimate business deal.
Remember: the only way to make sure you are talking to the real Better Business Bureau is to look up the number yourself. Don't rely on a number provided by somebody who is trying to sell you something.