Better Business Bureaus history
The Better Business Bureaus sprang from the early 20th-century “truth in advertising” movement. Advertising was then emerging as a distinct profession and hoped to elevate its low public standing. Unfortunately, the largest advertisers were patent medicine manufacturers who pioneered national marketing techniques while peddling false promises of health “cures.” Muckraking exposés by Ladies Home Journal (1904–05) and Collier’s (1905) revealed that the ingredients contained in these nostrums included everything from innocuous herbs to alcohol and opium. A horrified public pressured Congress to pass the Pure Food and Drug Act (1906), which required the labeling of drugs. National advertising agencies responded by dropping patent medicine accounts. Eight years later, Congress established the FEDERAL TRADE COMMISSION (FTC) to deal with unfair trade practices. The Wheeler-Lea Act of 1938 further empowered the FTC to deal with “deceptive” advertising and other misleading “acts or practices.”
Local advertising clubs, meanwhile, set up volunteer “vigilance committees” (later renamed “Better Business Bureaus”) to monitor advertising and retail trade. In 1914, the Minneapolis advertising club established the first full-time, professional Better Business Bureau. The concept spread to dozens of other U.S. and Canadian cities. For example, the NEW YORK STOCK EXCHANGE, seeking to eradicate stock swindlers, helped found the Better Business Bureau of New York City. The bureaus kept files on businesses, investigated scams, and reported criminal cases to the authorities. They worked closely with newspaper publishers, urging them to reject deceptive ads, and also cooperated with the American Medical Association in exposing health quackery. The Association of Better Business Bureaus (ABBB) represented the local BBBs, while a National Better Business Bureau (NBBB) focused on national advertising. In 1971, these two associations merged to form the Council of Better Business Bureaus (CBBB).The BBBs were successful at curbing fraudulent advertising and sales claims. However, cases involving borderline deception were more difficult to challenge given the subjective nature of the violations. Moreover, some large advertisers flouted the BBB code of ethics. Nevertheless, the drastic reduction in outright fraud and dishonesty, so prevalent in the early 20th century, was a major accomplishment. Member firms valued the BBB for its efforts to eliminate unfair competition and channel consumer dollars into honest businesses.
The BBBs’ history is intertwined with the CONSUMER MOVEMENT. During the 1930s, consumer activists launched an unprecedented attack on advertising with best-selling books such as Arthur Kallet and F. J. Schlink’s 100,000,000 Guinea Pigs. Consumers’ Research and Consumers Union tested products against their advertised claims and found many wanting. The low popular opinion of advertising was reflected in the colossal success of Ballyhoo, a magazine that spoofed leading advertisements. The BBBs responded to this widespread public cynicism by becoming involved in consumer education. They published buying guides and held conferences to bridge the gap between businesspeople and consumer advocates.
Consumer advocacy intensified in the 1960s and 1970s as Ralph NADER and other advocates demanded stricter government control of business. A separate critique of advertising’s corrupting influence on the public, particularly children, led to calls for the censorship of commercial speech. Fearful of government control, the leading advertising associations joined the Council of Better Business Bureaus in establishing the National Advertising Review Board (NARB). The NARB is responsible for regulating national advertising content. It reviews the decisions of the CBBB’s National Advertising Division. Although the NARB lacks legal authority, advertisers have abided by its judgments.
The Better Business Bureaus also arbitrate consumer disputes. Large corporations, regulatory agencies, and courts have turned over an increasing number of complaints to the BBBs. Recently, the Council of Better Business Bureaus has worked to bring self-regulation to Internet commerce. Companies may apply for a BBB seal of approval for their Web sites. This issue will certainly grow in importance as consumers spend more money online.
The Better Business Bureaus have a controversial past. Muckraking journalists and aggrieved business owners denounced the BBBs for acting as busybody detectives. This was especially true in the 1930s, when books appeared with such sensational titles as The Indictment of the Better Business Bureau Conspiracy (1931) and Rackets: An Exposé of the Methods and Practices of the Better Business Bureaus (1933). More recently, consumer advocates have questioned whether the BBBs represent business or the consumer. Thus, by mediating between business and consumer groups, the BBBs are vulnerable to charges that they did too little, or too much, for either side.
Further reading
- Kenner, H. J. The Fight for Truth in Advertising. New York: Round Table Press, 1936.
- Smith, Ralph. Self-Regulation in Action: The Story of the Better Business Bureaus, 1912–1962. New York: Association of Better Business Bureaus, 1962.
Jonathan J. Bean