Better Business Bureau faces challenges in a tight economy
POSTED: 1:30 a.m. HST, Jul 8, 2011
LAST UPDATED: 2:23 p.m. HST, Aug 5, 2011
Dwight Kealoha is a man who has had a close-up view of a lot of trouble spots. First there were the two tours in Vietnam and three decades in the Air Force, retiring after 29 years as a brigadier general and putting in 2 1/2 more in the National Guard. He was named acting chief administrative officer at Kamehameha Schools in the wake of the Bishop Estate upheaval about 10 years ago. Then there were his six months as chief executive officer at Unity House, a post taken to help guide the labor-union nonprofit through federal receivership.
So the past five years as CEO at the Better Business Bureau of Hawaii must have been a cakewalk by comparison, right? Not exactly.
"I think the recession did a lot to get people to find as much information as they can in their prepurchase decisions," Kealoha said. "In 2009 we had 171,000 inquiries on businesses. In 2010 we had 307,000. So far this year we've had 233,000."
His late father, Harry Kealoha, was a noted volleyball coach in the '60s and '70s. Kealoha, who's married, puts his own age at the "mid-60s," but an athletic upbringing has paid off in a lifelong fitness habit — running and playing squash and racquetball — that keeps him young and able to keep up.
The bureau itself works to mediate disputes between businesses and clients on everything from customer service to billing complaints. And, with its educational foundation, it has been out front sounding an alarm about scams that target seniors.
Kealoha noted a newspaper advertisement in which an elderly victim is asked why he fell for a fraudster's pitch.
"You know what his answer was? ‘I was lonely.' That's tragic," Kealoha said. "There's a reason why they call them scam artists: They're good at it."
QUESTION: Was there anything about the bureau's mission or operation that surprised you after you took the job?
ANSWER: What surprised me was the amount of work and energy that goes into checking businesses out. And as I got to know the organization better, it made eminent sense to me as to why they would do that, because we're trying to tell consumers, these are businesses that are a step apart from the mold in that they are committed to standards and therefore they can be trusted to give you honest prices, stay by their word, honor their promises, things of that nature.
Q: What makes checking out the business challenging?
A: In most associations, if you join, you just pay your money. In the BBB, you have to go through a vetting process. And that vetting process looks at the leadership, looks at the business, makes sure there are no government actions and they have the appropriate licenses, so that when the information is conveyed to the consumer they can trust what they're getting, because of the exhaustive research that's gone into looking at the business.
Q: Is there a difference between being "accredited" by the BBB and being a member?
A: For years we would talk about "being a member of the BBB." And when we did surveys with consumers and businesses, we found that their experience favored a term that would better show the experience that they went through to become, as you say, a member. What we did was we said to ourselves, what's the closest description that fits what we're doing with businesses? "Accreditation" was the closest we could come to. So we're certifying what we put on their record with regards to the business -- what business it's in, how long it's been there, who owns it, all the data we put into the reliability report.
Q: Some businesses are marked "A+" and are not accredited. How do they get that letter grade?
A: We have a rating system. It used to be satisfactory/unsatisfactory. It's based on (16) elements ... that essentially judge where the businesses will fall in the range of A+ through F. So most businesses, if they're free of complaints, or at least got licensing, meet all the criteria, and there's no smudge mark on their record, we can essentially give them an A or A+.
Q: Basically, you start off as angels?
A: Yeah. Some of the things, for instance, we judge them on is time in business. Because consumers think that the longer you're in business, the more you'll be around tomorrow. ... That's one of the toughest elements in the algorithm itself, to get points for.
Q: How does a business get selected to be rated?
A: Generally there's got to be interest from the consumers in the business. Someone calls, asks about the business. We'll send out a questionnaire and we'll call them. And if they send the information back and we have enough information on the business, we'll put in the algorithm and see what the algorithm offers up in the way of a rating.
Q: What's the relationship between the BBB-Hawaii and the national organization?
A: I guess the best way to describe it is we're a federated system. We have a certain amount of independence, but there are certain compliance issues that we have to live by. ... So what they look at is your financial stability, your governance, and all those things that make a difference from the standpoint of your ability to do the job.
Q: Last fall there was a "20/20" TV investigation on the bureau, concerning a "pay to play" practice, linking how a business scores to its fee payment. Did that damage the brand?
A: I don't think it caused us any damage. I think people understand that when you have a system that's made up of 108 BBBs, you don't want any of them to be noncompliant. In this particular case, we had at least one, and it was located in California. ... None of us were very appreciative of this. So the question for me was, how about the rest of it? Was there anything in there that I should be concerned about, in regards to the report? It was a mix of misinformation, some good focus, some things we've had to look at. ... One of the things we wanted to make sure about, is when we are vetting a business, do we put enough into it, so that when we tell the consumer that this business is trustworthy, that in fact we can stand on our word? So that's a matter of a match between resources and requirements. So we've done that.
Q: Have there been changes to the local bureau, more broadly, over its history?
A: I think in the early years, nationally, they were concerned about truth in advertising. ... The other thing they came out with was the notion that businesses can self-regulate. ... Here in Hawaii, we came out of the Chamber of Commerce, the Retail Board, back in 1945. And the whole idea was we were coming to the end of World War II, businessmen here in Hawaii said to themselves, "We think a boom is going to take place. We don't want government intruding. We want to self-regulate where necessary." So they said the BBB seemed the perfect organization to do this.
Q: How has the BBB changed more recently?
A: I would say that in the last four years -- not because I've been here, but just the nature of things happening -- we've seen more take place than in the 60-years-plus before.
Q: Is that because of the economic downturn?
A: No, I think it's the realization that for years we had necessarily serviced our traditional audience, and the realization was that we were missing generations that were following them. ... And so the end result was that we were soon to be irrelevant, if we didn't in fact do something and bring ourselves into the 21st century.
Q: How did you do that?
A: I don't think the job's done; I think we're still doing it. So the question (about the younger generation) is, "What's their lifestyle like, what kind of information do they want, how can we share that information?" One example is, they're always on the move, so you gotta find mobility at the center so ... mobile apps. National just finished an iPhone app for mobility; there are a couple of others that we've used. ... And we found that in serving our traditional audience, there wasn't a tremendous push to get online, and we found we're going to be left behind if we don't get our presence online, so we made great efforts to do that. ... There was a website when I got here, but it was dysfunctional. More than anything else, everyone expressed a certain amount of independence in 108 BBBs, because you looked at their websites and none of them looked alike. So we went through a process where we brought all websites together.
Q: How do you approach consumer questions?
A: We try to make sure that they get as much information about a business, and it's presented in such a way that it's easy to understand. So the ratings help. If you see a business with an F rating, I don't think you're going to select that business for duty. You find one with at least a B rating, and you know that it has at least the potential to be accredited.