But while most consumers and businesses have heard of the BBB, many do not have a clear understanding of what functions and services the BBB actually provides. Here are three of the most common misconceptions individuals and businesses often have when it comes to what, exactly, the BBB can do.

Misconception 1: The Better Business Bureau is a government agency.

Neither the Council of Better Business Bureaus nor individual BBB offices have any government affiliation.

“They are not a government agency and have no authority in that regard,” said attorney John Kenney of Lineberry Kenney, LLC.

Rather BBB offices are private, non-profit organizations funded by membership dues and other financial support. Membership dues are paid by businesses that join the BBB. Membership is based on paying dues, submitting an application and making a promise to honor the BBB’s principles of good business, which include having all industry-relevant licenses, using BBB’s arbitration methods for dispute resolution and so on.

“I don’t think that [joining the BBB] adds any special élan to a business,” said Darla Murker, executive director of the Silverdale Chamber of Commerce. “Except that some hold stock in the idea that the BBB is the end all, be all of who’s who of proper business.”

Misconception 2: The Better Business Bureau has legal authority.

Consumers commonly turn to the BBB to find out about a business or to lodge a complaint against a business. The vast majority of BBB offices make their “company reliability reports,” as the BBB calls them, available to the public online, free of charge.

“When a consumer views a company’s reliability report, they are given information on the number of complaints the BBB has processed in the last 36 months,” said Marcella Kallmann, public relations manager for the Better Business Bureau office serving Alaska, Oregon and Western Washington, “and, if applicable, the nature of the complaint and whether or not it was resolved.”

The BBB purports to act as a neutral third party when it comes to resolving consumer complaints.

“When the BBB receives a complaint…the complaint is forwarded directly to the company so that they may respond to any inaccuracies and take the appropriate action to resolve the dispute,” said Kallmann.

These complaints, and their resolutions, are tracked by the BBB office that received the complaint and the information is made available to consumers.

“When a complaint is closed, it can be marked as resolved, unresolved, or administratively closed,” said Kallmann. “…resolved when response from the company addresses the disputed issues and the consumer has verified that the complaint has been settled to his/her satisfaction…unresolved when the consumer indicates that the company’s response does not settle the matter and the BBB believes that the company’s response does not adequately address all the issues…administratively closed when the BBB determines the company made a good faith and reasonable effort to resolve the issues, but the consumer remained dissatisfied with the outcome.”

But although the BBB takes an active role in addressing consumer complaints, and even offers arbitration services, the organization has no legal authority to enforce consumer protection laws, or even to compel a business to respond to a complaint brought to their attention by the BBB.

“They can’t ‘make’ someone do or rectify something,” said Murker. “What they can do is apply their ‘rating’ to a business that doesn’t comply with their requests/demands and publish that.”

Misconception 3: Consumers can rely solely on the Better Business Bureau when choosing a business to work with.

While the BBB databases and company reliability reports can be a useful tool for consumers as they make decisions about what companies to do business with, it would be a mistake for consumers to rely solely on the BBB database information.

Why? Mainly because the BBB databases are not comprehensive. Non-member businesses normally are only included in the database if the BBB has received a complaint from a consumer or is involved in a dispute resolution process between that business and a consumer. And, because the BBB does not verify a complaint’s legitimacy before bringing it to the attention of a business, companies may receive an “unsatisfactory” rating on the BBB database because they chose not to respond to a malicious or specious complaint.

The bottom line. While the BBB can be a useful tool for consumers, and businesses, when it comes to researching a company or addressing complaints, it should not be the only source that consumers look to when it comes to making smart choices about which companies to do business with. And if your business receives a letter of inquiry from the BBB regarding a consumer complaint? Remember this: the BBB’s lack of legal authority doesn’t mean that letter should be ignored.

“They have been around a long time and are frequently referred to by consumers, kind of like Consumer Reports,” said Kenney. “So, the downside to not responding to a request for more information by them is it would potentially subject a business to negative information being published by the BBB.”.