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Support From Companies Has Declined Greatly : Lack of Business Causes Better Business Bureau to Close Its Doors

November 04, 1987|JOHN TIGHE | Times Staff Writer

The Better Business Bureau of Los Angeles/Orange Counties, which handled more than 1.5 million consumer inquiries last year, has gone broke.

BBB offices in both counties have closed and laid off their employees after exhausting the operation's budget and failing to raise emergency funds in the business community.

The future of the 59-year-old bureau--the only BBB in the country to close in the last 30 years--is uncertain.

President William Fritz said his office, which at one time was the second busiest in the nation, could still be bailed out by another bureau in the state or begin charging consumers for its services.

In the past, consumers have been charged nothing, while member businesses have each paid dues of about $300 annually to pay for the bureau's operations.

Fritz said Southern California businesses have been increasingly unresponsive in recent years to requests for money. "We get some support from some small businesses, but most of the large ones ignore us," he said.

He said the local bureau, which was founded in 1928, had 6,800 members three years ago. About 3,000 firms are listed today as members, and many of those are doubtful accounts, he said.

Fritz said many business leaders believe that the BBB provides few benefits to them. The bureau solicits and files complaints about specific businesses, then reports the information to consumers upon request. The bureau also monitors advertising and offers consumer education programs.

As income has dropped, so has the bureau's payroll. Early last year, the Los Angeles and Orange County offices employed 38 workers, but only about a dozen have been working at the bureau's offices in Los Angeles and Tustin in recent weeks.

Workers were told that last week's paychecks would be their last. But a few, including Fritz, reported to work this week as volunteers.

Lori Gabrielson, office manager in Orange County, which earlier this year had a staff of seven full-time and part-time workers, was alone in the office Tuesday handling administrative duties. Phone calls from consumers were going unanswered.

"I'm not going to let it go down," Gabrielson said. "I'll get my own directors and start my own organization if I have to.

"When a consumer askes me where to turn for help, I tell them to call the state attorney general, but (staff members in that office) can only deal with legal actions, not consumer inquiries."

Business and legal officials agreed Tuesday that without the BBB, consumers will have few sources of information about individual businesses.

"They provided an invaluable service. We referred calls to them," said Ray Remy, president of the Los Angeles Area Chamber of Commerce.

Remy said the chamber can't help raise funds to save the bureau, because the chamber's bylaws prohibit it from funding other organizations.

"There will be a huge gap for consumer information," Orange County Deputy Dist. Atty. John Flynn said. "There's no place to go."

Calls Weren't Answered

Other public and private officials said they relied heavily on the BBB, but that in the past year, calls to the bureau frequently weren't answered. "We relied on them greatly, but recently they have obviously been understaffed," said Lucien D. Truhill, president of the Orange County Chamber of Commerce.

"I've been here 35 years, and I don't want to leave this way," Fritz said.

The BBB's best chance for continued life--a change in the fee structure--is at least a year away, because it requires an amendment to the bylaws of the national Council of Better Business Bureaus, which has 178 members nationally.

"Whether that would be too late for us, we don't know," Fritz said.

He said bureaus across the country have been found it increasingly difficult to maintain membership, because many member businesses have said others should pay for BBB services.

Jim McIlhenny, president of the national BBB council in Arlington, Va., met with bureau officials in Los Angeles early this week, Fritz said. He could not be reached for comment.

THE SHRINKING BBB Annual budget for the Better Business Bureau of Los Angeles and Orange Counties.

1984 . . . $1.02

1985 . . . $1.53

1986 . . . $1.10

1987 . . . $0.714*

* As of 10/31. Almost all dues income is received by October each year.

Source: The Better Business Bureau of Los Angeles/Orange Counties.

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