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Southland's head of Better Business Bureau resigns

William Mitchell quits after criticism over the group's rating system for businesses and his compensation, which exceeded $400,000 a year.

April 22, 2011|By Sharon Bernstein, Los Angeles Times

The Better Business Bureau of the Southland is getting another shakeup at the top.

William Mitchell, who led the organization for 26 years, has quietly resigned — for a second time — after criticism over the group's rating system for businesses and his compensation, which exceeded $400,000 a year.

Mitchell previously announced his resignation in December, only to rescind it in February. At the time, Mitchell said he was needed to fend off efforts by the national Council of Better Business Bureaus to take control of the local group.

Mitchell did not return calls for comment. Bob Richardson, chief operating officer of the local BBB, said Mitchell left for health reasons.

The new president of the local group is Vince Gottuso, a former banker who had served on the chapter's board. Gottuso declined to be interviewed, saying in an email that lawyers had advised him not to comment because of "outstanding issues" between the chapter and the national organization.

The national organization began examining the Southland chapter's operations last year after a watchdog group found the BBB had awarded favorable approval ratings to nonexistent businesses.

Stephen Cox, president of the Council of Better Business Bureaus, said his organization has been frustrated with the lack of communication with the Southland chapter, which serves Los Angeles, Orange, Riverside and San Bernardino counties.

"We had no indication that [Mitchell's resignation] was imminent and certainly no information on Mr. Gottuso," Cox said. "And we didn't get any response back from the folks back in Los Angeles."

The national council's audit of the local chapter is expected to be completed by June, Cox said. Although each chapter is run independently, the national group can revoke the right of affiliates to use the BBB name.

Founded 100 years ago by a Coca-Cola executive who wanted to promote truth in advertising, the BBBs investigate consumer complaints about businesses and seek to resolve them when possible.

Based in Colton, the Southland chapter has about 100 employees, a third of whom are engaged in selling memberships at up to $8,000 each. These telemarketers earn a 45% commission on new memberships, Mitchell said in a deposition for a recent court case.

According to public filings, memberships bring in most of the chapter's annual revenue. The group also earns money by leasing out space in buildings it owns in Reseda, Culver City and other places. It also gets paid for arbitration services offered to businesses and consumers who have disputes.

Cox said the council was looking into ways it could exert more control over chapters in the future, he said. But the basic way that BBBs raise money is not likely to change, he said, noting that the chapters rely on dues to pay for the work they do investigating consumer complaints.

"Accredited businesses are the supporters and revenue stream for our Better Business Bureaus across the U.S. and Canada," Cox said. "That's just the way it is. It's been that way for 100 years."

sharon.bernstein@latimes.com

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