When Mission Valley Pools & Spas in San Diego unexpectedly shut its doors in June 2012, it left behind more than $1 million in debts and 50 uncompleted projects.

As recently as 2010, the firm boasted an A+ rating from the Better Business Bureau, a national organization of 113 local councils that are often cited as an essential resource for customers interested in the trustworthiness of a business. But clearly, in this case, the BBB grade didn’t reflect the firm’s shaky financial reality.

Elsewhere in California, the BBB also is facing serious questions from consumers and businesses about its credibility. Earlier this year, the Council of Better Business Bureaus expelled the Los Angeles chapter, BBB of the Southland, for failing to meet national standards. (In 2010, ABC News program “20/20” found that the BBB of the Southland gave high grades to the businesses that paid dues versus low grades to those who did not join the group, even if they had no complaints against them.)

Such scandals, combined with the rising popularity of online review sites, are causing some pool firms to refrain from joining the Better Business Bureau.

“It’s not anything that has any relevance to my day-to-day business,” says Brad McClelland, CEO of Los Angeles Pool Builders, which typically does 40 to 50 pools annually. “The Better Business Bureau has never played an important role in getting or maintaining my clients.”

Here, we’ll take a closer look at the BBB, its accreditation and rating system, and the organization’s relevance in an increasingly prevalent world of consumer-driven online review sites.

BBB Basics

Founded in 1912 to fight the problem of false advertising, the Better Business Bureau today has a broader mission. Through its national and local organizations, it provides consumer-friendly warnings about popular scams, gives accreditation to businesses that meet its standards, offers to serve as a middleman between businesses and unhappy customers, and grades those companies on a scale of A+ to F.

BBB accreditation is given to companies that have been in business for at least six months, meet all relevant licensing and bonding requirements, “advertise honestly,” respond quickly to customer complaints and more, according to the Council of Better Business Bureaus. When applying, company leaders must typically provide business license numbers, revenue information and other details about the firm.

The accreditation and the accompanying grade remains important to many pool companies who consider it the mark of a responsible, established business. “We wanted to have something that would reflect on our level of credibility, and we feel belonging to the Better Business Bureau does that,” says David Cohen, president of All Florida Pool and Spa Center in Miami. The firm, which services 3,000 pools, currently has an A+ rating.

After all, pool and spa business owners use the BBB themselves when evaluating potential vendors or suppliers.

“If someone doesn’t take the time to join the Better Business Bureau, then that’s the first one I throw out,” says Ted Rador, owner of Mastercraft Pools in Dallas. Accredited by the BBB since 1971, Mastercraft currently has an A+ rating as well.

Flies in the ointment

At the now-expelled BBB of the Southland, verification of a company’s information could be spotty. As part of the “20/20” investigation, an ABC News-affiliated blogger submitted an application for a nonexistent branch of “Hamas,” the Middle Eastern terrorist group, and received accreditation and an “A-” grade.

Such revelations didn’t surprise McClelland. “It vindicated my concerns,” says Los Angeles Pool Builders CEO, who says he declined repeated invitations to join the BBB of the Southland. “I didn’t really like their high-pressure tactics. It was like: ‘You better join the BBB or else.’”

That’s not how the BBB is supposed to work, according to Katherine Hutt, director of communications and media relations for the Council of BBBs in Arlington, Va. “[The BBB of the Southland] were not meeting our standards,” she says. “It was not a failed BBB. It was failed leadership.”

But there are some arguably weak links in the process even for legitimate businesses. Pool firms interviewed for this story said they believed that the BBB was updating their business’ information on its own, but that does not necessarily appear to be the case. If a firm maintains a grade of B or higher, they can automatically renew their accreditation each year, according to Hutt.

That means that after their initial application and acceptance, BBB members are not required to regularly provide information to the BBB that might indicate a significant change of fortune, such as what happened with the now-defunct Mission Valley Pools. “Lots of businesses went under during the recession,” Hutt says. “If they were meeting their obligations up until the day they closed their doors, we would not have any information on them.”

She notes that if a BBB sees a spike in complaints or hears about other issues, such as legal or government action, they can request more information about the health of the company and note it in its business review.

As for the grades, “ratings don’t have anything to do with the financials,” Hutt explains. The grades, which are determined by an algorithm, are based heavily on the volume of complaints filed with the BBB against a business and how promptly the business addresses the complaint. Businesses that fail to respond to a complaint within approximately 30 days risk being downgraded by the BBB for being “non-responsive” and the complaint file is closed.

High value

Some pool companies also have found the BBB to be a surprisingly strong source of leads. “People laugh at it, but if you use it properly, it can have tremendous value,” Rador says. “Thirty percent of my calls for new pools are from the Better Business Bureau.”

He’s not the only one. “We still get a lot of calls that list the Better Business Bureau as their reference,” says John Chatfield, president of Seascape Pools in San Diego, who sees Seascape’s BBB affiliation as an inexpensive form of advertising. “They seem to carry some weight, and everyone’s always looking to external sources,” says Chatfield, whose firm has been accredited since 2001 and currently has an A+ rating.

Others feel that online review sites — like Google or Yelp — are quickly outpacing the BBB as a useful resource for researching purchases big and small. While the BBB is exploring the idea of posting more complaint details, its online reviews currently include only basic information about the business and its complaint history. In contrast, the customer-written reviews at Yelp and other sites typically feature far more details and opinions about a business, giving would-be pool owners a variety of perspectives to consider when hiring a firm.

And some prefer that. “Yelp and Angie’s List are more driven by the consumer, and that allows for more credibility,” says McClelland, whose firm isn’t mentioned, even as a non-accredited business, in the BBB listings, but has stellar reviews on Yelp. “I don’t see my core customer going out to the Better Business Bureau to check those reviews. They do a search on you and see what comes up on Yahoo or Google.”