Better Business Bureau Research Articles

Identifying and reducing the money laundering risks posed by individuals who have been unknowingly recruited as money mules

Purpose This paper aims to help build awareness with financial institutions about the money laundering risks posed by individuals who have been unknowingly recruited as Money Mules and the measures that financial institutions can adopt to detect illicit funds which are being received into the bank accounts of low risk or medium risk customers who are unknowingly recruited as “Money Mules”. Design/methodology/approach The research took the form of a desk study, which analysed various documents and reports such as a 2019 report on Money Mules by the European Union Agency for Law Enforcement Cooperation (EUROPOL); a 2019 and 2020 report on Money Mules by the Federal Bureau of Investigation (FBI) and the Better Business Bureau (BBB); the Financial Action Task Force Guidance on the Risk Based Approach to Combating Money Laundering and Terrorist Financing (High Level Principles and Procedures) 2007; the Financial Action Task Force Recommendations 2012; the United Kingdom’s Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017; the United States Federal Financial Institutions Examination Council Bank Secrecy Act/Anti-Money Laundering Examination Manual 2014; Transparency International Corruption Perceptions Index 2018; The UK Proceeds of Crime Act 2002 (as amended); the Joint Money Laundering Steering Group JMLSG, Prevention of money laundering/combating terrorist financing: Guidance for the UK financial sector Part I June 2017 (Amended December 2017); the United States Codified Bank Secrecy Act Regulations (31 CFR); the Nigerian Money Laundering Prohibition Act 2011 (as amended); and the Joint Money Laundering Steering Group JMLSG, Prevention of money laundering/combating terrorist financing: Guidance for the UK financial sector Part II: Sectoral Guidance June 2017 (Amended December 2017). Findings This paper determined that financial institutions may be able to prevent proceeds of crime from being laundered by individuals who have been unknowingly recruited as Money Mules if they focus monitoring resources on the emotionally vulnerable customers like newcomers to the country, unemployed people who may have lost their jobs because of a pandemic like COVID-19, students and those in economic hardship; pay very close attention to the country of origin where the funds emanate from; pay very close attention to the country where the funds are being transferred to; and pay close attention to frequent large cash deposits followed by wire transfers. Originality/value While most articles focus on the money laundering risk(s) associated with Money Mules and the measures that individuals can use to ensure that their bank accounts are not used by criminals to launder illicit funds, this paper focuses on the different mechanisms that banks can use to detect illicit funds which are being received into the bank accounts of low risk or medium risk customers who are unknowingly recruited as “Money Mules”. This paper recommends a proportional approach that balances anti-money laundering measures, financial inclusion and human rights. The mechanisms/measures which have been extensively discussed in this paper will help banks to identify, assess and understand their money laundering and terrorist financing risks as it relates to Money Mules and take commensurate measures to mitigate them.

Identifying and Reducing the Money Laundering Risks Posed by Individuals Who Have Been Unknowingly Recruited as Money Mules

Purpose: This paper aims to help build awareness with financial institutions about the money laundering risks posed by individuals who have been unknowingly recruited as money rules and the measures that financial institutions can adopt to detect illicit funds which are being received into the bank accounts of low risk or medium risk customers who are unknowingly recruited as “Money Mules. Design/Methodology/Approach: The research took the form of a desk study, which analyzed various documents and reports such as a 2019 report on Money Mules by the European Union Agency for Law Enforcement Cooperation (EUROPOL); a 2019 report on Money Mules by the Federal Bureau of Investigation (FBI) and the Better Business Bureau (BBB); the Financial Action Task Force Guidance on the Risk Based Approach to Combating Money Laundering and Terrorist Financing (High Level Principles and Procedures) 2007; the Financial Action Task Force Recommendations 2012; the United Kingdom’s Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017; the United States Federal Financial Institutions Examination Council Bank Secrecy Act/Anti-Money Laundering Examination Manual 2014; Transparency International Corruption Perceptions Index 2018; The UK Proceeds of Crime Act 2002 (as amended); the Joint Money Laundering Steering Group JMLSG, Prevention of money laundering/combating terrorist financing: Guidance for the UK financial sector Part I June 2017 (Amended December 2017); the United States Codified Bank Secrecy Act Regulations (31 CFR); the Nigerian Money Laundering Prohibition Act 2011 (as amended); and the Joint Money Laundering Steering Group JMLSG, Prevention of money laundering/combating terrorist financing: Guidance for the UK financial sector Part II: Sectoral Guidance June 2017 (Amended December 2017). Findings: This paper determined that financial institutions may be able to prevent proceeds of crime from being laundered by individuals who have been unknowingly recruited as Money Mules if they focus monitoring resources on clients who are more likely to be used as Money Mules by criminal networks and organizations; Pay very close attention to the country of origin where the funds emanate from; Pay very close attention to the country where the funds are being transferred to; Pay close attention to Frequent Large Cash Deposits Followed by Wire Transfers; and Pay close attention to customers who make use of the wealth management services of the bank. Originality/Value: While most Articles focus on the money laundering risk(s) associated with Money Mules and the measures that individuals can employ to ensure that their bank accounts are not used by criminals to launder illicit funds, this paper focuses on the different mechanisms that banks can employ to detect illicit funds which are being received into the bank accounts of low risk or medium risk customers who are unknowingly recruited as “Money Mules. This paper recommends a proportional approach that balances anti-money laundering measures, financial inclusion and human rights. The mechanisms/measures which have been extensively discussed in this paper will help banks to identify, assess and understand their money laundering and terrorist financing risks as it relates to Money Mules and take commensurate measures in order to mitigate them.

American Better Business Bureaus, the Truth-in-Advertising Movement, and the Complexities of Legitimizing Business Self-Regulation over the Long Term

This essay considers the question of how strategies of legitimatizing private regulatory governance evolve over the long term. It focuses on the century-long history of the American Better Business Bureau (BBB) network, a linked set of business-funded non-governmental organizations devoted to promoting truthful marketing. The BBBs took on important roles in standard-setting, monitoring, public education, and enforcement, despite never enjoying explicit delegation of authority from Congress or state legislatures. This effort depended on building legitimacy with three separate groups with very different perspectives and interests—the business community, a fractured American state, and the American public, in their roles as consumers and investors. The BBBs initially managed to build a strong reputation with each constituency during its founding period, from 1912 to 1933. The Bureaus then in many ways adapted successfully to the emergence of a more assertive regulatory state from the New Deal through the mid 1970s. Eventually, however, the resurgence of conservative politics in the United States exposed the challenges of satisfying such divergent stakeholders, and led the BBBs to focus resolutely on shoring up its support from the business establishment. That choice, over time, undercut the Bureaus standing with other stakeholders, and especially the wider public. This history illustrates: the salience of generational amnesia within private regulatory institutions; the profound impact that the shifting nature of public faith in government can have on the strategies and reputation of private regulatory bodies; and the extent to which private regulators face long-term trade-offs among strategies to sustain legitimacy with different audiences. It also suggests a rich set of research questions for longer-term histories of other private regulatory institutions, in the United States, other societies, and at the international level.

A mixed method analysis of the Better Business Bureau’s third-party seal and the extent to which it inculcates trust among consumers

Purpose – The paper aims to answer the central question: to what extent does the Better Business Bureau (BBB)’s policy of providing a third-party seal inculcate consumer trust from consumers to BBB-accredited business members? Design/methodology/approach – For this mixed-methods study, the qualitative section used a phenomenological approach with three focus groups of consumers and business owners. The quantitative section utilized binary logistic regression from consumer survey data conducted in Colorado. Additionally, document analysis was conducted to understand BBB history and policy details. Findings – Consumers who notice the BBB logo are 4.7 times more likely to trust a real estate sales business than if they do not notice the BBB logo. Furthermore, consumers who notice the BBB logo are 17 times more likely to trust an auto and boat sales business when they notice the BBB logo. Research limitations/implications – A main limitation of the study was the inconclusive data that appeared between the qualitative and quantitative data regarding the impact of the BBB seal and trusting home service industries. Researchers are encouraged to further explore how the BBB logo affects trust with home service businesses. Practical implications – The BBB logo retains potency as a proof source of trust in the marketplace. However, the BBB is less relevant to the millennial generation. The BBB should explore ways to incorporate technology through social media and Internet applications. Originality/value – This work has value as the only mixed-method study on this topic, and these findings add to the body of marketing literature by Kimery and McCord, Cook and Luo and Garrett.

Using a Service Audit Project for Improving Student Learning in a Service-Marketing Course

Service-marketing education provides students customer service skills sought by employers who recognize the relationship between service and profit. Students in service marketing benefit from active-learning activities with actual organizations to apply customer service frameworks taught in the course. The purpose of this paper is to describe an experiential team project taught through collaboration with a local Better Business Bureau (BBB). Descriptions of the class project address challenges with group and experiential-learning projects. The paper provides suggestions for working with a local business organization for service marketing team projects.

Can visible cues in search results indicate vendors' reliability?

Search engines play a critical role in the diffusion of online information because they determine what content is easily visible to Web users. Major search engines, such as Google, Microsoft Live Search, and Yahoo!, provide two distinct types of results, organic and paid, each of which uses different mechanisms for selecting and ranking relevant Web pages. Using a third-party trust assurance program from BBB (Better Business Bureau) Online we find that vendors represented by websites in organic and paid results have varying reliability ratings. These ratings, based on overall customer experiences, may range from satisfactory to unsatisfactory. We empirically examine how vendors' reliability ratings from BBB Online are associated with cues (such as type of search result, relative price of a product, and number of sites selling the product) that can be observed or derived from organic and paid search results. Further, we apply a data mining technique to predict the vendors' BBB reliability ratings using those cues and achieve good performance.

Does meeting standards affect charitable giving? An empirical study of New York metropolitan area charities

AbstractCharitable donations constitute a significant revenue source for many nonprofit organizations. To help donors decide which nonprofits to support, watchdog organizations such as the Better Business Bureau (BBB) Wise Giving Alliance have developed standards to promote wise giving. The effectiveness of these guides in channeling limited resources to the best‐managed nonprofits is not widely studied. This research attempts to empirically investigate the effects of standards on public giving, controlling for factors that have documented effects on donations. Specifically, it regresses public support on the extent to which local nonprofits meet the standards of the Better Business Bureau Serving Metropolitan New York, Mid‐Hudson and Long Island Regions, controlling for organization size, board size, service category, government funding, fundraising expense, and giving price. The study found that BBB standards have a positive effect on giving behavior. Meeting BBB standards is associated with higher levels of public support. Participating in assessment programs and striving to meet the standards are recommended for nonprofits seeking to improve funding through charitable contributions. Further study that extends the search for the mechanism that links meeting standards to improved donations is recommended.

Rebuttal of the Report by the Institute for Justice Entitled Designing Cartels: How Industry Insiders Cut Out Competition

In September 2006, the Institute for Justice published a report entitled Designing Cartels: How Industry Insiders Cut Out Competition (Carpenter). The stated purpose was to examine “titling laws, using the interior design industry as the focus, to stimulate further research in this area and to illustrate what titling laws are and how they function” (p. 1). However, the focus of the report, in concert with the Institute for Justice's lawsuits against existing interior design regulation in New Mexico and Texas, appears to be an attack on the interior design profession. This paper is a research–supported rebuttal that analyzes Carpenter's findings within two major constructs: 1) interior decoration is not interior design, and 2) the purpose of regulation. The evidence of the Institute for Justice report is examined via principal topics that include the definition of interior design; the relationship of interior design to the health, safety, and welfare of the public; the framework of interior design regulation; the ideology of consumerism; the function of the Better Business Bureau (BBB) as a measurement tool of industry quality; and the idea of “profession” as a construct. This rebuttal found that Designing Cartels has not succeeded in presenting findings and conclusions that support its intended purpose. It is unfortunate for the public and the interior design profession that this report has been so widespread and used as a way to bolster litigation against the public interest without being examined more closely. Suggestions of the Institute for Justice, if implemented, could compromise the public's health, safety, and welfare.

The Debate Regarding the Better Business Bureau’s Commitment to Neutrality: An Analysis of Local Better Business Bureau Boards of Directors

The Better Business Bureau (BBB) states that it is a neutral party striving to serve equally the interests of both businesses and consumers. However, critics have alleged that the BBB’s policies and practices are biased in favor of businesses. This study analyzes the composition of the boards of directors of local BBB offices. Using resource-dependency theory, arguments are advanced to explain why the BBB may be more inclined to have board members from business backgrounds rather than board members who are “community influentials” (e.g., executives with nonprofit organizations and charities, academicians, and government employees). Results show that the vast majority of BBB board members are businesspeople from industries that generate large numbers of BBB consumer complaints. Discussion focuses on the implications of these findings for the credibility and legitimacy of the BBB as a representative of consumer interests in the marketplace.

The Types of Information Contained in Company Reliability Reports from the Better Business Bureau

Consumer requests for company reliability reports from the Better Business Bureau (BBB) have increased dramatically in recent years. However, no prior research has analyzed on a national level the types of information contained in these reports. This study reveals that the BBB had reliability reports for 69.1% of auto dealers, 58.9% of movers, and 43.8% of roofers. No significant difference was found between the numbers of complaints filed against BBB member and nonmember companies. However, significant differences were found in the manner in which member and nonmember companies responded to these complaints. Discussion focuses on the potential usefulness of these reports for consumers, and recommendations are offered for improvements.

Dissatisfied consumers who complain to the Better Business Bureau

Very little prior research has analyzed the behavior of dissatisfied consumers who complain to the Better Business Bureau (BBB). Therefore, interviews were conducted with dissatisfied consumers who filed complaints with the BBB against companies in three industries – auto dealers, dry cleaners, and home construction. The results reveal significant gaps between dissatisfied consumers’ resolution preferences and companies’ resolution offers. Further, the results highlight the highly negative word‐of‐mouth communication activity and repeat purchase intentions of dissatisfied consumers who complain to the BBB. Based on these data, complaint resolution recommendations are provided to improve customer service managers’ handling of dissatisfied consumers.