A Lakewood company that has been sued by the state for deceptive sales practices is raising similar allegations against the Denver/Boulder Better Business Bureau, a nonprofit agency that works to protect consumers from such crimes.
Attorneys for General Steel Corp. are soliciting complaints for a potential class-action lawsuit against the BBB for allegedly misrepresenting itself while soliciting new members. General Steel also claims the BBB uses its relationship with the Colorado attorney general’s office to entice new members and issues favorable reports about businesses that pay membership fees.
Paying businesses in good standing are allowed to advertise that they are BBB members.
“If you pay them a lot of money, you have your consumer problems go away,” General Steel chief executive Jeffrey Knight said Tuesday. “If you don’t pay, they bring your business down.”
The allegations are “utterly contrived,” said Thomas Kelley, an attorney for the BBB.
The local BBB, whose 6,500 members fund the bulk of its annual $3.5 million budget, collects consumer complaints about businesses and issues reliability reports about the companies. It periodically relays complaints to the attorney general’s office.
The agency’s mission is to “make a more ethical marketplace,” said local president Jean Herman. “We’re on target.”
Knight paid for a half-page ad that ran in The Denver Post last week asking businesses to relay their BBB experiences to General Steel’s attorneys.
Knight estimated that more than 100 companies have responded, though he wouldn’t disclose the names of the businesses. He said it will likely be six months before a potential class- action suit is filed.
The companies that respond to the ad are most likely those that have unsatisfactory reports with the BBB, Kelley said.
“If the Better Business Bureau is doing their job, they better have more than 100 companies mad at them,” said Kelley, an attorney with Faegre & Benson.
Kelley also represents The Denver Post.
General Steel, which sells steel buildings and employs 175 people, already has sued the BBB twice. The first suit, filed in January 2004, has been put on hold pending the result of the state’s suit against the company. The second was filed in February and is still preliminary.
The attorney general’s office sued General Steel in January 2004, alleging that it falsely advertised that its buildings were deeply discounted.
Jefferson County District Judge Brooke Jackson ruled in December 2004 that the company engaged in consumer fraud and imposed the maximum fine of $200,000 on CEO Knight and lesser fines against other company officials.
Staff writer Andy Vuong can be reached at 303-820-1209 or avuong@denverpost.com.
