Donald Trump’s opponents have sensed an opportunity in the real estate mogul’s failed enterprise Trump University. The real estate training program billed itself as a bee-line to wealth for those willing to pay to learn the secrets that made Trump a billionaire.
A group of former students have sued, claiming they were bilked out of thousands of dollars. New York Attorney General Eric Schneiderman has accused Trump of fraud and is pursuing him in court. There’s a class action suit as well.
Trump has two lines of defense. He has said that 98 percent of the students signed evaluation forms attesting to the value of the program. And Trump insists that it enjoys an A rating from the Better Business Bureau.
We first looked into Trump’s claim about a week ago and rated it False. As of today, the program — renamed the Trump Entrepreneur Initiative in 2010 under pressure from New York State regulators — has a rating of No Rating.
But a full vetting of the claim has been stymied due to a standing policy by the Better Business Bureau to withhold any of its past ratings. That left the public with an intermittent record gleaned from the Internet Archive.
It was a puzzling record because it showed Trump University/Trump Entrepreneur Initiative rising from a D-minus rating in 2010 to a B in 2014. On his Facebook page, Trump posted a screenshot showing an A rating.
Even more puzzling was the fact that the enterprise essentially stopped operating in mid 2010.
There is no question of that timing. In response to the attorney general’s lawsuit, Trump lawyer Jeffrey Goldman said in a court filing that the program changed its name to Trump Entrepreneur Initiative (TEI) on May 21, 2010. Then, Goldberg described what happened next.
"Within weeks of changing its name, TEI, in response to reduced market demand, also stopped accepting new students, offering live seminars or engaging in any advertising -- effectively ceasing its operations," Goldman said.
How could the firm’s Better Business Bureau rating improve when it stopped running any programs?
The answer lies with the bureau’s automated rating system.
The BBB algorithm: Complaint driven
The Better Business Bureau uses a set of formulas to grade businesses. With over 5 million firms to rate, the bureau relies on automation. Out of 13 elements about a business it tracks, the first five are tied to complaints from customers.
The Better Business Bureau explained all in a March 8, 2016, news conference. Breaking with its standing policy, it filled in the gaps. Claire Rosenzweig, the president of the bureau’s New York City branch, said complaints it received when Trump University was active drove the rating down to a D-minus. She then described what happened when it stopped accepting students.
"After 2013, no new complaints were reported," Rosenzweig said in a joint statement with the Council of Better Business Bureaus. "Complaints over three years old automatically rolled off of the Business Review, according to BBB policy. As a result, over time, Trump University’s BBB rating went to an A in July 2014 and then to an A+ in January 2015."
In short, no students meant no complaints. And no complaints meant a better grade.
A final note
When we first asked the Trump campaign for proof that Trump University had an A rating, spokeswoman Hope Hicks did not send us the screenshot image that later appeared. But Hicks did say, "When the school was operational it was rated A."
But by the time the program was called TEI, in the terms used by Trump’s lawyer, it effectively had ceased its operations.
In fact, not training anybody seems to have been an essential element to get a passing grade from the Better Business Bureau.
Council of Better Business Bureaus, Statement by Better Business Bureau Serving Metropolitan New York and Council of Better Business Bureaus, March 8, 2016
New York State Office of the Attorney General, A.G. Schneiderman Sues Donald Trump, Trump University & Michael Sexton For Defrauding Consumers Out Of $40 Million With Sham "University", Aug. 25, 2013
Robbins Geller Rudman and Dowd, Robbins Geller Rudman & Dowd Files Consumer Class Action against Trump University, April 30,2010
Facebook, BBB A rating for Trump University, March 3, 2016
Better Business Bureau, Trump University April 19, 2010, via Internet Archive
Better Business Bureau, Trump Entrepreneur Initiative Sept. 9, 2012,via Internet Archive
Better Business Bureau, Trump Entrepreneur Initiative Feb. 11, 2014, via Internet Archive
The people v. Trump Entrepreneur Initiative, Trump respondents’ affirmation in support of motion to dismiss, Oct. 31, 2013
Supreme Court of the State of New York, People vs. Trump, Aug. 26, 2013