# The IOU Method and the IOU Score

https://l3ad.io/method

**Summary:** The IOU Method is how L3ad.io recognizes new and up-and-coming businesses: Integrity, Openness, and the Underdog (read aloud: we owe the underdog). The IOU Score turns it into 25 pass/fail checks worth one point each, and every passed point is published with an evidence link and the date it was verified. No business can pay to be listed, to rank, or to be removed.

> Cite as: L3ad.io Editorial Desk. (2026). The IOU Method and the IOU Score. L3ad.io. https://l3ad.io/method

## Who can be scored

- First licensed or registered within the last five years.
- A live website of its own.

## Disqualifiers

- Unlicensed work in a regulated trade.
- A final disciplinary order or regulator action in the last five years.
- Deceptive claims: fake reviews, a bought badge or pay-to-enter award presented as earned, or "certified" without a certifier.
- Categories we never rank: marketing, SEO, web design, and advertising.
- Any business with a conflict of interest with L3ad.io.

## Integrity: Legitimacy

Is it a real, lawful, accountable business?

| # | Check | Passes when | Evidence |
| --- | --- | --- | --- |
| 1 | Licensed or registered | Holds the license or state registration for what it sells. | State license record, or the business registry for unlicensed industries. |
| 2 | Clean record | No final discipline, consent order, or regulator action in five years. | State discipline files and regulator searches. |
| 3 | Active, current entity | Active in the state registry, with its latest annual report filed on time. | Registry filing history. |
| 4 | Real, consistent place of business | The same address or service base on its license, registry, and website. | All three pages. |
| 5 | Accountable people | A named owner or team on its website that matches the public record. | Team page and the registry or license record. |

## Openness: Transparency

Can a customer see what they are getting before they pay?

| # | Check | Passes when | Evidence |
| --- | --- | --- | --- |
| 6 | Pricing published | Prices, ranges, starting prices, or a clear pricing method. | The business's own pricing page. |
| 7 | Terms published | Warranty, guarantee, refund, or cancellation terms. | The business's own terms page. |
| 8 | Credentials shown | License number and certifications with IDs a customer can verify. | The page where they appear. |
| 9 | Clear offer | Says specifically what it provides and who it is for. | The business's own site. |
| 10 | Reachable humans | Direct phone, email, or booking with stated hours, not a lead-broker form. | Contact page. |

## Openness: Originality

Is it doing something its competitors are not?

| # | Check | Passes when | Evidence |
| --- | --- | --- | --- |
| 11 | Own method or product | A named, documented process, method, or product that is its own. | The page that documents it. |
| 12 | Category-rare practice | Does something fewer than 25% of its peers in the same metro and category do. | The rarity table, computed from every scored business and published with the issue. |
| 13 | Original knowledge | Publishes its own data, research, tools, or guides. | The published work. |
| 14 | New customer model | Flat fee, membership, same-day service, open reporting, or another model that breaks the category norm. | The page that states it. |
| 15 | Verifiable edge | A registered trademark or patent, a top-tier certification, or a proprietary tool customers can see. | USPTO or certifier record, or the tool itself. |

## Integrity: Proof of work

Can it show the work, not just describe it?

| # | Check | Passes when | Evidence |
| --- | --- | --- | --- |
| 16 | Documented real work | At least three projects with scope, date, and its own photos or artifacts. | Portfolio or project pages. |
| 17 | Outcomes with evidence | Stated results backed by specifics: before and after, metrics, published results. | The results page. |
| 18 | Verifiable customer voices | Testimonials with full names or businesses, or links to real third-party reviews. | The testimonial page and its sources. We never republish review sites. |
| 19 | Standards beyond the minimum | Published insurance or bond, vetted memberships, safety or professional codes. | The published proof. |
| 20 | Contribution | Training or apprenticeships, free public resources, or verifiable community work. | The program or resource. |

## Underdog: Underdog

Is it rising on its own merit, not its budget?

| # | Check | Passes when | Evidence |
| --- | --- | --- | --- |
| 21 | Growing capability | Added license classes, locations, or service lines since founding. | License and registry history, or archived pages. |
| 22 | Team growth | Current job postings, or a larger team than twelve months ago. | Job listings or archived team pages. |
| 23 | Actively maintained | Dated updates on its own site within the last 90 days. | The dated page. |
| 24 | Earned recognition only | Editorial press, podcasts, or association features. Pay-to-enter awards and bought badges score zero. | The article or feature. |
| 25 | Cited unprompted | Not assessed in Method 2.1 (shown as a dash). Linked by real publications, not directories, or named by AI assistants on a fixed prompt panel, once a source for it is in place. | None scored in 2.1; the citing page or the panel record when assessed. |

## Ranking

- A business needs at least 15 of 25 points to be ranked. Fewer qualifiers means fewer than five picks.
- Tie-breaker: Higher Originality score.
- Tie-breaker: Then higher Proof of work score.
- Tie-breaker: Then the more recently licensed business: the underdog wins ties.
- Tie-breaker: Then alphabetical order.

## What is a business rating?

A business rating is a grade or score that tells customers how far to trust a business. The method behind it decides what counts: complaints, reviews, payments, licensing, or the evidence a business can show.

Different ratings measure different things. A Better Business Bureau letter rating looks at complaints and how a business handles them. A star rating averages what reviewers felt. A business credit score looks at payments, loans, and financial health, the things lenders care about when they weigh profit, not the customer experience. None of them was built to help consumers find the best new business in town, or to give newer companies a fair way in.

That is the gap the IOU Method fills. It rates what a newer business controls today, whatever products or services it sells: running a legitimate operation, showing its work, being open with customers, and doing something its competitors are not.

## How does the BBB rating system work?

The BBB rating system grades businesses on a letter rating scale from A+ to F. Better Business Bureaus publish profiles for accredited and non-accredited businesses alike, so a business has a BBB rating whether or not it is accredited.

The BBB scores businesses on a 100-point scale and converts the score to a letter: A+ takes 97 to 100 points, and an F is anything under 60. When there is not enough information to rate a business, the BBB shows NR, for no rating.

Seven rating elements feed the score: complaint history, type of business, time in business, transparent business practices, failure to honor commitments to BBB, licensing, and advertising issues. The complaint element looks at the number of complaints filed, the size of the business, and whether the business responded on time. Time in business is one of the seven, which is one reason a brand-new company starts at a disadvantage.

Local BBBs serve communities across the United States and Canada, and your local BBB handles business profiles, complaints, reviews, and accreditation in your area. The network is coordinated at the national level by the International Association of Better Business Bureaus, whose affiliated programs include the BBB Wise Giving Alliance (Give.org) and BBB National Programs.

Accreditation is separate from the rating. To be accredited, a business affirms it meets the BBB's eight Standards for Trust, keeps at least a B rating, and pays a fee. The BBB says accreditation dues do not buy a rating, and that the fee supports its mission of advancing marketplace trust. That funding model means the group that grades businesses also collects membership fees from many of them, which is why the BBB states plainly that the two are kept apart.

- Grade: A+ to F, published for accredited and non-accredited businesses.
- Seven factors: complaint history, type of business, time in business, transparent practices, commitments to BBB, licensing, and advertising issues.
- NR: shown when there is not enough information to rate a business.
- Accreditation: a paid program with eight standards and a minimum B rating.
- What a BBB rating does not show: whether a business is new, growing, or doing something original.

## How do Better Business Bureaus use complaint history in a letter rating?

Complaint history is the heaviest part of a BBB letter rating. Better Business Bureaus look at how many complaints were filed against a business, weigh that against the size of the business, and check whether the business responded on time.

That design makes sense for established local businesses with years of records. For example, a company with 200 employees and five complaints looks very different from a two-person shop with the same five. But a business in its first year may have no complaint history at all, and the bureau has little to support a grade either way.

Neither a letter rating nor a review score is a fraud check. To confirm a business is operating legally, use the state license lookup. To report fraud that uses a business name, the BBB runs Scam Tracker.

## How are star ratings and review scores different?

Star ratings average how reviewers felt about a business. They are useful for spotting patterns in customer reviews, but they reward companies that have been collecting reviews for years. For consumers, the stars are easy to access and hard to verify.

A business that opened last year may have a handful of reviews and no complaints on file, which leaves most scoring methods with not enough information to say anything useful. Higher ratings tend to follow time and volume, not quality alone.

Reviews can also be filtered or bought. The Federal Trade Commission's rule on consumer reviews bars fake reviews and review suppression, and our reporting in Rigged covers how paid placement sits next to the ratings on the big directories.

## How is the IOU Score different from other rating systems?

The IOU Score rates evidence, not volume. Every one of its 25 checks is pass or fail, every passed point is published with a source link and a date, and no check depends on how long a business has existed or how much it spends.

|  | BBB letter rating | Star rating | IOU Score |
| --- | --- | --- | --- |
| What it measures | Complaint history, responses, transparency, licensing actions | Average reviewer sentiment | Legitimacy, proof of work, transparency, originality, and underdog momentum |
| Scale | A+ to F | Usually 1 to 5 stars | 0 to 24 points, 15 to be ranked |
| Evidence shown | Business profile and complaints | The reviews themselves | A source link and verified date for every point |
| Money involved | Accreditation is a paid program; the BBB says dues do not buy a rating | Platforms sell advertising next to ratings | None. No business can pay for anything |
| New businesses | Often little history to rate | Few reviews, easily outweighed | Built for them: first licensed or registered within five years |

## How can a small business build trust before it has a rating?

A small business builds trust by making its record easy to check. Before the reviews pile up, customers and partners look for signs that the business is real, reachable, and honest about what it charges.

For example, a two-person company can publish its license number, its pricing, and its warranty on its website today. It can name its owners, show three recent projects, and answer the phone. Each of those is an IOU check it passes on its own, and each one is an advantage over bigger local businesses that hide the same information.

Entrepreneurs operating on a tight budget often focus on marketing first, creating ads before creating a record worth advertising. The better order is proof first, then marketing materials that point to the proof. Keep your record current, monitor your license status, and treat online profile management as part of the job, so the facts match everywhere a customer might look.

- Show the license and registration numbers where customers can see them.
- Publish prices or a clear pricing method, and your terms.
- Name the people who run the business and list a real office or service base.
- Document real work with dates and your own photos.
- Report scams that use your business name; the BBB runs BBB Scam Tracker for that.

## What makes a business rating trustworthy?

A trustworthy rating publishes its rating criteria, shows the evidence behind each grade, and says plainly who funds what, so consumers and business owners can check the research themselves. If you cannot see how a grade was made, treat it as advertising.

Openness is the test we apply to other ratings in Rigged, and the test we hold ourselves to. The IOU Method is versioned, the checks are public and accessible to anyone, the scoring data ships with each list, and every correction is noted on the page it affects. That is how we support fair grading at the local level, one metro at a time.

- Published criteria anyone can read.
- Evidence behind every grade, with dates.
- A clear statement of the funding model.
- The same rules for every business, big or small.
- A public corrections process.

## How do you check a business rating before you hire?

Check the license first, then the ratings. A grade from any source is only as good as the record behind it, and a few minutes of research lowers the risk of a bad hire.

- Search the state license lookup and confirm the license is active and in good standing.
- Read the complaints on the business's BBB profile and how the business answered.
- Read reviews for patterns and dates, not the average alone.
- Look at the business's own website for pricing, terms, and a real address.
- For a newer business, read its IOU score card on the Rising list to see which checks it passed and why.

## Why do new businesses score poorly on older rating systems?

Most older ratings measure time: years of reviews, years of complaints, years of credit. A newer business has not had the time, so it lands at the bottom or goes unrated, no matter how good its work, its services, or its sales are. Across the United States and Canada, that is the same story for first-year companies in every industry.

The IOU Method flips that. The Underdog pillar looks only at businesses first licensed or registered within the last five years, and it rewards growth, active upkeep, and recognition that was earned rather than bought. A small business with a sharp plan and honest pricing can outscore a legacy name here, because every point is something it can prove today.

## Questions

**What is the IOU Method?**

The IOU Method is how L3ad.io decides who gets recognized: Integrity, Openness, and the Underdog. Read it aloud and it says what we believe: we owe the underdog. The IOU Score turns it into 25 pass/fail checks.

**How is the IOU Score calculated?**

Twenty-five checks, one point each, all equally weighted. Check 25 is not assessed in Method 2.1, so a business is scored out of 24 and needs at least 15 to be ranked. Every point requires a source link and the date it was verified; no point is awarded on judgment alone.

**Does the IOU Method only work for contractors?**

No. Licensed trades come first because their public records are strongest. The 25 checks apply to any industry; where no license exists, the state business registration stands in for it.

**Can a business pay to score higher?**

No. There is no paid placement and no way to buy a point. Pay-to-enter awards and bought badges score zero, and presenting one as earned disqualifies the business.

**What does a BBB rating mean?**

A BBB rating is the Better Business Bureau's letter grade, from A+ to F, based on a business's complaint history, its responses, its transparency, and any licensing or government action. The BBB publishes ratings for accredited and non-accredited businesses alike.

**Is a business rating the same as a review score?**

No. A review score averages what customers felt. A business rating like the BBB letter grade or the IOU Score applies set rating criteria. The IOU Score publishes the evidence behind every point.

**How can a business earn the checks it missed?**

Every issue publishes each pick's 25 results. A business can see exactly which checks it missed, most of which it controls on its own website, and earn them before the next issue in its industry.