According to the national nonprofit organization, the local chapter did not meet standards.
The investigation turned up evidence that members of the local Better Business Bureau were able to pay membership fees for higher ratings.
Celebrity Chef Wolfgang Puck is among many business owners who have said they were told they needed to pay in order to receive an "A" rating.
"If you don't pay, it's very difficult to get an A," Puck said after receiving an "F" rating for one part of his food empire.
Carrie Hurt, the Better Business Bureau president and CEO says the Southern California chapter "no longer has the right to use the Better Business Bureau name, our logo, or any of our trademarks."
The chairman of the local chapter disputes the claims and says the organization quit the council before it was expelled. The main office in Colton has now changed its name to the "Business Consumer Alliance."
ABC News contributed to this report.