This comes courtesy of Len Clements:
California Attorney General Edmund G. Brown Jr. filed a lawsuit against YTB Travel (YTBLA.OB) yesterday seeking $25 million in fines and restitution, calling it a "gigantic pyramid scheme". The suit was filed against YourTravelBiz.com, a subsidiary of YTB International. The AG’s press release states the lawsuit seeks to, "shut down the company’s unlawful operation before more people are exploited by the scam." The basis for this position, according to the release, is that, "Once enrolled, members who join the pyramid scheme earn compensation for each new person they enlist, regardless of whether they sell any travel." The Attorney General has charged the company and it’s senior management with unfair business practices and false advertising.
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I hear that YTB Travel Associations are in St. Louis for their National Convention this week…that should be interesting. With nearly 80 percent of company revenue coming from sign ups and agency fees and roughly 15% coming from the sales of actual travel, it is easy to see how YTB is now a target for shut down as a pyramid scheme.
If you are a YTB Travel rep, I know it is difficult to detach yourself from the emotional attachment of thinking that YTB is the key to your dreams and goals, but please try to look at this logically and with some business sense. I have seen this happen before with a number of companies and they never hardly ever recover.
YTB also made it much more difficult to market online recently, forcing many reps to shut down their successful marketing site or risk immediate termination.
Rumor Mill: Rumors are flying around that YTB is about to remove the MLM component from their plan and go strictly direct sales, which seems far-fetched since the only created 15% of their revenue outside of MLM sign ups.
As a certified RTA with YTB, allow me to correct you one very incorrect statement in your blog. Any marketing sites that YTB shuts down are those that do not meet the company's strict standards. What YTB HAS done is to separate the marketing and travel sites by removing the mutual links back and forth. This was done in an ongoing effort by YTB to prove itself as a valid seller of travel. In fact Travel Weekly — the same magazine that just published the article about California's pending attempt to shut down the company — recently rated YTB in the top sellers of travel in the United States, and Carnival Cruise Lines has awarded the company its highest award for sales three years in a row. Quite a remarkable achievement for a pyramid scheme, huh?
I think people need to get off their high horses and look at the fact — including the fact that if someone does not make good money through actual travel sales with YTB, it's not because of any moves on the part of the company, but rather lack of effort on the part of that individual.
With YTB squarely in the cross hairs of the CA AG, how much longer until the next AG jumps in? Then the class action civil suits start.
The MLM travel business is about to be in for a rude awakening. Traverus, World Ventures and the rest of the crowd better find some other products to get the commissions up from actually selling products.