YTB sued by California AG for operating pyramid scheme
In the YourTravelBiz (YTB) profile, it calls for potential members who wish to, “Work with a stable, ethical, well-managed company that seeks to become the largest travel agency in the world.” Yesterday, California Attorney General Edmund G. Brown Jr. disputed that notion, and said he “seeks to shut down the company’s unlawful operation before more people are exploited by the (pyramid) scam.”
YTB is a corporation using a business model known as multi-level marketing (MLM). MLM is a sales system under which a salesperson receives a commission on their own sales, and a smaller commission on the sales from each person they convince to become a salesperson. MLM business models can be legal and sustainable if they do involve real sales.
On the other hand, a pyramid scheme is a non-sustainable business model. It’s income is primarily derived through a system of enrolling other people into the scheme, without a real product or service being delivered to those people enrolled.
California Attorney General Brown stated, “Once enrolled, members who join the pyramid scheme earn compensation for each new person they enlist, regardless of whether they sell any travel. The company lures new members by offering huge income opportunities through online travel agencies yet the typical person actually makes nothing selling travel.”
To back up his charges against YTB, Brown cites the following information, which comes directly from YTB’s own financial and business records. YTB had over 200,000 members in 2007 who paid $449.95 to set up an “online travel agency” plus paid a monthly fee of $49.95, for a total of more than $1,000 for the year. In 2007, only 38 percent of YTB’s members made any travel commissions at all. In 2007, the median income of members who received travel commissions was $39.00, which is less than one month’s cost to keep their member website in operation. At the same time, Brown states, “YourTravelBiz’s extensive marketing materials include videos of people driving Porsches and other luxury cars, holding ten-thousand dollar checks, and claiming to be raking in millions of dollars in profits.”
It’s hard to escape the conclusion reached by Attorney General Brown, that while YTB states they want to be the “largest travel agency in the world,” the small number of YTB members receiving any commissions for selling travel, and the amount of commissions paid to their members for selling travel belies that statement.
Isn’t it ironic that just the day after the Attorney General of California has called YTB a “complete rip-off,” that the YTB convention in St. Louis begins with a 25 ton Styrofoam Statue of Liberty as the convention’s symbol.
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- Your Travel Biz to pay $1 million in fines and restitution
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- Are travel agent commissions coming back? Bet on it
Comments
51 Responses to “YTB sued by California AG for operating pyramid scheme”
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To the contrary, I hope YTB fights and defends its right to bring life back to an industry that’s dead. Here’s the crux of the matter. The Internet has changed every industry it has touched: music, movies, education, car purchases, sex, real estate…and travel was next.
Let’s put a rumor to an end. In California, we do not get to travel for doing nothing. We have to earn the right to earn travel perks by hitting sales goals.
Readers. Do you know what the main problem is that has TTA (trad travel agents) upset? YTB attracts people who like to and know how to market. I don’t have to sit in an office and wait for people to call or walk in just so that I can show them pretty pictures on a brochure. I can go out and find customers who want to book cruises, stay at exotic resorts, fly first class as a business traveler, etc. The Internet has allowed me to use my marketing talents learned in real estate, insurance and corporate America to help a traveler find a good deal. Plus I’m a traveler too. I’ve been to Hawaii, the Dominican Republic, on 4 cruises, and Europe…before I started YTB!
I am perfectly okay with receiving 60% of the commission. I don’t have to pay a real estate lease for a building. I don’t have to pay TTAs to sit around and DO NOTHING, hoping someone will walk in the door.
The traditional travel agencies need an *****. All those trips I mentioned above, I booked by my darn self. I’ve never received a call from a travel agency. Never received a business card from a travel agent. Never received a travel marketing materials at my home. I can’t even find a travel agency in my community unless it’s AAA Travel. So don’t blame YTB because of TTA’s own ineptness. Blame the power of the Internet! Before YTB came along, Orbitz, Expedia, Travelocity were already TAKEN YOUR BUSINESS! That’s why TTA began to shut down. YTB just came along to give the common man and woman an opportunity to book travel for friends, family and contacts, book travel for OURSELVES because WE TRAVEL TOO, and earn a little money selling the opportunity to others WHO HAVE FAMILY, FRIENDS, CONTACTS, BOOK TRAVEL FOR THEMSELVES, and WANT TO EARN A LITTLE MONEY SELLING THE OPPORTUNITY.
And finally, the state of the American economy with jobs going overseas, people getting taxed to the hilt, and an unstable mortgage market, PEOPLE ARE LOOKING for ways to stabilize and brighten their economic outlook. There is a strong, but silent undercurrent that Americans should be broke and dependent solely on government. When people like YTB RTAs break out of the pack and find opportunities to improve their lives, people get offended like the good ole boy network use to get offended if a newcomer comes on the scene with a better product. As far as the 5-8% commission statement, I agree with this and this is what I quote using the YTB calculation process (60% X 16%-cruise) is about 9.6% for cruise bookings. So duh! Nothing surprising here. The last comment that the industry is ruined is invalid for the most part. It’s just ruined for TTAs sitting in that desk for 8 hours hoping someone will walk in the door. My recommendation to TTAs: tell more people about what you do. Pass out your business cards.
Pick up the phone and make some cold calls to businesses and individuals who might travel. Stop being a bump on the log hoping that your clients will just come to you! It’s called marketing!
Rick Nappier (408) 786-5824
Rick–you seem upset. If you are making money, I am glad. Unfortunately you make it sound like this is about the TTAs versus YTB. It is not. This is about unethical business practices between the State of California and YTB.
I can’t say that the news upsets me, but it is not a TTA deal. YTB made their bed and now they are laying in it. They have a history of skirting the law and every regulation throughout their history and now they got caught in a pretty major way.
You ask what they skirted…well to start…
they were delisted for irregular and deceptive accounting practices (subsequently were relisted)
they were terminated by Royal Caribbean for being a card mill
They were terminated by IATAN for illegally reselling their number
They opened in Canada and ignored the TICO regulations until they were forced to buy an agency (a real one) there
The encourage and accept misinformation in recruiting. Have you heard about Seligman? Does anyone know him?
They purchased $3M of Olympic event tickets knowing that they they were for sale to Chinese citizens only, yet they tried to scalp them here in the US
They give out credential cards to anyone who joins and when cauight by California (see there is a history here) they changed their ways.
They claim it is 2 companies but they are very much woven together
They offer misleading information to Travel Weekly. Last year they could not substantiate their sales in any way. This year they say it is $414M but then it says only $211M was sold by RTAs
Your management is not forthcoming either. How long did it take for them to tell you about IATAN, RCCL? Apparently it has been an 18 month investigation by the AG and you hear about it in the newspaper.
What about that foam statue? The cost is $6M or $8M depending on the report you read. Who built it…a privately held company owned by the two Tomers and Sorenson. Can you say self dealing. Hello? Is the SEC reading this?
I wonder what was the cause of the stock run up a few months ago–perhaps it was orchestrated in response to talks breaking down with the AG and the ability for some insiders to be able to sell off some of their shares.
I do notice from your phone that you are in California. If you are a rep, have you contacted your own attorney? In the document, the AG is going after others and reserved the right to do so. Are you “Doe 1″? If you have recruited anyone, you had better be sure they are happy with the bill of goods you sold, because you may personally be involved here as well
“The Internet has allowed me to use my marketing talents learned in real estate, insurance and corporate America to help a traveler find a good deal. Plus I’m a traveler too. I’ve been to Hawaii, the Dominican Republic, on 4 cruises, and Europe…before I started YTB!”
Yup. Another one that thinks because they can surf the web and has been on a plane, they know everything there is to know about being a travel agent.
You, my dear Rick, have no clue. I would take TTA’s advice and contact your lawyer.
Oh, and if you happen to know Dr Seligman, please let him know that we’d really like to meet him.
I’m afraid Rick is going to blow a gasket while in the defense of pyramid marketing. And he is quite mistaken if he thinks the travel agency industry is dead. TTA’s in California are not behind the Attorney General’s actions; the AG has brought this action on behalf of the injured parties - that is: the people who believed the bogus claims of YTB and signed up for their various programs and got nothing in return.
And somehow he thinks that TTA’s can stay in business by not changing with the times (marketing to prospective clients, internet booking engines, etc). And he thinks a handful of trips qualifies him to be a travel professional just because he booked them himself as opposed to using a qualified agent??!! Gimmeabreak.
I would imagine that it will be a little difficult for the 4 named in the indictment to be leading the pep rally in St Louis this coming week with that black cloud hanging over them.
I hope CA gets the $25 million they’re after!
TTA,
Not upset. Far from it. Actually, I’m quite laid back. I’m a Californian!
Look. Here’s the difference between how you feel and how I feel. To me, YTB is a marketing experience. And for you, perhaps, it’s more a task master issue. All those things you mentioned. IATAN…I never joined YTB for the perks and free trips. I joined for the income. I’m satisfied with a few upgrades on a room or a car. TTAs are mad when I make this comment. What TTAs are upset about is the some of same customers that they used to have now have their YTB sites. These informed people now can book their own trips without your help, thus ******** up your income. Now really…isn’t what this is about? But guess what…the big Internet travel companies were stealing your business long before YTB!
All the other stuff you mentioned…good research…but that has not affected me either way.
RCCL…a agreat cruise line. I took two cruises with them before YTB. Guess what? Carnival cruise line…another great cruise line. Took some trips with them and sold 8 cruises through Carnival. The people had or are going to have fun! If the clients had fun, guess what…Mission Accomplished! When I was on the ship, both cruise lines had great service, great food, and great entertainment…and I got paid when I booked the cruise through Carnival.
The statue…could care less…they should have kept the money. But public relations is what it is, isn’t it!
Attorney? Yes, I have one, but not worried about it.
Again the difference between people like you and people like me is: On my side, we are marketers looking to help people make their way in America. I don’t know you. But I know people that may be just like who thumb their nose at everything that they don’t like, who missed out on “ground floor opportunities” and are mad now, who sit at their neat and tidy desk and worry about the economy, who are jealous and envious when someone outspoken is out and about handling their business.
This scuddlebug has very little to do with YTB. It has more to do with control; people looking to control everyone else by limiting their dreams and desires and making people act like clones: go to college, work for the same company for 40 years, and retire at 65.
TTA, I run two MLM businesses and two traditional sales businesses. If it’s were not YTB, I’d have the same success in another business.
Guess what? There’s money to be made in soaps, wireless, real estate, vitamins, health & beauty, insurance, legal services, etc? Are you mad at all these industries too?
Thanks goes out to Bill Gates who in the early 1980’s in California decided he could provide an unique service to people by putting a little box on their desk so that you could reach the world through 1’s and 0’s.
I’m a Marketer.
Rick Nappier
Because of the power of the internet my Mother thought she was a doctor. Yup. That’s right. She was on Webmd and all the other illness sites and had been self diagnosing herself. Self medicating with herbs too. Didn’t know that herbs are what medicine is made form. Too bad she didn’t go to a real doctor. They might have been able to catch her heart problem in time.
Just because someone clicks on webmd it doesn’t make them a doctor any more than clicking on an on-line site makes them a travel agent. Something to be said for training, experience and education. Something YTB sorely lacks.
As to CA, YTB had 18 months to get in compliance and they arrogantly ignored it. They made their bed now they have to lie in it.
I am so sick of the YTBites thinking they created the concept of a home based travel agency. Wake up folks - this has been a viable business model for real live professional travel agents for quite a while. You have been terribly misinformed on who and what constitutes the TTA’s
The big difference between YTB and TTA’s is accurate information, depth of travel and destination knowledge and experience - something you simply cannot buy for $449 and $50 a month.
I see the arrogance and fear all throughout you guys comments. Like I mentioned before, I never heard of a travel agent until YTB. You guys never called me. I could have been somebody’s client over the last ten years.
When I wanted to buy my first house, I went and got a real estate license and earned the $9000 commission. I’m so sorry that I infringed upon the business of an existing real estate agent. But guess what! This is America, I thought.
But here’s the beauty of it all. Marketing is an equal opportunity event. How many NEW people have the combined number of people on this blog contacted today? This is the point. I’ve called 30 people asking for their travel business.
Go out and market your travel services
Spent to much time on this today. Let the lawyers figure it out.
…end of transmission…
I want to correct something mentioned in the comments about the article, and a misconception I’ve noticed, which some have indicated to me, in emails sent to me today.
The California Attorney General, Edmund G. Brown Jr. filed a civil suit against YTB, not a criminal indictment. The complaint filed by AG Brown is a “Complaint for permanent injunction, civil penalties, restitution and other equitable relief.”
While AG Brown might seek to obtain a criminal indictment, in the future, against these same defendants named in the suit, he has not yet done so.
Did you really expect TTA’s to just cold call you out of the blue? Do you think we have the time to sit around and call people out of the phone book or what??? I hope you are checking the National Do Not Call list before you are just randomly calling people.
This scuddlebug has very little to do with YTB. It has more to do with control; people looking to control everyone else by limiting their dreams and desires and making people act like clones: go to college, work for the same company for 40 years, and retire at 65.
Scuttlebutt is the term you are looking for. It is amusing that you talk about “control” when YTB is really an enigma when it comes to that. On one hand they offer no control because that is what drives recruiting. Say what yo need to say to sign them up. But all of a sudden, with a pending civil action from the State of California, they decide to re-control to look better. YTB Legal has been calling all YTB blog people and asking them to remove the blogs or edit them significantly.
Perfect example of YTB wanting it both ways.
I find it amusing that you have an issue with “clones”, have you looked at your website and your recruiting site? Now go look at the sites of 200,000 of your closest colleagues and let me know the difference.
It is not about limiting anyone’s dreams or desires, it is about allowing them to pursue them ethically and legally!
Oh Rick, you really don’t get it do you?
I’m a TTA, I work at home, I have a website, I do all kinds of marketing and have all kinds of clients. I don’t have to pay agents to just sit around, I don’t have a lease for a building, I don’t wait for clients to call me up so I can book stuff for them. How does this make me different from a YTB RTA? I know what I’m doing.
I can cook meals for myself at home, that doesn’t qualify me to be a gourmet chef and contract out as a caterer. I can order music for myself online, that doesn’t make me a record producer. And you can book travel for yourself online - good for you! But when you’re dealing with someone else’s hard earned cash, taking their money and booking a vacation for them, you’d damn well better know what you’re doing. You see a TTA, unlike YOU, cares more about making sure that our clients are well-serviced and properly taken care of than about signing up dozens of people so that we can sell them a bill of goods on how to book things for themselves and make millions while doing it. We don’t sell websites or business opportunities, we sell service and expertise - a fact which is obviously beyond your comprehension. TTAs have been appalled at YTB not because we think you’re going to take away our clients - quite the opposite has been happening! We’re getting more clients because they’re finding they don’t get any service from YTB. TTAs are disgusted with YTB because of that simple fact - you call yourselves travel agents but you don’t know the knowledge necessary to do a competent job and properly service your clients, and as a result that gives the travel agent industry a bad name. You say you earn your travel perks by reaching sales goals, but how much of those goals are related to selling TRAVEL and not signing up other people?
So you’re an MLM addict, good for you. I have no problem with the MLM model in general, it just doesn’t belong in an industry that depends on service to survive. Why should anyone by a cruise from you when they can buy it from the cruise line directly? The only reason is to avail themselves of the service that you can provide to them, which is basically none. They think they’re getting a travel agent that’s qualified to sell travel, someone who’s been educated in the industry (ie in travel, not just in marketing), someone that will act as an advocate for them when something goes wrong and not just tell them to call the vendor. But that’s not what they’re getting when they book with an RTA is it? So stick with MLMs and sell soap and sign people up to sell soap - wonderful. But stay out of industries where you can actually do harm to people, where you’re taking money that they might have saved up for years so they can take that family vacation and then provide them with nothing special in return.
And if you’d never heard of a travel agent before YTB, then there’s not much I can say about that. You’re obviously living in some kind of fantasyland, even my 9 year old nephew has heard of travel agents.
AutumnRose,
God Bless your soul. There are thousands more ways to connect to people than SPAM calls. I never, never call someone that has not given me expressed permission.
Calling people on the DNC list is unlawful and punishable with a $10,000 fine per event.
Rick Nappier
Regardless of the claim that YTB is or isn’t a travel agency and/or if it is better or worse than traditional travel agencies, the basis for this lawsuit is that YTB has, in the eyes of the CA AG, bilked people out of their money. There may be some individuals who have made some or even lots of money but according to what is being reported in the media, the vast majority haven’t made a penny from selling travel. Additionally it appears that the only way one really makes money is to recruit other people to purchase/rent a website. Given that so few people make any money and the ones that are making tend to be well up the chain it does have the hallmark of being a pyramid scheme. This is why the AG has filed suit, not that YTB is some new way of selling travel or that members get travel perks that they may or may not have earned or that traditional travel agents may or may not feel threatened by YTB. It’s all about the money and who gets and who doesn’t.
Good for you Roxanne! I commend your marketing skills to get business! I applaud anyone who is out making their business happen. I like motivated people.
I’ve working from home since 1998 and no travel agency ever advertised that the opportunity was available from home. I probably would have done it since I grew up around cruise ships in Miami where I had summer jobs cleaning them when they returned from sea. And the cruise ships would take the teenagers out for 4-hour excursion.
Don’t be shocked if I’ve never a met a travel agent. It’s human nature for people not to introduce themselves to people. I don’t know why it’s like that. The first trip I booked was with Priceline because I liked William Shatner. Then after that, I always used the Internet for every trip thereafter. My wife however, booked a Mexico trip through AAA in California. As an employee, he did not seem like he enjoyed what he was doing. Of course, he was probably just getting bread crumbs and a health plan for being there.
I don’t think I’m competing with you because I’m going to make my income targets regardless. And there should be enough money for other motivated people to make their monies. The strongest always survive.
This whole series of events with people and the Internet just amaze me. I sell insurance over the Net. I have friends who sell MLM style insurance and financial services. They are long time friends. I do other business over the Net. Why is travel so contentious? I think I know why. It’s because the public has discovered that they can book stuff themselves. I don’t think that they intended to not use TTAs. It’s just the natural order of things. People work later and later, and have access to Net on Blackberry’s and I-Phones and just book trips. A large majority of trips are simple to transact. Not one complaint from my clients in 18 months. There’s probably some totally exotic trips that are complex to book. But I haven’t run across any yet. And when I do, I will pick up the phone and do my homework like everything thing else I have questions on.
Some bank tellers got the boot when the ATM card came out in the mid 1980’s. My local telephone company is close to shutting down because of VOIP and failure to compete and invest in future technologies.
Now American based engineers are losing their jobs to overseas competition. There’s a nursing shortage. Manufacturing jobs are moving to Asia and Mexico.
You guys think that travel should be immune from change where every other industry is going through dramatic metamorphoses?
Didn’t mean to offend anyone. I’m just seen technology change just about everything I’ve done in 47 years. And just don’t understand why TTAs should feel like it’s their right to have the travel industry all to themselves.
I’m a marketer.
john m has summed it up perfectly.
“It’s all about the money and who gets and who doesn’t.”
With that said, no AG can control who works the business or who does not. If I signed up for YTB and never tried to book a trip for someone, who’s fault is that? Definitely not YTB!
If I buy paint and a paintbrush and never paint the house, it’s NOT the paint’s fault. It’s sitting there ready and willing to be used. Now if I hire a painter to paint my house after I purchased the paint and the brush, he/she might want to use his equipment. So I just wasted my money. The key word is “I” wasted my money.
The Marketer
Rick, for a guy who claims to have never met a travel agent, you sure do seem to have a pretty strong opinion of what our jobs are like.
Contrary to what you believe, REAL travel agents have to be much BETTER marketers than you. We’re not selling false hopes and websites. We’re selling our professional serivces, our time, and our expertise. We have to compete against the myth that the internet is cheaper, and than travel planning only requires a mouse click or two. Yes being a travel agent has changed, but there are still hundreds of us doing it, and doing it well I might add!
Ask any professional travel agent, and they’ll tell you that we welcome anyone into this industry who is willing to work hard, educate themselves, and make a positive contribution.
YTB is not a threat, or a competitor. YTB is the embarrassment of this industry. I applaud the attorney general for his actions,and look forward to seeing more states follow.
Ms. Kate,
I spent a few minutes trying to find a word that best fits your comments. I will tell you in a few…
Couldn’t wait…it narcissistic.
What more actions above and beyond do TTAs perform on the majority of the travel bookings. I’m 47 and been to islands, european countries, used to purchase my own tickets, hotels and rental cars online as a consultant. Took my wife to Punta Cana, DR for our 20th anniversary.
Tell me Ms. Kate what more could you have done for me?
Now if you’re doing mainly group itineraries, then there’s obviously more work to help people with meds, special accommodations, senior discounts, transportation services, price negotiations and discounts based on prior productions etc.
Ms. Kate,
You have an incorrect definition of marketing. Marketing is defined as matching products, goods, services to clients to whom these PGS fit the clients’ needs.
What you described are more features and services provided.
The science of marketing as it relates to the company for whom you work, or the ability to capture market share works like this:
Expect a 30% response rate from all marketing after you have went through the learning curve in the industry. Mathematically, this means that, at the beginning, new marketers (regardless of industry) should be happy when 1 out of 10 people say yes and buy…so that’s 10%.
If your company has good marketing training, you should be at 20% response rate by week 2 or 3.
You should reach 30% yes responses after week 3 and thereafter, when several things happen:
1. You learn how to listen more than you talk (respect).
2. You ask questions about what the client is looking for (consulting).
3. You properly ask for client contact information with the expectation that a call to the client will be made (commitment)
4.You show your client the product that they are already looking for (solved this problem in #2) (soft sale).
5.Ask the client for the business (closure).
6.Ask for referrals when the client receives PGS (confidence).
This is a freebie. Learned this 15 years ago, long before YTB.
I’m a Marketer.
I applaud Jerry Brown for looking into the ‘marketing’ business of YTB. May other states follow. From all the figures ever released, only those at the top are making any money. Mr. Rick N thinks he is showing us what a bright business person he is, but in reality, he is embarrassing himself by showing us that he is really just self serving, which he has in common with those at the top of YTB.
I got into ytb to purchase travel for my self and family. The same reason I got my real estate license and my insurance license.There are more people with real licenses making no money then ytb reps. I paid more getting my real estate license. But that money pays AG Brown and his downline.
Hi Bodega.
Guess what amigo or amiga? I’m not at the top. Not trying to reach the top. Just want to service the customers I meet along the way.
You guys are not ambassadors of goodwill and didn’t have a clue about what I was doing. I was hoping to hear about the companies you work for just in case I need to find another travel agency. I did what I did on purpose for a Master’ Degree thesis on how people behave when face with a potential threatening situation. Plus I work for two MLM companies but I market to the business community, exclusively. Why? Because its too long for people to learn how to market for results. So I stopped sponsoring people six months into YTB.
Not one of you recommended a company that paid that glorious 100% commission or spelled why you like the company you work for.
I’m out. No more wasting time like this for a while. I’m not going to reply and removing my info from tripso.
The math doesn’t lie. YTB sells the opportunity to have an internet travel agency. How ever the math put forward by the AG is very telling. $103 m in monthly fees and paid out $13 m that works out to only $6.31 per $50 monthly fee. Granted that 62% of YTB agents didn’t book any travel last year means that some people had to be profitable. The vast majority have unsustainable businesses.
I am going to speculate further and say YTB isn’t the only MLM travel company that will be facing problems in the near future.
“Not one of you recommended a company that paid that glorious 100% commission or spelled why you like the company you work for.”
This is a discussion of YTB and the lawsuit file by CA, not travel agents recruiting ICs.
My agency does not need a marketer but thanks anyway.
“I’ve working from home since 1998 and no travel agency ever advertised that the opportunity was available from home.”
You obviously weren’t looking in the right places. Independent Contractors of Host Agencies have been working from home for longer than 10 years, and the Host Agencies have been advertising for longer than that too. Ever read a copy of Travel Weekly or any of the other trade magazines? That’s where you would have seen the advertising.
There are quite a few books that have been written about being a home based travel agent. If you ever went to Amazon.com and searched for “travel agent”, I’m sure a few of those would have popped up.
The key is that you weren’t looking to be a travel agent until this MLM opportunity came along. You sound like you’ll get into anything to try to make a buck. Good for you. That shows initiative. That’s something a lot of people don’t have. However, I would encourage you to do a bit more due diligence of the companies you associate with and all the other factors of each business you get into. With YTB and the other MLMs, if you are serious about selling travel, you are leaving a lot of money on the table, or in someone else’s pocket.
There are host agencies that will give you a website powered by Revelex, just like YTB’s websites, and an 80/20 commission split, and quality back-office support, for no monthly or yearly fees at all. Why not quit paying the nearly $50 per month for the site, plus give yourself a 33.33% raise by switching to one of these host agencies?
“Don’t be shocked if I’ve never a met a travel agent. It’s human nature for people not to introduce themselves to people. I don’t know why it’s like that.”
Well I for one tend to avoid crazy people on the street when I see them. Not walk up to them and strike up a conversation.
All the little YTBers are clammering around now trying to figure out how to clean up Coach’s mess as usual. Aren’t you all tired of doing that yet? It’s always something isn’t it?? You’ve got to be exhausted defending yourself all the time. When do you have time to sell websites?
The ego of Mr. Rick N supercedes anything that he types. We are not here responding Mr. Rick N and his greed for the almighty dollar, we are here to say we support the AG of CA regarding the investigation of the YTB scam. Thank you Ned for the informative article.
but Didi, If you get within 3 feet of someone, crazy person or not, it’s the perfect time to try building your downline or selling yourself! Try it in ailse 4 of your grocery store and see how long it takes to get a visit from management.
Let me try to put it in terms you might understand…
You have a choice to go to either of two doctors. The first didn’t want to work as hard - so he went to med school in Granada. The second went to UCLA.
Both charge the same
Which would you go to?
Rick, (and any other YTB folks on here),
The CA AG did not sue YTB for producing a bunch of lousy travel agents. They did not sue YTB for producing agents that were not TTAs. They made absolutely no judgement on the legitimacy of the travel services provided. It is true that a great many TTAs are no more qualified than a well-traveled Joe On The Street to be travel agents. (On the other hand, a great many TTAs do indeed provide valuable services obtained through extensive training, industry experience, and contacts that involve far more than buying a cookie-cutter website.)
Instead, YTB was sued for marketing a “business opportunity” for which the primary source of revenue (and profit) for the agents was selling the “business opportunity” instead of actually selling travel.
What differentiates a pyramid scheme from a legitimate MLM opportunity? If the primary source of profit for the franchisees/IBOs/whatevers is through selling the product (travel/makeup/soap/food storage containers/sex toys (there is a sex toy MLM, no joke)/cooking equipment/etc.) then it is a legitimate business. If the lion’s share of franchisees/IBOs/whatevers make most of their profit from recruiting others into the business, then it is a pyramid scheme. It’s that simple.
With YTB, the median agent booked ZERO dollars in travel, in return for paying $500 to set up, and and $50/month in fees. For the portion of participants that did book travel (35 percent), the median comission income was $39. Not even enough for a single month of fees.
Yes, the YTB folks will say that all those no-product-revenue folks just didn’t have enough commitment, were too negative, whatever… However, if the majority of “businesses” do not sell a single unit of product, then there is likely something very wrong with the business overall. If the average business owner does THAT poorly, then maybe it isn’t such a good opportunity after all.
For those that join “just for the discounts”. Do you really travel so much as to make the $500 setup fee and $600 annual website fee worth it? That’s gonna take one heck of a discount to cancel out.
I saw on the linked website that some are claiming that there are two separate business opportunities, the recruitement one, which is free, and the travel agent one, which isn’t. And the non-travel one diluted the travel business. However, the suit addresses that too, in stating that among those that did sell services, the median commission revenue was only $39. Given that the only source of actual money is the travel “opportunity”, and median travel business owner pulled in very near zero, that makes this a complete scam.
SirWired
YTB will withstand this scrutiny. This is completely 100% to do with TTA pressure and complaints. (More like whining I suppose) Just like when they complained to RCCL and pushed to get RCCL to dump YTB…and the gal at the hand of that knife was cut herself, right Lisa? Funny how no one mentioned the RCCL is now downsizing and laying people off….hmmmm…and Carnival is growing and growing. Oh, yeah - tCarnival stood with YTB because we sold 12,800 cabins in a 24 hour time frame. Hey, but we don’t sell travel, right?
I am not a lawyer. I am not a TTA. I am a YTB RTA and IM R who is sold out to YTB because of what YTB has done for me personally and financially. I am a Master Cruise Counselor accredited by CLIA. Are all YTB agents CLIA accredited at this level? No. Because some only point people to their website and do not find interest in selling a ton of travel. Maybe just to save on their own. They bought the business for their own reasons….I took it to a higher level and will continue to go higher and higher- I want to be able to make money from MULTIPLE STREAMS. Some don’t- is that not the right of the business owner to decide how they want to do business? That is a personal right. They decide how much they want to make and how much they want to pass by. The “employee” does not get sued because they decided not to go to work.
I am anxious to see the fine article that will follow our victory!
This site, TRIPSO, is hosted by a Traditional Travel Agent who HATES YTB.
How credible & ethical is that??? Talk about Deceptive practices. Tell both sides of the story John Frenaye.
In answer to “The real scam”, John Frenaye has never hidden the fact that he is a TTA. I don’t think he hate YTB. What he dislikes is seeing people being led down the primrose path and having swindlers take their money. His blog is aimed at all multi-level marketing travel schemes, though I’ll concede most of it focuses on YTB simply because YTB is the most public. Their members are the most vocal, and they are the only one with public financials. I see nothing deceptive about that.
In answer to “All in”, congrats on attaining MCC status. That is indeed a real accomplishment. I’m only at the ACC level myself, though I’m working on MCC right now. What I must ask you is why you would want to give up 40% of your commissions plus $49.95 per month to YTB, when there are plenty of host agencies that will give you an 80/20 split for no annual fee or monthly fee and give you a website for free that is virtually identical to that provided by YTB? I find that really dumb to hand over that amount of money to YTB when you don’t need to do so. Oh yeah, you want to make money by recruiting! Get other folks to sucker into to a filed for which the vast majority will never make any money. I hope you can sleep at night knowing you are helping to fleece the poor and unknowledgeable.
Also, RCL did not drop YTB and other purely due to TTA’s complaining. Their phone agents were tired of dealing with all the stupid questions they had to handle from YTB agents. Vicki Freed was not canned by Carnival, she left of her own free will. YTB did not sell 12,800 cabins in one day. They sold some number, maybe 12,800, cruise certificates, which is way different then cabin sales. As an MCC you should know that.
Whether YTB will prevail or not remains to be seen. Personally, the statistics show that recruiting is down, and now with the investigations, it will probably drop further. That alone will cause more people to drop out, as all the money is in the recruiting side of the business. Once that downhill spiral starts, it will be very hard to stop. That will be the death of YTB. The major winners of this will be the Toomers and the very few people that were at the top of the pyramid. The losers will be the hundreds of thousands of folks that put up money and never made any.
Has anybody gotten hold of the bleepin NUMBER$ here? The YTB people were (are) raking in 147 mil on the websites alone! Last year, from their own published numbers fewer than 200 people made more than 10K -this out of 247,000+ members. Talk about nobody but the top getting anything.
I would like to apologize to all the traditional travel agents out there. I have been a MLM junkie and have been a threat to your business. I have been in YTB since July 2006. I have currently have a massive downline of 4 RTAs (I used to have 6, but 2 quit) and 11 Reps (Reps can join for free in case anyone didn’t know). None of these RTA’s or Reps have been motivated to do anything. I have shown the business to maybe 25 people. I know, I’m such a recruiting machine. I have also booked a whopping total of $172.60 in travel commissions. I know, I know, I should be ashamed of my greed. Most of these bookings have been from family and friends, but also a handful of strangers who found my travel site on the internet. Most of the bookings have been with flights, hotels, rental car and an occasional extra like honeymoon registry or tour. I work a full time j.o.b, go to school and enjoy working my business part time. Even if YTB didn’t have the marketing company, I would still purchase the travel site, even if I knew I didn’t have a snowballs chance of making a lot of money. I guess if I give up my YTB site and if myself, my family and friends book through a traditional travel agent, they will share their commissions, bonuses, tax deductions, benefits and more, cool.
Chris,
The small amount of commission that goes to you or any other YTB or other MLM agent is not the point. You are “working” a business part-time. You have spent approximately $450 to sign up, and another approximately $1200 in monthly fees to collect $172.60 in commission. Quit now, promise me you won’t go into another MLM, send me a check for $500 for this advice, and you’ll only lose $500 over the next two years, instead of the almost $1500 you lost over the last 2 years. Waht a bargain! I’m saving you $1000 and you don’t have to do anything at all!
You said, “Even if YTB didn’t have the marketing company, I would still purchase the travel site, even if I knew I didn’t have a snowballs chance of making a lot of money.” Why would you purposely get into a business in which you knew you would lose money? Are you one of those people that P.T. Barnum talked about?
Apparently you don’t understand that traditional travel agents are not concerned that you are “stealing” our business. We are more concerned that by pretending to be travel agents, you are going to damage our reputation as people that know the products we sell, and have the experience to give people expert advice on which product is best for them. People that are going to book online aren’t going to come to us anyway. They will go to Expedia, Travelocity or a host of other places, including the YTB sites. Just remember, if you book your trip online, you’re on your own.
If you are really serious about having a part-time travel business, there are host agencies that will give you an 80/20 split on commissions instead of the 60/40 split that YTB gives you. Some of them charge no monthly or annual fees. Some of them give you a website just like YTB’s for free. They also provide true travel agent training, not the CRTA recruiting training.
To get what few travel benefits there are, you will have to earn them. You’ll actually have to sell enough to earn $5000 in commissions in a year so you can get your IATAN card, something you’ll never get with YTB, since IATA dropped them.
So, no apology needed. Go ahead and keep giving Coach and company the hard-earned money you earn at your j.o.b.
When you are ready to be a true travel agent, give me a call.
I have read all the comments here with great interest.
I am a former TTA (Traditional Travel Agent/Owner) with 15yrs of frontline experience AND education, which includes CTC, MCC designations, as well as ARC/IATAN and ITAA appointments; I have attended numerous sales and marketing seminars over the years, as well as participated in many HARD Fam Trips to many parts of the world. I chose to sell my “traditional” agency back in the early 90’s when Delta first started cutting our commissions. The writing was on the wall. I “chose” to return to the airline industry where I first started (in hindisght maybe not the most secure move), but I did it nonetheless. I have been a Flight Attendant now for a private charter airline for nearly 12 years. I fly all over the world, EVERY month, and a lot of my flying is done commercially to join my trips. I am now back to booking my own travel again.
Earlier this year a colleague introduced me to YTB. I was excited because it was a no brainer for me! (To this day I still have former agency clients and friends asking for my advice). I “thought” at the very least, I could earn commissions on my own monthly travel. I recruited 4 “RTA’s” almost immediately; however, when my website was up and running, I found it generic and certainly NO GREAT DEALS were found there. I was able to find considerably cheaper fares on multiple web sites by a few simple clicks of the mouse. My own “industry” knowledge aside, ANYONE could have found better deals by just a few simple clicks to Expedia or Cheapo air.
I quickly realised that “my own personal website” developed for “me” by YTB was nothing more than a ruse to recruit more people because it “looked good” . Then I started reading articles in Travel Age West, Travel Weekly (yes I STILL subscribe after all these years because I like to LEARN and stay informed). I chose to cancel my membership with YTB, and I advised my colleagues to do the same. They did. Wrote it off as a lesson learned.
I think if I choose to look at generating additional income in the travel industry again, I will do so through a “Host Agency” who is appointed/traditional and forthright about thier terms of commission splits, UP FRONT.
To all the “traditional” agents on here who have commented to RICK N, you GO!
NOTHING can substitute for a lifetime of dedication, education and service to your clients. To Rick N, I suggest you take the $39.00 commission check you no doubt earned last month at YTB and invest in an “Herbalife” business. At least Herbalife has a proven income-earning track record. Your few cruises and a couple of trips to Europe do NOT make you a travel agent. A History of education and track record of SERVICE does. You are a Salesman, move on to something you know.
Just my “humble” observation(s)………..
“You never have a SECOND chance to make a FIRST impression” so act wisely.
Reading the comments e-mailed to me by Tripso in my GMail, it is hilarious the ads GMail is coming up with. You would think at least a couple of them might YTB agents trying to get you to use their website to book travel… heck no!
Every single one of them, without exception, is either:
a) How to make more money with your YTB “business” (by, of course, spending a lot more money on these “secrets”.)
or
b) Ads saying that YTB doesn’t work, and enticing you to purchase some other MLM instead, which is guaranteed to make you bazillions.
Try it yourself! Just Google “YTB”.
What is it about MLM that is so compelling that it causes people to go through one “system” after another, and failing to turn an actual decent profit (say, above minimum wage) every single time? Why do they keep putting good money after bad for all these packages that promises to fantastically increase their returns?
I would think the fact that all of the marketing effort seems to be on helping YTB agents recruit bigger “downlines” instead of actually selling travel (ostensibly the purpose of the whole enterprise), would be pretty compelling evidence that it is more pyramid scheme than travel business.
SirWired
The lady that had 4 rta’s than quit don’t make any since all she had to do is have six and move to the power team and her website would be freeThose four people could have brought one each dum dum
get six more in your power team and you made the 500 back.
I have friends in this and I am joining because I see the money 5 months matching her postal salary and she gets the money for infinity.
Come on you guys have you seen the video on you tube the power of one
all you people need to get a life because if you was making the money I seen with YTB you would not be talking to this board you be talking to be about the business .
That’s what is wrong with American you can’t stand to see other people can do something you can’t do.
There are doctors and lawyers. business manger people with marketing degrees in this business you think they make enough now. Why be bother with YTB all you naysayers need to take a second look with 84,000 people laid off in the month of july
read my blog http://www.daniellemangum.blogspot.com
and decide for yourself because at this point you don’t know if you have a job tommorrow don’t let other people keep you done do you.
because it your money and your life tune them out and do you.
we have to learn that as americans do you.
ytber,
Your friend will NOT get the money “for inifinity”. She will only receive payments as long as her downline keeps paying money. Eventually the number of people willing to sign up WILL run out. And all those on the bottom of the pyramid will realize they are paying $39/month for absolutely nothing, and their uplines will stop making money.
MLM can certainly be a viable business model for the distributors, but only if it is based on the distributors at the bottom spending most of their efforts selling whatever product the business ostensibly makes money selling and making the recruitment effort a distant second.
If all the distributors really sell is more copies of the business, and virtually nobody actually sells significant product to non-distributors, then you quickly have a business model based solely on the lion’s share of the “business owners” (which is everybody on the bottom of the organization) all losing money.
Yes, that can be a fantastic incentive to not be on the bottom yourself, but is it really ethical to sell a “business” where anybody capable of doing arithmetic can see that most of the people in your organization WILL lose money? (Yes, those money-losers may be several levels down, but they MUST exist.)
It is a truism that most new business owners of any kind (MLM or not) never turn a profit over what the owners could have made by spending the same time earning a simple wage and/or investing their money in nothing more complicated than an index fund. This is the case no matter the business, whether it be a store, restaurant, mail-order company, real estate, etc.
However, this style of MLM (one in which little actual product is ever sold to non-distributors) is unique that well over 50% of total owners have a 0% chance of even making enough revenue to cover their initial investment, much less make any profit over what they could have earned spending the same time flipping burgers at McDonalds.
Maybe this does not apply to your immediate downline, if they themselves recruit successfully; but the money has to come from SOMEWHERE. That “somewhere” is everybody on the bottom of the organization, who, by definition, will make little to no revenue, much less profit. The people on the profitless bottom make up more than half of any organization.
You said that the website is free if you have a total of six people in your downline. Okay, great, but that means that there are now six other people now losing money instead. If those six people each recruit six themselves, you now end up with seven people making revenue, and 36 money losers. If those 36 all manage to sign up six, we now have 43 winners, and 216 losers. etc., etc. In summary, over 80% of recruits will NOT bring in enough money to stop that useless website from costing them money. Those 80% have a ZERO percent chance of success. Yes, that remaining few will make money, but only at the expense of the poor folks at the bottom of the stack.
I don’t think it is right to be selling a business where simple math tells us that well over half the people that buy the business, will, in total, earn little revenue and lose their entire initial investment in the process.
SirWired
ytber - You have your facts wrong, and you have have lousy grammar.
The only thing that last to inifinity, is the overrides of the site fees, and as SirWired pointed out, “infinity” in this case means as long as they keep paying their $49.95 per month to make no money themselves. The recruiting bonuses are a one-time payment, and you only get more if you keep recruiting.
I’d suggest that you go back to school and take some English classes and learn how to read the payment structure for YTB and to learn how to write. You should also take some finance classes to learn how to read the YTB finanancial reports posted at http://www.sec.gov. They are quite enlightening on the inner workings (or failings) of YTB.
Steve and SirWired eloquently stated the FACTS. The YTB’er with the atrocious grammar is CLUELESS!
I am all for people making money and realising thier dreams. I think with the right “product”, the MLM business concept CAN work. However in YTB’s case, you have to look at travel as an “intangable”. To make money in “travel” you have to either have a book of business that consistantly generates volume, thus commissions, overrides etc., such as a large commercial account. Or, you have to have a large “Leisure” client base with “discretionary” income, booking packages, tours, cruises with you REGULARLY.
YTB is about SELLING CREDENTIALS, and recruiting MORE people to BUY CREDENTIALS.
IATAN has called this a “Card Mill”; Royal Caribbean has severed its ties with them, the California Attorney General has filed a Lawsuit against them.
Hello!!!!! Do ANY of you die-hard YTB’ers NOT get this? It’s a SCAM! Those at the top make the money, those at the bottom are spending the money! And WHY aren’t any of you so-called “Travel Agents” addressing the issue about your Web Site(s)?????
The airfares being quoted are ABSURDLY high, and more often than not the schedules, with a code-share flight number, are rediculous. Again, a few clicks of the mouse to CheapO Air or Travelocity will get you a much lower price and/or range of choice. They (the YTB websites), look pretty up front, but they are generic, and THOUSANDS more just like it under a plethora of “agency-sounding” names (as long as the $49.95 monthly “maintenance fee” is paid).
You think we are jealous because you “say” you are “making money”? Quite the contrary, more power to you! But the writing is on the wall with YTB. It’s a CARD MILL, A SCAM and a FRAUD!!!!!
If you have a “Book of Business”, take it to your local “TRADITIONAL” Travel Agency; they will be happy to appoint you as an “Outside Agent”, they will give you a “generous” commission split (usually 80%); they will welcome the dollar volume you will add to thier bottom line, and they will provide you with all the back-office support you need. Usually for FREE! And THEY are ONLY interested in helping YOU sell and PROMOTE TRAVEL!
Take YTB, WORLD VENTURES et.al, and file it away under SCAM!
Many Multi-Level-Marketing companies are indeed legitimate. One of the ways to tell is where they place their emphasis.
If it is on building your “downline” as opposed to the sale of product then the whole thing is a scam.
If the emphasis is on selling product while building your downline then it’s totally different.
Aw, c’mon, he’s a MARKETER! He knows better. Like Madoff was a marketer.
I wonder if any of these people above have a different idea of this thing after the big market crash . . .
for all of you dummiess just google your travel biz and seewhat comes up and you will see the truth,i hope you all lose eveything like my best frinend did when he got sucked into this mlm!
Unbelievable,
To those of you throwing stones and live in glass homes - shame on you!
Expedia, is the largest online Giant! But not for long. As mentioned the YTB lawsuit is a civil suit… so YTB is going anywhere.
But getting back to the point - stats show that %85 of all Americans Book there vacations online - so deal with and accept it.
YTB offers the exact vacations as expedia, trvaleocity, orbitz and priceline etc… except we get the commish when we book for the same resort, same hotel, same plane seat etc…
Live with it
To the misinformed,
The product YTb sells is in fact the website!!!
With the website you can sell Travel (Market it) nd show the business model to people looking to do the same. Plus any RTA that is involved is no eligible for the perks of an HBB (Home Based Business) it’s called a tax shelter by re-direction of expenses.
later Dude’s
FYI FELLAS !! California and YTB reached an agreement today APRIL 6TH ! All systems go in Cali baby! Wooooo
OK Shawn,
What is the goal of YTB? TO acquire a down line via the signing up more members or is the goal to help people build a travel agency via the Internet?
The answer to this determines whether the YTB is a legitimate MLM or yet another Bernie Madoff scam.
There is still no official announcement or comment from the California A/G that there has been any form of settlement with YTB. I’m pretty sure, based on past performance, that “announcement” from inside YTB was just a stunt by “Coach” to boost YTB stock to a value someplace above Monopoly Money. It worked for about 24 hours… The best chance most YTBer’s have of seeing any money would be to join a class action suit against YTB as soon as possible.
According to my sources, Ih8MLM, California Attorney General Brown did not then, nor has since, agreed to a settlement with YTB. That’s not to say a settlement will not occur, but it certainly hasn’t yet.
I would be surprised if the YTB announcement by Lloyd Tomer hasn’t hurt their chances to actually settle the case at this point.