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YTB's travel pryamid collapsing
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YTB FINED $1 MILLION BY CALIFORNIA, ILLINOIS SUES FOR $500 MILLION
Your mother probably told you that if something is too good to be true, it probably is. Mom always offers good advice. Listen to it.
Over the past few years, you may been approached by a company called YTB (Your Travel Biz) about a “business opportunity” where you are told that you can travel like an “insider”, make a ton of money when your friends book their travel through your website and reap incredible tax deductions all along the way.
Hopefully you did not buy into the YTB hype; but if you did, I recommend that you get out. If you are interested in a career in travel, there are plenty of better, more lucrative options than paying $500 and $50 a month.
YTB has been on the scene for quite a while and has been a thorn in the side of travel professionals across the country. The main focus (and income) of YTB is to recruit others to pay for a site and encourage them to recruit to pay for a site and encourage then to recruit and pay for a site….
Those at the bottom are supporting those at the top and receiving nothing in return for their money and efforts. Very few made any money. Even fewer were serious about selling travel and many that joined got ripped off. Not only are participants getting ripped off, consumers are as well. And Baltimore is not exempt as this WBAL-TV investigative piece with Barry Simms explains.
This company has stated that they are going to be the largest seller of travel in the world by 2010. However, lately they are shifting away from "travel" to “products” and have pushed it back to 2020. If they are still around. Slowly, people are beginning to notice them and understand that this is nothing more than a classic pyramid scheme.
Below are just a few reasons to use caution when dealing with them -- buying travel or buying into the opportunity.
- In November 2007, Royal Caribbean Cruises, Perillo Tours, Celebrity Cruises, Azamara Cruises, and Qantas Vacations all terminated YTB and refused to work with them.
- The American Society of Travel Agents (ASTA) will not allow them to become members with their current business plan.
- In November 2007, the International Airlines Travel Agent Network (IATAN) revoked their endorsement because YTB was found to be selling the credentials. YTB appealed and lost.
- In August of 2008, California’s Attorney General sued them for being an endless chain and charged them with deceptive advertising and business practices.
- In August 2008, two separate class action suits for $100 million dollars each were filed against YTB by former Referring Travel Agents who were defrauded. The suits have recently been combined into a single $100 million dollar class action.
- Their BBB ranking is the pits and there are multiple unresolved complaints.
- In January 2009, Norwegian Cruise Lines (NCL) terminated their contract and refuses to do business with the company.
- Carnival Cruise Lines has restricted the ability for YTB's travel agents to contact them directly.
- On May 14, 2009, a settlement was announced in the California suit requiring YTB to significantly alter its business model and pay a $1 million dollar fine.
- On May 15, 2009, Illinois Attorney General, Lisa Madigan, filed suit against YTB for being an illegal pyramid and for several violations of the state’s Consumer Fraud Act. The fines, if levied will amount to $285 million per count. Plus restitution.
- Their financials filed with the Securities and Exchange Commission (SEC) show consistent losses
- In their annual report filed with the SEC, their auditors have stated they do not believe the company can continue (and this was before the California settlement and the Illinois suit)
- They have seen an unprecedented drop in their recruiting
- They are losing Referring Travel Agents at the rate of 1 every 5 minutes
- Many higher level Directors have departed the company.
- Several Board members have abruptly resigned
- Their auditors have warned that the management does not follow the wishes of the Board and operates as their own
- They have sold off many assets to raise cash, but have burned through the cash
- Their credit card processor has changed the terms of their escrow from $1.7 million to $3 million dollars
- They only have $1.8 million in cash and cash equivalents.
- I have learned that Maryland, Louisiana, Florida and Texas may also be investigating.
- Their founder has a long and storied history of scams.
That is an impressive list for only 18 months! My advice if approached about joining or buying from YTB—run the other way. In terms of joining, you need to know that according to their income disclosure, over 80% of the participants earned nothing in 2007. As a matter of fact, of the 305,055 reported reps in the program, only 163 made more than $21,000 in 2007—and that was before taxes! In terms of buying travel, the pricing is not equivalent to the other online agencies or to any professional travel agent. At best, it is equal; but more often than not it is higher. And of course, since these people may not be earning the money they had expected, there may be a temptation to run off with your money—never pay in cash or check. (Actually that is good advice for any travel purchase.)
Still not sure? Why not simply Google "YTB" and see what turns up. And then click over to the blogs and see some other opinions.
I have said it before, buyer beware. These recruiters are trained to talk a good talk and they will prey on your weaknesses--there are national calls scheduled multiple times a week to make sure the recruiters are up to speed. Religion will figure prominently in the pitch as will the allusions of wealth, prosperity, frere or discounted travel, credentials, and tax write offs. Travel with caution!
Full Disclosure: I am a vocal opponent of Multi Level Marketing in the travel industry. I have been an outspoken critic of YTB, TraVerus, ProTravel Network, World Ventures and others for several years. I offer no apologies for my criticism or opinions. The links above all point to facts--not opinions. If you are looking for more facts about Card Mills and Multi Level Marketing firms in the travel business, please visit Travel Scams: Card Mills If you are looking for a heaping portion of facts combined with strong opinion, please visit my blog, MLMs and Travel: A Bad Mix.
Other Examiner Coverage of YTB:
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