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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Comments
great article John. Consumers have a right to know who it is they are giving their hard earned money too.
I can't believe how many people have fallen for this scam.
I am a YTB small business owner. Just to set the record straight,
YTB never promised me that I would make any money. And the company never said that making money would be easy.
They did say that if I bought an Internet travel site that I would be entitled to all of the tax deductions that accrue to home based business owners. That benefit comes to almost $7,000 annually for me.
They also said that, as a Internet travel business owner, that I could use their technology to build my travel business. Each day my travel business grows and I’m becoming known as something of an expert in the world of cruising to the Caribbean and Alaska.
When I share the value of my business with someone who wants to enjoy the same benefits I receive and they buy an Internet travel business, I get a referral free from the YTB.
I’m very confused by the California AG’s behavior. In California pyramid schemes are illegal. The AG has the ability to shut a pyramid scheme down in 24 hours.
Yet, he choose to not shut YTB down but rather sue it for $25,000,000 and, months later, settle for $1,000,000 and then have the nerve to say that the big, bad pyramid scheme of YTB was closed.
Makes one wonder what else is going on here?
I, for one, am grateful to YTB for allowing me to be a part of a business that is affordable, easy to run, easy to promote and has none of the downside of most home based businesses – except that Jerry Brown doesn’t like it.
Nothing has hurt my business more than JB. If I had the resources, I’d sue him for libel along with several other publications that have, with malice, attacked YTB and distorted the truth.
Count me among the small business owners who are still open, doing business, making money and don't feel for a moment that we were mislead by YTB.
Well said Keith!
I too joined YTB about a year ago and I don't have a bad word to say about them. There was never any promise of getting rich only the opportunity to save money on the traveling I do by booking my own travel. And that is no lie. In fact I have a few regular clients who book regular golf outings and cruises with me and are very happy with the service that I provide them.
The sad part of it all is that there are way too many hacks out there that shamelessly misrepresent YTB.
As a matter of fact I challenge Mr. Frenaye to show me exactly, in the YTB video presentations or any of their literature for that matter, where there is a claim that you will get rich in this business.
The whole idea is for those people, like myself, who love to travel can save money by owning my own travel site. In addition I make money on selling travel. My family and friends book their travel through me. I have spent a great deal of time and energy marketing my business and have a small byt loyal customer base. Further more I have not brought one person into this business. I have never tried to recruit anyone. I SELL TRAVEL!
There is no obligation to get into the MLM side of the business at all. In my first 9 months in business I have covered my $500 original investment, my training costs, my web site maintenance fees ($50 per month) for the full year, made about $3,000.000 in travel commissions and have saved a bunch of money in taxes. What's wrong with that?
Further more I resent your comment about the temptation of these people running off with peoples money. I wouldn't take a dime from anyone that I didn't earn if I was living in a card board box on the street. Who are you to make such an assertion? You don't know me or anyone in this company and I take that comment as a personal insult.
I am working hard to learn this business as are many others. I already have my CLIA certification and will soon have my IATAN credentials. If it wasn't for YTB I would have never even thought of having my own travel business. In another year or so I will be a legitimate travel agent and should be well on my way to having a productive travel business of my own while you sir will still be a wannabe journalist posting on blogs rather than having a real job in legitimate media.
Have a Wonderful Day!
This is a correction to false information in John's reason number 8 for taking caution when doing business with them. I've written to John a few times before correcting this lie.
Yes I can use BookCCL.
Yes I can call Carnival reservations to place a booking.
You are a terrible journalist and ofcourse like many you are bitter with YTB because you are threatened. How Sad!
Keith Ivey said- "Nothing has hurt my business more than JB. If I had the resources, I’d sue him for libel along with several other publications that have, with malice, attacked YTB and distorted the truth." 1.)You can't sue someone for facts and the truth and 2.) You don't have any money for an attorney because you made squat. Are you people deluded or what?
Bill said "In my first 9 months in business I have covered my $500 original investment, my training costs, my web site maintenance fees ($50 per month) for the full year, made about $3,000.000 in travel commissions and have saved a bunch of money in taxes."
I say BS. In 2008, YTB paid out $19.6 M in commissions to 138,000 people. Are we to believe that one person is responsible for 15% of the commissions? And if so, why are you working for 60% when you could be getting 80% or 90%.
Rod@ SWR Travel. We have gone back and forth on this, but according to CCL I am standing my my position. If you can prove otherwise, maybe you can grab a screen shot of your CCL page and email me
The author of this article is wrong on almost everything he wrote. I have been in YTB for over 4 years.
I never heard any of the get rich schemes he speaks of.
I have not lost my ability to book or talk directly with Carnival and use the bookccl.com website.
It only took me the first 6 months to recover the startup fee with YTB. It's been all profit since then. The seminars at sea have been very profitable to my YTB business. And yes the tax deductions are great. This author of this publication is very misinformed about YTB.
Some of us in YTB are dedicated to our travel business, and this idiot is trying to destroy our business with articles like this. I say BOYCOTT the Examiner for publishing this authors personal vendetta against YTB.
@CruiseTravelAgent
Can you please show us all where the factual information to impartial third party sources are not true? I admit I have a bone to pick with YTB and I disclosed it.
However, all of the links are links to trade publications, legal documents, newspapers, etc. Not a lot of opinion here (aside from yours) but a lot of facts.
Woudl you care to share exactly how much you earned from YTB? Remember, they produced their own income disclosure. The SEC reports don;t lie.
So wh
WE ARE FORMER YTB RTA's. I CAN CERTAINLY UNDERSTAND MR. FRENAYE'S OPINION IN THIS ARTICLE and YTB'ers you have to as well. We worked incredibly hard for 2 years selling the $495 website to others (friends and family members primarily, as most do) as well as selling a little travel. YTB didn't promise wealth but they certainly alluded to it in all the advertising they did to seduce you into buying a website for $495 and paying the $49.95/mo. maintenance fee for 3 months until we got 6 personal
There are 2 VALID VIEWPOINTS HERE. To argue as to which is more valid or trumps the other is lunacy. Primarily the tax deductions we were entitled to were too good to ignore and made our little business viable. Everyone we knew also took advantage of this as well.
My friend tried to sign me up for this scam. We are no longer friends. I can't believe there are people so blind to the truth that they've been jipped.
Joined YTB 6 years ago, tried hard for 3 years. Not the MLM, but got into it for travel sales, which is what it's supposed to be about. Primarily, to sell Disney packages on my own, through Disney via YTB's CLIA# (which cost additional $100's). The $50/month YTB website was mandatory and a waste.
Pushed hard for web air/hotel sales too. Those sales were almost nil because the "deals" could be easily beat elsewhere. Of the few hotel sales, the commissions were scant (usually $10-$20). Air bookings were even worse, at $5 comm. Most months yielded nothing despite vast marketing. NEVER paid even close to the $50/mo web fee.
On Disney sales, which were 100% my own efforts...Disney typically gives a 10% comm, for an average package a couple hundred dollars. But then YTB takes 40%, so the average comm was cut to just over $100. Disney sends the package to YTB, who would not forward to me unless I begged. Same with the checks, then $1.50 to mail...cheapskates.
Waste of $$$
(continued from previous post, below)
In fairness to YTB, they never promoted themselves as "get rich quick"...to the contrary, they stressed hard work and you get out what you put in. But the only $ to be made here is in the MLM.
I could have pushed the MLM side and made $, but felt that it was dishonest because the product (travel sales) was not profitable. This is because the website is too expensive (really, probably costs them pennies per Rep to operate, yet they charge $50/mo), and they nickel/dime you on everything they can.
I finally found out that I could pursue Disney sales directly, and cut out these middle-men. Then ALWAYS got the package/info without having to beg, plus got 100% of the commission as it should be.
Still happily, and profitably, selling Disney packages all these years later...costs me NOTHING, and no parasites eating 40% of my comm plus additional "fees," and causing me grief with the getting materials and getting paid.
If I knew then...
There was law suit brought to YTB from the attonery general, However YTB won that suit!
scam
get a life keith
this article needs to be pulled. Written poorly and facts are not all correct. In Calf. YTB not only won, but the judge also signed the franchise agreement that Mr. Brown said would never be signed. Also the suit in Ill. has been dropped by the judge. This is all old news. Ben needs to get a life. Anyone who is complaining here just didn't want to work it. YTB made no promises. Only hard work.
My co-worker is in ytb.. This guy has been caught stealing twice from our company.. If He is making all that money at ytb.. Why is he still stealing from us??
THIS COMPANY SHOULD BE NAMED BIG ASS SCAM!!!!
I always stay away from the typical MLM types of organizations too although YTB never sounded like a scam to me .
I have however found a different type of organization utilizing network marketing of brand name items through major retailers websites offering cash back rewards by virtue of linking from your own subsite. It's a saving's co-op with the ability to earn.
I registered because it is free and no monthly fees. If I link to Orbitz, Travelocity, Hotels.com, priceline etc. I get a small cash back rewards as part of this network. People I refer who book travel through the actual Travelocity etc. site get a small cash back reward, and the "upline" if you will get's a share of a small cash back reward as well.
I checked out the cell phone prices and they actually BEAT Costco. You can get a Blackberry Curve FREE and $50 cash back + $25 to split. Check out my blog at blastoffnetworkblog.blogspot.com
I have been in YTB for two years now. I just closed my business but it took two years of hard work. It's not a 'get rich quick" business, but it is a real travel, and e-commerce business. If you travel, as I do, it makes sense to buy it from yourself. And in the past year I chose to market (yeah, it's multilevel) but the marketing is optional. If you don't like MLM but you travel, like to shop online, why not do it and make commissions? I give (yeah GIVE for free) my ShopYTB portal so they can get cash back at over 700 stores. I REALLY like the idea of the company paying me a 50% commission on everyone's cash back. If you don't like, don't do it. I guess a increase in travel sales from being in the top 35 in 2008 to the top 25 largest travel sellers is going to upset some of the big boys. I guess if I invested over 5billion in a business and some upstart came along and started taking my thunder I too would get some states to fight them. Sounds like sour grapes to me!
Sounds like the negative people forgot to post the information about lawsuits being dropped for lack of substance!
I use YTB for all my travel and take a great tax write-off. If you don't travel yourself then YTB might not be for you. The company is not perfect but who is?
All you guys who are being negative, need to stop hating. YTB is great, it is like any other investment, you may do well in the first 6 months or the 1st year. If any of you guys no anything about MLM you have to be in the industry for a while to really see the return, you can not give up in the first year or two. Pyramids are illegal, so if any are out there they must be black market, and YTB is not black market. Don't be a soar loser, if YTB was not for you, then move on. It is a great opportunity...
Thank you all for these comments~ It seems like they would get sued and under scrutiny for doing what they do~ however they are just as strong now as they were then. That says a lot about the integrity of the company. They had the strength and muscle to stay in the race and this add was from 2 years ago. Im proud to be in this business now. Im not looking forward to getting rich over night~ the possibility to travel and shop and earn cash back excites me. Esp. if I can earn off of others too. Ill keep this add as a reference.
Hey yaLL IF YOU ARE LOOKING FOR BIZ OPP THAT MAKES MONEY VISIT MY SITE www.myganocafe.com/skscafe
What most of you that don't like ytb are forgetting is the TAX benefits of owning a home business, I got into this business last December and the TAX write offs paid out more than expected and literally paid for my business for this entire year and then some. ytb is the only mlm company that gives you for free, INSURANCE ; AS IN; MEDICAL, DENTAL, VISION, LIFE,. need I say more? ya just dont get it. Oh, and probably wont.
I have been in the Wright Brothers Family since I was born. After meeting Coach and his son Scott and hearing them talk from the heart about their humanitarian goals in the travel industry and seeing how they have grown to #34 in travel sales in the US travel industry since I started with them I have no doubt that they will be #1 and everyone will be buying from them in the future. I always rent a car on my website and have many friends who love the car rental prices. I love this company and will always stand behind this family. Not many companies have this kind of heart and motivation to help others. Tsering A Wright
I have been a member of YTB for over two years. I use it to book my family and friends trips. It is a fantastic tax write off. I shop around and check other travel web sites and YTB is competitive. If anything I under utilize my site. I fully support YTB. The $50.00 monthly fee is well worth it.
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