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.
After many years working in corporate America as a chemical engineer, executive and eventually CFO of a multinational manufacturer, Ned founded a tech consulting company and later restarted NSL Photography, his photography business. Before entering the corporate world, Ned worked as a Public Health Engineer for the Philadelphia Department of Public Health. As a well known corporate, travel and wildlife photographer, Ned travels the world writing about travel and photography, as well as running photography workshops, seminars and photowalks. Visit Ned’s Photography Blog and Galleries.
