YTB Sued For Operating An Alleged Pyramid Scheme
Tue, Aug 5, 2008
John from notravelmlms has just notified me of a lawsuit levied at YTB in the State of California.
LOS ANGELES–California Attorney General Edmund G. Brown Jr. today sued YourTravelBiz.com for operating a gigantic pyramid scheme that recruited tens of thousands of members with deceptive claims that members could earn huge sums of money through its online travel agencies…
…Today’s lawsuit against YourTravelBiz.com, filed in Los Angeles Superior Court today, is attached. The lawsuit also names affiliates which include YTB Travel Network, Inc., YTB Travel Network of Illinois,Inc., as well as the company’s founders J. Lloyd Tomer, J. Scott Tomer, J. Kim Sorensen and Andrew Cauthen.
Read more at John’s No Travel MLMs site.
John has also made a pdf file of the actual suit available on the above site now as well.
Tags: YTB
Loading ...
It honestly was only a matter of time. ANd it could have been Florid, Texas or Pennsylvania to initiate it.
I’m not well versed on US law John – after the case in California, if it goes to trial, could it then spread out to other States?
I certainly hope that YTB and other travel MLM’s are shut down for good.
What would have happened if real estate agents had the same MLM type company with the same attitude as YTB ” yes, you could make 1,000’s just by signing others up and having your own website showing all of the houses in your area! Think of all of the money you would make, after all… houses could sell for millions and people will be rushing to join under you!”
Thanks for stopping by Linda.
Don’t forget that this case hasn’t been heard yet so there is no guarantee that the allegations will stick.
Personally, I’m no fan of any mlm because of the recruitment ethic that many of them maintain.
That applies to all mlms, not only those in the travel industry.
Linda:
NEWS FLASH — they already have real estate MLMs….!
MLM/network marketing is a legitimate means of distributing goods and services and is recognized in over 100 countries worldwide.
As long as the company operates ethically, there is nothing wrong with the system.
I’m presuming, as I’ve never heard of any, that we don’t have real estate mlms here in the UK.
I wasn’t aware that you had them in the US either – can you name any DuecePrez?
If they already have mlm’s for real estate are the people involved called “Referring Real Estate Agents?”
I think that if you call a person a “Referring TRAVEL AGENT” then for real estate they would probably be called Referring REAL ESTATE AGENTS?
Why do you hope that this company is shut down? I don’t know, maybe it’s a mindset thing.I have been involvd with several different network marketing company’s. Only one of them made any money to talk about.I failed at those company’s because of me, and my lack of effort, knowledge or whatever.
It amazes me the more negitive things about “MLMs” What are YOUR arternitives? I am a supervisior for the world leader in aluminum production. I also am a co-owner of a small business. I continue to pay out of my pocket each month trying to keep our small business up and I am treated like crap at work. Look at what is going on in the world. You are basically telling the adverage Joe to just do what everyone eles is doing….. What everyone eles is doing is stupid. The company’s that they work for could care less about them. They (we) all have “given our all” to these company’s… For what, a pay check? More than likely they will struggle for the rest of their lives. Why not go to work, collect your pay check, and give your all to YOURSELF and YOUR own future. Trust me I see these confused people at work everyday. What makes it so sad is that they all make over $60,000-$70,0000. That is until the company tell them good by. Each one of them have no control over anything and hate it….. Now why should they not make 1,2,3,4 or even 5 attempts at a homebased business.
Amen to you Shaun. I think there are a lot of “REAL” travel agents (as they call themselves). That are very threatened. Hence why this site and so many others are created. A lot of time on their hands.
I am a Referring Travel Agent with YTB. I have thouroughly researched the company talked to people who have been in the business for 14 & 16 months who are making money in this business. This business model is for people who want to help others better their lives and have unlimited potential to earn according to their time and energy. If you look at the traditional company, the picture from the CEO down to the worker bees in the company forms a pyramid. If you want to become financially free based on the time and effort you invest, check out http://www.HolidayXpressTravel.com.
Wish you the best,
Cindy
Hi Cindy
I don’t think anyone would argue the point that traditional jobs have a pyramid structure, though the similarities do tend to end there.
How, specifically, do you think this lawsuit will affect yout ytb business?
That is not what YTB numbers show Cindy.
I think what all MLM travel agents need to be asking them selves right now is “Do any of the MLM travel companies really book enough travel to create a sustainable business?”
The other companies are going to have to move quick to add other products or services to increase sales volumes so they can pay commissions to justify the monthly charges.
MLM or network marketing or what ever you choose to call it is a business model when done correctly is very powerful. It is not a get rich quick scheme. The failure rate for MLM is in line with the failure rate for small and home based businesses in general. As with any investment you have to do your due diligence before you plop down the credit card.
I recommend those new to or thinking about MLM read The New Professionals and Your first Year In Network Marketing.
I think there are interesting times ahead for all mlms in light of this lawsuit.
It will be interesting to see how some of them adapt and alter their business activities in order to increase the direct sales based earnings of their consultants.
What are the chances of other states joining in?
I have no idea whether they will or not Marie, only time will tell.
It’s certainly an interesting time to be involved in mlm though!
Other states cannot “join” the CA suit but they can file their own. Currently Illinois is preparing a suit and it may be for $10M, $100M we will have to wait and see. It could even be a criminal suit depending on the charges and the evidence.
Civil you need to prove guilt with a preponderance of the evidence. Criminal is beyond all reasonable doubt. Often the discovery process in a civil case can lead to a criminal one and vice versa.
I know that MD has an Asst AG assigned to an investigation and no word on where it stands or if there is any action pending.
I have also heard that FL is engaged as well.
So, 50 states could file 50 suits. But no one is going to waste those resources. Many will let CA go ahead and make the determination if it is worth the effort. But with two states now filing suits, it is likely that it will raise the interest of the FTC, IRS, FBI and the SEC.
IRS for all the BS deductions they encourage people to take. SEC for insider trading–they knew about the AG investigation for 18 months and never disclosed it and sold stock. The FBI for their self dealing and potential criminal practices where they sheltered $8M of YTB money in a privately held company (Beryl-Martin) owned by the Tomers and Sorensen that just happened to produce the statue. They essentially paid themselves $8M for the statue and the money went from a public company to a private and the value of the statue is no where near $8M. The FTC will jump on the pyramid.
There is also a concern that if the Bahamas, Bermuda, and Canada take a look, it will collapse quickly. The US Gov’t does not like it when another nation accuses us of sending our “trash” to operate businesses on their land. The Bermuda media has picked this up so stay tuned there.
I have to think recruiting is difficult at best right now and if the AG can delay this in discovery, the heavy hitters in YTB will bail and then there will be nothing and then they go to a liquidation…case closed.
Another interesting twist is that the AG is not only going after the YTB leaders but anyone that may have violated those laws. So any director that recruited anyone from California had better be sure that the message was on target or he might be facing the lawsuit personally as well.
Well…you can now add Illinois to the list.
California wasn’t the first either…Rhode Island stepped in just recently as well.
Rhode Island had some issues and it was resolved as a moot point when the legislature did away with the licensing of agents in the state. That was back in March or April I believe.
However, I think RI ought to revisit it and perhaps relook at what they found.
MLM’s made a huge mistake when they started touting thst their marketing approach was ” so revolutionary that they started teaching it at Harvard Business School. ”
Well, the halls of academia had a vapid distate for being aligned as tacitly approving of what MLM’s were doing.
Academics tend to travel in the asme cocktail circuit as Attorney Genrals.
Perhaps, they should have used some other claims.
Dr. Maguire
P.S. Lloyd Tomer is a very personable guy. Played golf with im 20 years ago in Mexico when he was with Primerica.
I recently joined YTB. As someone who has always been an outside the box thinker, I tell all you nay-sayers to do some research before starting to be negative about MLM. It is a completely legal, legitimate way to earn a living, and can give anyone a chance to surpass anyone as far as income goes. This is why this ase will not affect YTB because it is not a pyramid. You earn what you deserve, therefor if you work hard you earn more than those who do not much. Also I would like to point out that YTB is now #14 or so of the top sites to book travel on in the world. To me, that does not sound like a site that does not book much travel, as per a comment made before about not booking enough travel to legitimately pay all the people signing up. Not only that, it is not like everyone is losing tens of thousands of dollars joining this. You can easily earn your initial fee back. The fact is that people want more out of life, and want to get it and still have the time to be with families. I thank the founders for thinking of this, and giving some people a chance at a hopeful futur full of all the good things they want, and time left to be the family they wish to have.
Chelsea
Number 14 or so??? You mean you have no idea how they actually rank? lol Hmmmm Guess the two Attorney Generals don’t know as much as you do or the BBB or the other attorneys involved in suits for various clients against YTB, or IATA, or ASTA and on and on. Have you ever read YTB’s SEC filings every quarter???? Do you understand them? Do you not recognize that the majority of their income is made from recruiting into the MLM/Pyramid scam and NOT made by selling any travel??? Do you realize that the turn over of members is extremely high and that the majority of them make no real money and that the majority of the ones that do, make very little? Have you seen their stock price lately and it’s enormous decline???? lol
Hey! 007??? LOL
Do you know how to read the quarterly’s? Obviously NOT! YTB will acheive over $1 Billion in Travel Sales in 2008. I repeat “TRAVEL SALES”. This is completely separate from the sales of “TRAVEL STORES”. YTB is not and never will be a pryamid. We sell 2 products and 2 products only. TRAVEL AND TRAVEL STORES! If you choose to participate and market travel stores that is completely up to the new business owner.
What company, in light of a pending lawsuit, has had positive growth in the area of stock price? NONE!
007, who are you anyway? A butt hurt brick and mortar travel agent who sales has been lost to online travel booking? Go pick on Expedia.
Aparently you cannot read YTB’s financials and their SEC filings sonny. Travel sales are WAY off. Year to date they have paid out $14.1M in commissions. That will put them near $28.2M for the year. At an overall 10% commission that places sales in the neighborhood of $282M. Seems a long shot from the $411M they claimed to Travel Weekly. ANd certainly not on the way to a BILLION dollars for 2006 2007 2008. $282M puts them in the mid 30s spot on Travel Weekly, but my guess is that they slide much further (while others grow) if they make it at all.
P.S. YTB’s worthless stock tanked out at 59 cents a share. lmao
WHY YTB? It is an eligitimate business. THE REAL SCAMMERS are people who steals from other people like Big Businesses who took advantage of the bail out money for bonuses…etc They should focus on this one & they should all go to Jail (GRAND THEFT)
the only way a mlm can be a pyramid scheme if it’s the product is not being used. a good mlm compensation plan will it structured in a way where every agent is a product of the product. If everyone is booking travel for themselves, the product is being used and pyramid scheme. Well I can speak for the company I am, can’t speak for the others. But the one I’m in has a compensation wrapped so tight could never turn to a pyramid scheme. a lot of people really need to learn ALL about a MLM. We are encorage to sell travel to public but as long as agent still using the product themselves and earning commission for using the product, no pyramid scheme. MLM rules!
http://thebestonlinefranchisebusiness.com
the biggest shot in illinois kenny lewis brought in 6000 people and 5900 lost money why ???? no more suckers out there why all of a sudden his failing business burn down. whot goes around comes around mr ken lewis give those 5900 people back there money
A YTB rep made big promises to me and did not fulfill. It is a good business if you know how to run it. You could make millions. People travel everyday. Some reps. are just in it to make money by getting you to sign up for the business and after that you are on your own. I emailed Spencer and he totally told me I am on my own.
If YTB is operating a “Pyramid scheme”. Why is it that people I know, who have bought a travel website, got trained as a travel agent, received their travel credentials and are making between $500-$3000 per month extra income in addition to their own jobs.
Most people probably bought a website…thought “WOW! I have a site on the internet and thought all the search engines would point to them and they would make all this money without any work or marketing of any sort. These are the people I feel are the “bitter past owners” of wanting to get rich quick and realized that it doesn’t exist.
All MLM companies that I am familiar with require you to “buy in” at a certain price in order to bring people into the business or become a rep. I know that YTB does not charge anything to become a rep. for the company. Therefore, there is no “pyramid” operation possible. Sales reps. are simply paid commissions for selling websites and owning a website does not require you to sell websites…two completely different operations.
Most people would also agree that in any business structure, even in corporations. The V.P. of Sales’s bonus’ are reflected by the Regional Sales Mgrs, the District Sales Mgrs. and the salesmen. This sales structure occurs in most all businesses world-wide.
I don’t feel YTB had done anything illegal. What I do see is a lot of very bitter travel agents AND a lot of bitter, desperate people who were looking to get rich quick by doing nothing…I hope someday they wake up to realize…it doesn’t exist.
YTB travel credentials? You probably would not know a travel credential if you saw it.
Yes, REAL agents work on their credentials such as ACC, MCC, CTC but I haven’t ever seen anyone in YTB have anything but a phoney card. People you know get trained? HA they probably would NOT know a 1a category on a ship from a 2C on another….oops forgot….they can’t sell 2C Well maybe a D2 category…oops, forgot…they can’t sell that either. Ohhhh, maybe they can go from IAD to SFO and then off to HKG before they head to AKL and SYD, …..oops, these so called YTB agents would probably have to really work on what all of these mean!…By the way… which leg is your favorite?
No, my friends have gone thru multiple trainings. They have travel credentials beyond anything YTB offers. One is a group cruise specialist and has her individual CLIA, the other just booked a 200 person tour to India and made 80K.
That’s why I don’t understand why people are saying that they never received a commission from YTB. I guess it’s because, like I said prior, they just didn’t work the business properly.
There is no company, MLM or otherwise, that you can get rich quick by doing nothing. Everything that you do requires an effort.
by the way, I’m in vending, make $20k+ a month and don’t do YTB.
My favorite leg?????? I would probably say KFC – Extra Crispy!
ytb agents most of the time are very lost i think the company is great and helping alot of people by givingthem a chance to make big bucks but they just need to spend a little more time training there staff about what they are calling for ..Carnival cruise lines deals with them very well as i was one of those reps that talked to them everyday smart ones and dumb ones (srry) Scam not sure !?
The YTB “business” is nothing but a scam. I was unfortunately one that got sucked in by it. The money is not made by the actual web site itself it is in putting on the meeting. They charged you to attend the “RA” “RA” “RA” meetings and the person that put on that meet pocketed the proceeds which I am sure was not reported to the IRS. The web site itself will make you NO money at all. I was charged $150 (required to get the certification) to go to a “TRAINING” and drove from Baltimore to Richmond VA only to sit through another “RA” “RA” “RA” meeting I was attending 5 minutes from my house. Then to get any business card or any other type of advertisement items you had to purchase them through them at a much greater cost then what I could have had them down somewhere else. I paid $450 to obtain the web portal and they had to pay a $50 a month fee to maintain it. The kicker for me was when the owner of the “so called” company was coming to town and again I was charged to attend the meeting.
And I am not sure what Angie is talking about because I was notified that carnival cruise was dropping YTB as an agent and will no longer pay commissions to YTB agents because of the shaky type of business it was.
THIS COMPANY AND ITS BUSINESS PRACTICES ARE NOTHING BUT A TOTAL SCAM!!!!!!!!!!!!