YTB INTERNATIONAL: Is YourTravelBiz.Com a Pyramid Scheme?
October 13, 2008 by Sean Kelly
Filed under Business
(FranchisePick.Com) This past August, STLToday reported on the charismatic leader of YTB International whipping his YourTravelBiz.com “agents” into a frenzy at their sales meeting in St. Louis:
“I believe we’ve become the hope for tens of thousands of people pursuing their dreams,” said Chief Executive J. Scott Tomer. “We’re going to become the hope for millions of people around the world.”
The 18,000 roared.
But is the hope that YTB is selling a false one?
Is it offering a tremendous opportunity? Or just peddling an illusion?
Those are the questions facing the Wood River-based travel company, which is led by a small-town pastor turned marketing-industry millionaire who has convinced more than 130,000 people to pay money to YTB for the ability to sell airline tickets and cruises.
Some, like California Attorney General Jerry Brown, say the whole thing’s a scam that recruits thousands of members with deceptive claims. The only people reaching their dreams, they say, are a handful at the very top, while most get nothing. But YTB’s legion of supporters say that’s just not the case. They argue that the complaints come from ex-agents who thought success would be handed to them, and that YTB is rigorously aboveboard.
Earlier this month, California Attorney General followed up his accusations with action, suing Wood River, IL based YTB International, board chairman and founder Lloyd Tomer, his son and current chief executive Scott Tomer, the company’s third co-founder J. Kim Sorenson and Andy Cauthen, president and CEO of YTB subsidiary YourTravelBiz.com. The suit is seeking $25 million in fines and restitution.
According to a recent report on STLToday:
The suit accuses YourTravelBiz.com, a subsidiary of YTB International, of recruiting tens of thousands of members with misleading promises that they’d earn large sums of money selling travel online to friends and acquaintances. Agents pay YTB a $499 fee to join, then $50 a month thereafter. They also often buy training materials….
“We are disappointed that the state has decided to take this action,” YTB CEO Scott Tomer said in a statement. “We firmly believe that the facts in this matter support our position and our legal counsel has advised us that our position is strong.”The company… has grown fast in recent years, nearly tripling its revenue in 2007 to $141 million, with profits of $3.2 million. At the end of March, it claimed nearly 139,000 “registered travel agents” and an even larger number of sales reps who sell the agencies and earn a commission on their business.
It employs nearly 300 people in Wood River and is spending $25 million to expand its headquarters there.
ARE YOU FAMILIAR WITH YTB INTERNATIONAL & YOURTRAVELBIZ.COM? IS IT A PYRAMID SCHEME OR IS AG BROWN ATTACKING A LEGITIMATE BUSINESS AND EMPLOYER? Share a comment below.
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Is YTB an illegal pyramid? No. Think about this. Gerry filed the suit against YTB the day before the National Convention. Hmmmmm. If that doesn’t say “political” then I don’t know what does. Second, if he truly had a viable complaint then why didn’t he file an immediate “cease and desist” order? In my opinion, he didn’t have it nor does he have it now. YTB is still in operation in California and California happens to be one of the fastest growing markets. I believe Gerry gave in to the pressures of YTB’s competion and a few bitter traditional travel agents.
NO, ABSOLUTELY NOT. I have been in YTB for almost 2 years and while I haven’t made tons of money, YTB has delievered on everything it said it would in its RTA’s Bill of Rights. I was smart enough going into the business to realize that it was going to take more than a $500 investment and 6 months for my business to be profitable. I went into it for the long haul and believe that if I keep working it, I will one day have a strong profitable business. A number of years ago, I spent about the same amount of money to get into one of the makeup businesses. At that time, $500 was a lot more money than it is today. I never made a dime on that business, but the parent company itself is still in business today and no one calls it a pyramid. Buidling a business is a commitment.