In case you have not heard, YourTravelBusiness.com, or YTB just got slapped big big big time by the California Attorney General, Edmund G. Brown Jr.
The office of the Attorney General has sued YTB declaring that it is a pyramid scheme because only a few make money at the top and the rest never make money who join under the top players.
You can read the full story at their website:
I'm going to be giving my opinion on this matter, which is a very delicate matter, and I invite you, the reader to offer your opinions in the comments of this blog as well.
WHAT DO YOU THINK?
Now, keep this in mind. Brown is only suing, so there is no final order from a Judge to declare Brown's claims to be true. YTB will say they have done nothing wrong and are within the realm of the law to conduct business the way they see it legally.
And, in case Brown did not realize, according to Dunn and Bradstreet figures, 90% of all new businesses fail. Network Marketing, MLM and Direct Sales are the same way. People start and most people fail no matter if it is a brick and mortar or a digitally based internet product or a physical product.
According to Michael Gerber from the Emyth Revisited:
- 1,000,000 million people will try to start their own business this year
- 400,000 will fail their first year
- 400,000 will fail within 5 years
- 160,000 will fail within 10 years
That leaves only 40,000 in 10 years are still in the game… Of those 40,000 most I would say are just scraping by…almost at the end of their ropes and a couple hundred at the top are killing it making millions… So, does that make it a pyramid scheme cause the failure rate is so high?
It's not a function of a marketing plan or a pay plan that makes a business a Pyramid Scheme.
Pyramids are everywhere in business.
Just look at your fortune 500 set up where presidents, CEOs, VPs and Managers make huge salaries, while the rest of the office makes minimum wage. Pyramidial structures are everywhere. All major businesses are set up this way so the rich stay rich and the not rich stay comfortable there.
The case for failure is not how the company recruits or advertises (although Brown Claims they are doing this illegally as well), the failure of so many is because of numerous conditions found within the soul of every one who calls themselves a human being…
- FEAR Of FAILURE
- FEAR OF SUCCESS
- LACK OF KNOWLEDGE
- LACK OF SKILLS
- LACK OF IMPLEMENTATION
- LACK OF MONEY
Most people fail because of a fear that comes from a lack of knowledge and a lack of skills development.
More people would succeed if they spent the time to work on THEMSELVES and develop skills and knowledge. So blaming the system for failure of so many and calling it a pyramid scheme is wrong in my opinion.
Home Based Businesses would be WILDLY successful if Human Beings did not run them! 🙂
I guess, if you join a company and you don't make money cause you told 4 people about, then you complain to the AG of your state… and enough people do it… then you'll get their attention.
So, maybe Brown should start sueing all the MLM or Network Marketing businesses since only 2-10% ever make it in the big paychecks and the rest can only wish to be in that top group?
So, many in YTB are obviously freaked out by this.
So are many similarly modeled travel agent business opportunity websites out there as well. If the courts do see it as Brown see it, many people will be fleeing from these home based travel agent businesses and looking for new homes.
If you are reading this, and you are a part of a company like YTB or another like minded "possible pyramid scheme" then maybe consider or weigh your options.
Do you want to keep recruiting people into a company with a grey cloud over their heads, that is bound to have to defend itself in public, over the long haul and constantly try to stick up for this companies business practices, or would you rather move on to a different company where you are not going to find lawsuits and red flags?
That is a decision all reps from Your Travel Business (YTB) will have to decide for themselves.
But if the reader is looking for a new home, please contact Jeff Mills, the CEO of Goldmills Marketing, which has other popular travel products to offer with high commissions, that might be a better fit for starting a home based business.
As I said, the jury is not out yet on the legitimacy of Brown's self declared "pyramid Scheme" talk he is shouting from Sacramento, this will need to be decided and defended in a real court where a judge or jury will make the final decisions.
This case will be a case watched by ALL industry players, as it does infact effect more than just the travel business opportunity markets that promote home based travel agent businesses, it affects many MLM models and affiliate sales based models as well.
Hopefully, all the money YTB has made over the last several years is enough to hire the best MLM lawyers to defend the case.
I am not actually too worried about what the outcome will be. I think MLM's have been on trial many times in the past and the real legit ones always come out on top, while the real schemes out there get pounded for what they really are… scamming people at the bottom to pay the people at the top.
I don't think this applies in YTB's model. But I am not a judge and I do not know the bounds of the law like the book smart lawyers do.
ONE BIG CAUTION: There are MANY high roller Direct Sales people out there touting their homes, Cars, Boats, Bentleys, Hummers, Jetskis, Bank Accounts, and more ENTICING people into a business opportunity and if I was one of those dudes, I would be scared as hell! Seriously… here is why…
Brown charges the company, its affiliates, and the company’s founders J. Lloyd Tomer, J. Scott Tomer, J. Kim Sorensen and Andrew Cauthen with operating an “endless chain scheme,” an unlawful pyramid in which a person pays money for the chance to receive money by recruiting new members to join the pyramid. Brown also charges the company with unfair business practices and false advertising practices including:
* Deceptive claims that members can earn millions of dollars with the company
* Operating without filing legally mandated documents with the attorney general and the Department of Corporations
* Selling an illegal travel discount program
Under California’s unfair business practices statue, the company is liable for $2,500 per violation of law. Attorney General Brown is suing YourTravelBiz.com to get a court order that:
* Bars the company from making false or misleading statements
* Assesses a civil penalty of at least $15,000,000 and at least $10,000,000 in restitution for Californians who were ripped off by the company.
from Brown's Comment
s "From August 6 through 10, thousands of members are preparing to travel to St. Louis for a national convention to learn new techniques to recruit more victims into the illegal pyramid scheme. Last year at least 10,000 people attended a similar national conference. For more details on the company’s plan to perpetuate its scheme visit: http://www.yourtravelbiz.com/bizRep/BizReports/BIZREPORT_07-18-08.htm"
For more information on pyramid schemes visit: http://ag.ca.gov/consumers/general/pyramid_schemes.php
Consumers who believe they have been bilked by YTB should send a written complaint with copies of any supporting documentation to:
Office of the Attorney General
Public Inquiry Unit, P.O. Box 944255
Sacramento, CA 94244-2550
Or through an on-line complaint form: http://ag.ca.gov/contact/complaint_form.php?cmplt=CL.
This lawsuit against YourTravelBiz.com, filed in Los Angeles Superior Court, 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. For a copy of the lawsuit please contact the attorney general's press office: (916) 324-5500.
You gotta love the timing of the lawsuit eh? All these reps flying into St. Louis, for the company yearly convention, over 10,000 expected to be there, and boom, this bomb drops on everyone WHILE THEY ARE THERE!
Crazy timing from Brown, sure to shake things up in the MLM, direct Sales industry.
Cross your T's and dot your I's people … watch how and what you are marketing. I point to finger back on me as well… Do a thorough and real inventory on what your marketing really says to people and promises to people.
What do you think?