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California Sues Online Travel Company

Alleges pyramid scheme

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California Attorney General Jerry Brown is suing an online travel business for operating a "gigantic pyramid scheme" that recruited thousands of members with misleading claims that they could earn huge sums of money through its online travel agencies.

The suit names YourTravelBiz.com and its affiliates and alleges that its pyramid scheme only benefits members if they find enough new members to join the scam. Once enrolled, members earn money for each new person they recruit to join the scheme and not for selling travel packages. The company attracts new members by promising huge income opportunities via online travel agencies, but the average member makes nothing selling travel.

YourTravelBiz.com

"YourTravelBiz.com operates a gigantic pyramid scheme that is immensely profitable to a few individuals on top and a complete rip-off for most everyone else," Attorney General Brown said. "Today’s lawsuit seeks to shut down the company’s unlawful operation before more people are exploited by the scam."

Company records show there were over 200,000 members in 2007 that paid $449 to set up an online travel agency with a monthly fee of $49. In 2007, only 38 percent of the company’s members made any travel commission. For a handful of members who made travel commission in 2007, the median income was $39, less than the monthly fee to keep the site. There are close to 140,000 of the company’s travel Web sites, all almost identical, on the Internet.

YourTraveBiz’s marketing materials include videos of people driving expensive sports cars, holding ten-thousand dollar checks, and claiming to be bringing in millions of dollars in profits. The company advertises through its Web site, and at conventions, workshops and nationwide sales meetings.

Brown charges the company, its affiliates, and the company’s founders J. Lloyd Tomer, J. Scott Tomer, Kim Sorensen and Andrew Cauthen with operating an "endless chain scheme."

Brown is also going after the company for unfair business practices and false advertising, which include deceptive claims that members can earn millions of dollars with the company.

The lawsuit seeks to get a court order against YourTravelBiz.com that will bar the company from making false or misleading statements. It also seeks a civil penalty of $15 million and $10 million in restitution for Californians who were ripped off by the company.

 

California Sues Online Travel Company
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  • http://www.gogimon.com/Page.aspx?id=5 Search tool

    Why isn’t a Pyramid scheme illegal by defintion? Maybe it is but there are so many of these scammers around its a bit unbelievable. they have called it different names.Multi level marketing, multi marketing etc..

    Someone should put a stop to it.

  • http://www.LaurenSellsTravel.com LaurenSellsTravel.info

    I am a YTB Referring Travel Agent (RTA). We simply ask our friends & family to compare our prices to other popular websites. We also find promotional rates through a travel agent only booking engine & pass larger savings onto these folks.

    When we travel, which we do, we take advantage of travel agent rates and/or get paid commission when we get home. If you are using your business and working your business it will pay for itself & even give you a extra cash.

    However, If you purchase a business, Any Business, and do nothing with it what would you expect the results to be. In any business, you need to work hard to drive traffic and profit.

    YTB is a Traded company, With SEC Filings. Check out our .info site for more details.
     

    • Myrna

      First of all YTB’s prices are NOT competive at all. Travelocity, Orbitz etc. beats them hands down. A good Travel Agent also beats their prices.

      Secondly, there has been recorded abuse of YTB RTA’s on fams and education seminars. Carnival implemented sales requirements for YTB to be eligible for theirs. You have to sell $1500 worth of their product.

      Both Royal Caribbean and Celebrity Cruise Line terminated their relationship with YTB as did IATAN the governing body of the airlines, Perillo Tours, Quantas Vacations and more.

      Lastly, YTB has unleashed thousands upon thousands of untrained, uneducated RTA’s and Reps without basic travel training. They have tainted the industry and ruined consumer confidenece.

      Illinois is also investigating their business practices. As to the SEC comment Enron was regulated to. YTB has shown they are arrogant and flaunted their noses at the rules. Just like Enron. If you were naive enough to sign up with them without doing your home work you get what you deserve. A simple google search on YTB Scam will bring up plenty of information on them.

       

       

       

       

       

       

  • http://nlc.successin10steps.com Guest

    YTB Reps you’ve been lied to and its NOT your Fault.  Take a few deep breaths aand count to 10 backwards.  I’ll say it again you have been lied to and its NOT your Fault.

    Scammers steal peoples lives, They wreck peoples finances and destroy families.  They leave people in debt as they squirrel away millions.

    All you have to do is Learn what to Look for and the Scammers will Never Scam you again.

  • http://notravelmlms.blogspot.com John

    They are indeed scamming people, there is no doubt about that and to see the evidence you only need to look tot he SEC filings that the supporter mentioned.

    Last year, out of 305,000 reps  282,000 earned nothing!  The average annual commission earned by those few that do sell travel is less than $100. The upfront cost is $450 and the maintain cost is $50 a month,

    The tax deductions they encourage are ludicrous and quite possibly fraudulent. The IRS will have to determine that and I understand they have been notified as well as the SEC for insider trading.

    Illinois is preparing a suit and I woudl not be surprised to see it filed in the following week. Maryland and FLorida are also launching investigations and I have heard that Missouri is as well.

    This does not look good for these leaders who have made a career of scamming people. Finally.

    The good news is that this scam is not going to "ruin" lives. The investment is rather small and there may be some restitution, but it is not like there are hundfreds of thousands invested in the scheme.

    THe bad news is that the California AG is not only going after YTB. He is going after the individual directors and represenatatives that may have misled California citizens. So I assume the people that made presentations are at this point shaking in their boots and waiting for their attorney to open up tomorrow morning.

    I have been following MLM and travel on my blog and we actually broke the news of the suit at 1AM EST on August 5th.  If you are interested, the site is

    http://notravelmlms.blogspot.com

    The comments are very interesting and Monday’s post will have some old but extremely incriminating and relevant information.

  • http://www.akvaluetravel.com Guest

    World Ventures is not a scam and is helping YTB members stay in the travel business. Go to http://www.akvaluetravel.com for more info.

  • Guest

    I would like to point out that a pyramid scheme and MLM are NOT the same thing.  Whether or not YTB was deceptive (the courts will find out), the fact that the majority of users made no money should not be surprising . in ANY "start your own" business’ most will fail simply because they do not put any time and effort into being successful.    People are looking for get rich quick and it does not exist.  Soon after the average joe gets started (hoping and dreaming they can sit in front of their computer and grab the cash falling out) he/she realizes that  there is WORK involved and they move on, complaining they’ve been ripped off.  This is the case in all of  your legitimate MLM companies – and they are not "pyramid schemes." 

  • RONNIE RMOYEAND

    Am RONNIE RMOYEAND from United Kingdom.I will Like to make some Flight Enquires for my Clients Travelling to some part of the world.I will really appreciate it, if you get back to me as soon as possible, so that i can forward you the Pax details for immediate Booking, so that payment can be made with the Fastest and Easiest mode of payment.Await your swift Response.Thanks and B.Regards
    RONNIE RMOYEAND