Skip to Content

Massively looks at the best free to play games

YourTravelBiz (YTB) sued by Attorney General for being "gigantic pyramid scheme"

More
Text SizeAAA

Filed under: Ripoffs and Scams

Yesterday California's Attorney General, Edmund G. Brown Jr., announced a lawsuit against YourTravelBiz.com (YTB) for being a "gigantic pyramid scheme." He says that the multi-level marketing company recruited tens of thousands of members with false earnings claims.

YTB was supposed to a business through which members could operate online travel agencies. In reality, it was nothing more than a pyramid scheme meant to make those at the top rich, while thousands of people below them lost a lot of money. The operation is accused of being a pyramid scheme because the members were paid for recruiting new members, regardless of whether they sold any travel services.

Members pay $450 to join the scheme, and a monthly fee of $50 to stay active. In 2007, it is alleged that there were over 200,000 members, and that only 38% of them made any money from selling travel services. The median income for those making commission on travel services was only $39. (You read that correctly... not even enough made all year to pay for one month of fees!)


Mutli-level marketing companies like this pop up all over the place. Their defenders claim they are legitimate business opportunities because there is a product or service being offered. Yet those involved with the schemes soon realize that recruiting is the real name of the game, making these "business opportunities" appear to be more like pyramid schemes.

One recent player in the multi-level marketing game is Shop To Earn, a program which recruits "brokers" who each pay about $448 to become a member. As a member of Shop To Earn, they can be paid a small percentage of sales when they and others shop online using affiliate links. The real focus of Shop To Earn, however, is recruiting in new members who will pay the $448 fee to join (plus an annual renewal fee of $119). This doesn't seem all too different than that YourTravelBiz.com program that California is going after.

Schemes like this really only benefit the owners of the company and a handful of people at the top of the recruiting pyramid, usually the ones who get into the program early. In terms of real money to be made from shopping online, it would take thousands of dollars of shopping just to recover the membership fee. The payouts are skimpy, often less than 5% of purchases. Even at 5%, it would take $9,000 of shopping just to recover the initial sign-up fee.

There are also monthly minimums for those who want to be paid commissions on the people recruited into their downline. $100 a month must be spent on the "Shop To Earth" portion of the Shop To Earn site to even "qualify" to receive commissions. That's another $1,200 a year out of the pocket of the member to even be eligible to earn any money.

Consumers would do well to stay far away from these schemes which promise financial freedom to them (and a few of their friends and family). Studies suggest that 99% of participants in "business opportunities" like this lose money, making it a horrible "investment' for most consumers.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.
Subscribe to Walletpop

Reader Comments (Page 1 of 1)

Add your comments

Please keep your comments relevant to this blog entry. Email addresses are never displayed, but they are required to confirm your comments.

When you enter your name and email address, you'll be sent a link to confirm your comment, and a password. To leave another comment, just use that password.

To create a live link, simply type the URL (including http://) or email address and we will make it a live link for you. You can put up to 3 URLs in your comments. Line breaks and paragraphs are automatically converted — no need to use <p> or <br /> tags.

Ensuring a Safe Manicure and Pedicure
Millions of women (and a few men) visit nail salons regularly to have their nails done. ...
Lalique and Haviland Open Flagship Boutique
Two of the most prestigious brands in the luxury industry have joined forces to open a flagship ...

Your Frugal Tips

dollar bill in sandwichBeing frugal is now hip, but many don't even know where to start. Share your best money-saving secrets here!

    AOL Safeguards

    Megan Angelo
    Megan Angelo Filed under: Shopping

    Your own personal shopper -- free -- at J. Crew

    The phrase "personal shopper" inherently has a certain air of snobbery about it, calling to mind that wealthy aunt who always bought the best Christmas gifts but whose over-the-top get-ups elicited ...
    Julia Scott
    Julia Scott Filed under: Bargains, Saving Money, Bargain Babe

    Lots more coupons coming to WalletPop!

    I'm a new blogger at Wallet Pop and my name is Julia. My goal is to post the best coupons for all the everyday stuff you buy, like groceries, clothes, and meals out. The little stuff ads up, after ...
    Julia Scott
    Julia Scott Filed under: Bargain Babe

    Free diapers for an entire year

    Sign up to receive emails and news from Pampers.com and you could win an ENTIRE YEAR of free diapers. That means your bundle of joy just got a lot cheaper. Why join Pampers? You'll get rewards ...
    Laura Heller
    Laura Heller Filed under: Shopping, Technology

    DVD wars come to online retailers

    First books, now movies, the price wars between the biggest retailers just keep getting hotter. Walmart, Target and Amazon are all slashing pre-order pricing on some hot new releases like "Harry ...

    Headlines from WalletPop Partners