Your Travel Biz, YTB, Faces New Challenge to its claim to be a legal MLM

by louabbott on January 7, 2010

YTB sued for $100 million

If you look at any of the “Related Posts” below, you will know that YTB, Your Travel Biz, has faced more than its share of legal challenges because of its business model.  This new class action suit, at $100 million, may be the biggest yet. This is according to George Dooley at Travel Agent Central, long time opponents of the YTB’s “travel” business

YTB International faces a new legal challenge with the year-end filing of a class action lawsuit that alleges that YTB has “perpetrated an illegal pyramid scheme that represents one of largest fraud(s) in the history of the State of Illinois and the history of this nation.” The plaintiffs are requesting $ 100 million in actual and punitive damages and was filed U.S. District Court for the Southern District of Illinois, East St. Louis Division. The action has once again focused attention on multilevel marketing companies and industry standards.

He quotes the lawsuit:

“The defendant corporations have taken over half a billion dollars from their unsophisticated customers, selling them on the dream of cheap travel and million dollar pay-outs when the only way that Plaintiffs and their class could make a net profit was by recruiting others to join the illegal pyramid scheme,” the plaintiffs argue. “While over half of the its customers received no travel commissions at all, the directors of YTB International, Inc. each paid themselves multi-million dollar salaries while also siphoning tens of millions of dollars from their publicly traded corporation to privately owned corporations that they owned and controlled. Plaintiffs and their proposed class ask this Court to end Defendants’ massive fraud and to enter a judgment that compensates them for the hundreds of millions of dollars that Defendants swindled. Plaintiffs’ claims are typical to those of their proposed class because they arise out of Illinois common law.”

He also quotes John Frenaye, a respected agent and critic of YTB’s performance:

“This case involves the operation of an illegal pyramid sales scheme and chain referral sales technique in violation of the Illinois Consumer Fraud and Deceptive Business Practices Act. The YTB Defendants have generated hundreds millions of dollars in net revenue—$162 million in 2008 alone—doing business as, or in affiliation with, entities commonly known as YourTravelBiz or YTB,” the plaintiffs said. “YTB Defendants derived the lion’s share of  their revenue—$122 million in 2008 (75% or their net revenue)— by using Independent Marketing Representatives (IMRs) to recruit Referring Travel Agents (RTAs) to buy Online Travel Agencies (“OTAs”) from YTB Defendants. RTAs pay approximately $450 up-front and $50 per month thereafter to own and operate their OTAs. IMRs receive ‘marketing commissions’ if the persons they refer to YTB Defendants buy OTAs, regardless of whether the OTAs generate any commissions from the sale of travel.”

Apparently, YTB has yet to comment publicly on the law suit. YTB also faces legal action by the State of Illinois Attorney General and last year lost a case -and was fined – by the Attorney General of California. See Related Posts below.

Also, see our YTB Profile page.

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{ 1 comment… read it below or add one }

Maggie Kress January 17, 2010 at 12:08 am Thumb up 0 Thumb down 0

I think it is very sad that companies and their executives find it OK to take the little person that is just trying to make a little extra income. The only way we can stop something like this is to educate the companies that we are considering for that extra income. We must ask ourselves some questions such as:

How does the Compensation Plan read?
Written where a layperson can read it and understand .

Does the Management drive the behavior in the field?
The management is looking out for the Representatives.

What does it take for me to break even?
How many people and sales do I need to break even

This is just a few of the questions you must get answers to before joining any company. A company such as YTB is proven to be an illegal pyramid, this is against the law and you could possibly be caught up with them and could be fined or imprisoned due to the association.

This makes it so important that we do our homework before considering any company. There are some that have very good products but the products may be overpriced. Make sure the products are value priced.

Do your homework and know your company completely before joining them. It will save you a lot of heartache and headaches.

Lou Abbott’s MLM Whole Truth is a great start. Put this site in your favorites where you can always find it when you need it.

Wishing everyone a life of prosperity and fun. We only come this way once so let’s make it our best.

A thought to leave you with is Focus on the Positive that you have had today. The negatives will take care of themselves or may just have to go away. A Positive mind leads to clear thinking.

God Bless
Maggie Kress
maggiekress.com

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