YTB INTERNATIONAL: State of California v. YourTravelBiz.com (PDF)

According to STLtoday.com, the California Attorney General is suing the YTB International, franchisor of YourTravelBiz.com, for $25 million in fines and restitution.

According to the complaint:

“…While Defendants purport to be in the business of selling travel, their real business is the operation of a pyramid scheme that relies on the sale of essentially worthless websites they refer to as “online travel agencies.” For the opportunity to own and operate an online travel agency, consumers pay Defendants over $1,000 per year.

“…in 2007, consumers paid over $103 million to Defendants for websites, but made only $13 million in travel commissions in a business Defendants advertised as the “easiest way to make money” and earn “serious income” without any selling. Of the more than 200,000 consumers who purchased or maintained Defendants’ websites during 2007, 62% failed to earn a single travel commission — not even on their own personal travel. The typical participant made no money on the sale of travel. Furthermore, the typical annual travel commission earned was less than the cost of just one month for a consumer
to maintain his or her website. Even among those California residents who participated in Defendants’ program for at least one year from April 1, 2006 to March 31, 2007, and who paid Defendants at least $1,000, 45 percent did not sell any travel and 61 percent made less income on the sale of travel than the cost of one month’s use of their website.

“While the vast majority of consumers made nothing selling travel, Defendants generated 73% of their net revenue of over $141 million dollars from the sale of websites and monthly fees. Another 10% was generated through the sale to consumers of training and marketing materials. Only 14.5% of Defendants’ net revenue were generated from the sale of travel. In short, Defendants sell an illegal pyramid scheme that uses the minor, incidental sale of travel as a front for their scheme.”

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