Yesterday on WalletPop, I wrote about how California’s Attorney General announced a lawsuit against YourTravelBiz.com (YTB) and called it a “gigantic pyramid scheme.” The evidence that it is a pyramid scheme is based upon the fact that the company theoretically offers members a chance to sell travel services to customers, yet that’s only a small fraction of how the money really flows.
The real money in YTB is in recruiting new members, who pay $450 to join and pay $50 a month to stay active and eligible for commissions. Hmmmm… Kind of sounds like the $448 it costs to join Shop to Earn and the minimum monthly purchase of $100 from its “Shop to Earth” products in order to be “qualified” to be paid commissions.
It doesn’t even seem like YTB tried to hide the fact that it was a gigantic pyramid scheme. In 2007, there were over 200,000 members, and only 38% of them made anything from actually selling travel services. And for those who did make money selling travel services, it averaged $39 a year.
And late last year, another WalletPop writer, Zac Bissonnette, clued in on the proof that YTB is a pyramid scheme. He wrote:
The latest 10QSB for the company provides damning evidence that this company’s online travel agency business opportunity is nothing more than a classic pyramid scheme. How can we tell so quickly? 2 lines under “Net Revenues” tell the story.
Three Months Ended
June 30, 2007
Online travel store sales and monthly license fees $23,309,601
Travel commissions and services $5,856,731
Three Months Ended
June 30, 2006
Online travel store sales and monthly license fees $7,405,332
Travel commissions and services $1,904,131
Quite simply, the YTB agents pay way more in fees to YTB than they make in commissions from selling travel products. Sounds like pyramid scam to me….
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