Speaking of Exaggerated Claims

Traverus is full of them. This piece from one of their "agents" nearly caused me to go change my undershorts.

Get started with Traverus a 26 year old brick and mortar travel agency that hosted the 2006 Emmy Awards and Gave away 1.8 Million Dollars in Vacations Free. If you love to travel and use your own product with your family at whole sale rates. Check out Traverus and see for your self.

I must have pulled a Rip Van Winkle but I am pretty sure they were not held at a travel agency! But the Oscar for this claim definitely goes to Pastor Brewer the National Executive of Traverus!

http://traverus-traverus-traverus.blogspot.com/

MLM Math (Part 2)

I have been discussing the plausibility of the program with several people and they have stated that my previous post was ignorant (using the term properly and no offense taken) since I did not understand the math. I may not have explained it clearly enough, but I have done a spreadsheet that shows that under the best circumstance, there is a $1.9M shortfall for the month of July 2007

More commissions and bonuses were paid out than income sources could cover.

Item	Income	Expense
106,000 RTA Sites Monthly Fee	$ 5,294,700
Training and Marketing Sales	$ 700,000
Travel Commission Earned	$ 1,700,000
Non Power Team REP Commission		$ 489,522
Power Team REP Commission		$ 6,213,799
1642 Leadership Bonus ($1000 ea)		$ 1,642,000
26 Dream Bonus ($10,000 ea)		$ 260,000
RTA Travel Commissions		$ 1,006,513
TOTAL	$ 7,694,700	$ 9,611,834
OVER/UNDER	$ (1,917,134)
Source: http://www.ytb.com/downloads/Rep_Earnings.htm
Source: http://www.ytb.com/downloads/RTA_Earnings.htm
Source: http://sec.edgar-online.com/2007/05/03/0001144204-07-022623/Section36.asp
NOTES:
There is a $3.6M deficit for the month.
From YTB SEC filings, there are no other appreciable income sources.
Therefore to break even with the expenses, travel commissions would
need to equal $3.6M for the month. $3.6M equates to $36M in sales.
Assuming a 10% across the board commission. If you assume 15%
the total sales would be $24M.
Assume the expenses met the income, the travel commission received
was $3.6M and 60% of that was paid to the RTAs, the RTA share
should be $2.1M not $1M
But assume $1M is correct and it represents 60% of commissions
received, that makes the commissions received $1.7M
When you plug in $1.7M for commissions, there is still a $1.9M deficit
New signups are not accounted for. However, monthly fees are waived for
RTAs that have 6 downline people. I assume the two offset each other based
on the number of emails from RTAs claiming they do not pay the monthly fee.

More Perks... Less Travel

More of the same false statements are out there. Here is a blurb from a website that touts all the freebies and discounts and credentials. The only mention of selling travel is a small link at the top.

I keep hearing that 100,000 people are hard to control. Well, I believe it is these same 100,000 people that are the root of the issue. When you have people representing a company like this and it is not in line with the company principles, they should be terminated. They should vet out the people that join from the beginning. But I have to say I believe the problem lies within the company's own marketing. These hundreds of thousands of RTAs did not come up with this all on their own. They were told this info and most likely it came from the home office.

http://gatewaytravelgroup.tripod.com/

As a YTB Travel Professional you can travel for pennies on the dollar!

Look at the cost savings you'll enjoy traveling as a YTB Travel Professional compared to a tourist:

Luxury Hotel
Tourist Price......... $235
YTB Travel Pro..... $ 79

5-Star Resort, 2 People, 7 Days
Tourist Price......... $2,086
YTB Travel Pro..... $ 420

1 Week in a Resort Condo
Tourist Price......... $1,695
YTB Travel Pro..... $ 215

7 Day Cruise, 2 People
Tourist Price......... $4,800
YTB Travel Pro..... $ 750

Math Help Please

I was just looking at the total numbers for July on the YTB site and I need some help.

If you add the REP and RTA commissions paid out (non-power team reps, power team reps, the $1K bonuses, the $10K bonuses, and the RTA commissions) the total payout comes to $9,611,833 (approximately)

From what I understand, the only sources of substantial income are travel commissions, website sales, website monthly fees, and training material. I have also heard that RTAs with 6 people under them do not pay the monthly fee. But not taking that into account and also not adding in the $500 one time fees, the income from the websites is $5,300,000. Taking a stab at the training income (based on the nearly $6M in 2006) I am guessing $700K for the month. So that brings total income to $6M. The remaining difference must therefore come from travel commissions.

Taking the $9.6M and subtracting the $6M, that leaves $3.6M in travel commissions.

If they are paying the RTAs 60%, the monthly cut to the RTAs would be $2.1M and not the $1M that was paid. And to earn $3.6M in commissions, they would have needed to sell $36M of travel in the month.

This does not take into account any additional for overhead, operation expenses, etc. The numbers just don't add up.

More Exaggerations and Misinformation

Here is a link to a MLM company's "agent" where he/she is documenting the money saved on the FAM and discounted trips. As a legitimate agent, I can see no reason to document this and put it on the web for all to see. Last time I checked, Walmart does not post their cost from distributors for the public to compare. Perhaps the reason this was posted was to entice someone to "travel like an insider" and to gain all these discounts and FAM trips that the MLM companies claim they never tout? You be the judge.

But a few comments on the presentation itself.

• The MSY trip (that is New Orleans for the MLM crowd) has incredibly exaggerated pricing on the retail end. This was in AUGUST. This was Post-K. I doubt there was a room selling in town that was more than $150 a night. Certainly not $279 per night. This is New ORLEANS not New YORK! The FAM was done by the CVB. Do you think they are offering space and values like that during their busy times? Come on! And a small note, the WORLD renowned coffee place on Decatur Street is called Cafe Du Monde.....not Cafe du Mundo! And again, this is New Orleans and not New York. The Beignets are $3 and the Cafe au lait is $2 for a total of $5 per person--not the $18.
• On the PVR trip (Puerto Vallarta for the MLM crowd), the claims are once again exaggerated. First, hotels do NOT pay 60% commission. The "agent" probably earned 10% commission on the $118.98 rate of which 40% went to the parent MLM company. The agent "discount" a whopping $7.13. Again, But what a bargain. I cannot search history, but if I look at rates for THIS November for a single night, I am getting (as a consumer right from their reservation office) $147 a night. Figuring in inflation, it does not seem to be so much of a deal. And if I snoop to one of my preferred vendors that has a contract with the hotel, I am finding the same room for $129 a night. Mind you this is pricing to the consumer and NOT an agent rate. So, are you REALLY saving THAT much?
• LAS (Las Vegas for the MLM crowd), is a total exaggeration. Most of the packages to Vegas will include a lot of the amenities that are shown to be additional. And I would hope that the retail guest would not get the "guided tour" and the "travel agent education class". And again, if this "agent" knew anything about the destination, they would certainly know that a breakfast for two almost ANYWHERE is going to cost more than $10!

Here is the link to the PDF file:
http://www.journeyshappen.com/My%20Fam%20Trips.pdf

And I know there will be some comments made to this post about not being able to control the "agents" and if it was approved by the MLM company it woudl have a secret code at the top. But you know what? The consumer does not know that. The consumer goes on what they see. And what they see here is, quite honestly, a crock.

I know you cannot control everyone, but my suggestion to the MLMs out there is to maybe be a little more concerned with vetting out your members. It honestly takes more than $445 and $50 a month to be a travel agent!

Consumer Fraud in the United States (FTC)

This document is VERY dry, but here is an excerpt on Fraudulent Business Opportunities and Pyramid Schemes. (Caution, 128 pages long)

http://www.ftc.gov/opa/2007/10/fraud.pdf

Fraudulent Business Opportunities and Pyramid Schemes

Another change was made to the questions about two of the money making
opportunities that were included in both surveys – fraudulent business opportunities and pyramid schemes.

Pyramid scheme promoters often claim that purchasers will operate their own
businesses selling a particular product or service and that they will make money both from their own sales and from those of others they recruit to join the program. Although such a business may look like a legitimate multi-level marketing program, it differs because the income earned by participants comes ultimately from recruiting, rather than the sale of products or services to consumers. Most participants in pyramid schemes lose money because the program really just transfers money from those who have joined most recently to those who have been involved for a longer period of time. At any point in time, the vast majority of those who have joined the program – often 90 percent or more – will not have recouped the money they paid to join.

Business opportunity offerings also involve consumers operating their own
businesses selling particular products or services. Business opportunity offerings
generally include some package of information, equipment, and services that purportedly will enable the consumer to establish and operate a successful business. Such offerings often appeal to consumers who have little or no business experience because they supposedly provide everything needed to own and operate the business. However, fraudulent business opportunity offerings often involve false promises that purchasers will make a large amount of money. Similarly, sellers sometimes make false promises that they will provide purchasers with assistance in finding customers or locations. For example, sellers of fraudulent vending machine business opportunities may promise to provide high-volume locations where purchasers can place their machines. Promises that the business is certain to make at least a specific income or that customers will be provided can lead potential purchasers – particularly those without experience operating their own businesses – to believe that there is little risk in purchasing the business. Potential purchasers believe they will not have to do a lot of selling and they are highly likely to be successful.

MLM and Credit Cards

An interesting topic has come up regarding merchants to be PCI Compliant. Apparently ARC is modifying it's agreement in a few weeks. I wonder how this all will factor in when there are so many MLM agents each needing to comply. I would imagine that having hundreds of thousands of agents involved in this has to be an issue in terms of security, identity theft, etc.

From the website Airline Training Council
http://www.airlinetraining.org/en/sempciwebinar.shtml

As credit card forms of payment for travel service purchases continue to grow, despite various efforts by certain travel suppliers to encourage alternative payment systems, credit card companies are continuing their efforts to assure that travel retailer merchants, travel service providers, and travel suppliers themselves adopt the credit card data protection standards mandated by the Payment Card Industry (PCI) Security Standards Council. The Council is a joint body, founded by American Express, Discover Financial Services, JCB, MasterCard Worldwide, and Visa International, to develop, enhance, disseminate and assist with implementation of standards for credit card security.

The Council manages an industry protocol referred to as the PCI Data Security Standard (DSS), a common set of industry tools and measurements to help ensure the safe handling of sensitive credit card data and the protection of cardholder information. In general terms, any entity which stores, processes, or transmits cardholder data (specifically the primary account number) must comply with the PCI DSS.

Even if an entity does not operate an online booking web site (which must comply with the PCI DSS despite already having an SSL secure certificate and web site "padlock"), so long as an entity uses the Internet to connect to a GDS, a travel supplier agent booking portal, a payment portal for online processing of agency service charges, a settlement system for airline ticket sales or travel sales transactions, a web-based storage or back-up facility for back-office accounting or customer profile data, or any other Internet-facing portal or application (including standard e-mail) used in the transmission of credit card data and cardholder information, the entity must comply with the PCI DSS.

While individual credit card companies have had security and account protection standards for quite some time, a collective effort using joint PCI DSS compliance is now in force and will make it easier for all travel merchants to comply more efficiently and effectively. Travel agencies may have noticed recent changes to GDS login and password management to be more PCI compliant.

IATA member airlines, at their Passenger Agency Conference in Geneva in June 2007, agreed to require agencies to be PCI compliant in order to satisfy IATA resolutions and accreditation requirements.

The Airlines Reporting Corporation (ARC), effective 12 November 2007, will amend the ARC Agent Reporting Agreement and the ARC CTD Reporting Agreement to require U.S. travel agencies and corporate travel departments which are ARC-accredited to be PCI compliant. A summary of ARC's changes to the Agreements, including those amendments regarding PCI, are available on the ARC web site.

A Sampling of Credentials

I am seeking out other samples of credentials. This one is from YTB. To many front desk agents, rental desk agents, and other front line employees in the hospitality industry, this may look like an official industry sanctioned identification card. When in reality it is merely an "employee" identification card.

It is my understanding that this card is provided upon joining YTB. I have also heard that members are encouraged to use this card to attempt to gain discounts and upgrades, yet it is never guaranteed. This card is supplied without the benefit of any training regardless of the level (or lack) of professionalism.

But these cards are everywhere. A quick search on Google for "Travel Agent Card" revealed the following examples. Some were MLM opportunities, others were simply scams, others were travel clubs. The common thread was that they were offering purported legitimate credentials to an industry that has let this get out of hand. What is also interesting is that most of these cards also come up when you Google "IATAN Card" and "CLIA Card".

Suppliers, two of these cards are legitimate. Do your front line people know the difference? Or are they giving away the farm to someone who does not deserve it?

Exaggerations from the beginning

This excerpt was from a paid press release located here:
http://www.prweb.com/releases/2006/7/prweb407254.htm

And it demonstrates that the numbers that are put out there to consumers are very misleading. On one hand, there are claims of $226 million in 2006. And this one claims $500 million in 2005 and a target of $2.5 billion for 2006.

“It’s brilliant! Who do you know at Expedia?” Doug asks “Do you even know where Expedia is? If I tell anyone I’m a Referring Travel Agent do you know what the very next thing out of their mouth is?” Doug answers “Can you get me a deal to_______?” So far it seems to be working, booking over $500 million in travel services in 2005 and thus far 2006 is showing indications that the company could exceed 5 times that amount, with expectations of $2.5 Billion in travel bookings for the current fiscal year.

Perks and Credentials

Over the past few weeks, it has been said that the MLM companies do indeed promote travel and NOT the perks, discounts, and credentials. If you look at the "About Us" page of any MLM travel company, the message is pretty clear. They are indeed promoting the credentials, the perks, and the discounts. This excerpt was taken from this website:

http://www.ytbtravelnetwork.com/2.html

YTB Offers You

A real, tangible home-based Travel Agency Business you can run from anywhere in the world or from the comfort of your kitchen table! Huge discounts on hotels, car rentals, luxury cruises, upgrades, exotic vacation packages and many more travel perks Personal travel agent photo ID card and credentials State of the art travel agency in greater St. Louis Up to 60% paid commissions on your personal website Online booking engines Affiliate marketing program Company familiarization trips Total service and support And so much more!

An Interesting Comment

I found this excerpt on a MLM "About Us" page and the first question that comes to mind is, "If network marketing is such a good business model, why have the last three gone bankrupt or closed due to "unfortunate circumstances."?

We have been looking for that right company for years. Our last 3 networking businesses went bankrupt or simply closed down due to unfortunate circumstances. Before that, Nick was downsized out of his job.

We lost our first home and had to move in with a friend. We slept on the floor in one room for almost a year.

But why the MLM Ads on the Website?

Some have asked about the ads on this blog. Why they are advertising MLM travel business opportunities. I think that most people are intelligent enough to know that when something seems too good to be true, it usually is. I think that the majority (not all) of the ads probably reflect that.

As Dennis Miller might say, "I could be wrong, but...."

Are There Really Deals Out There?

This is a video of a MLM agent that got a fantastic "travel agent" deal of $145 a night at the Renaissance St. Louis Grand & Suites Hotel. The "deal" was not so good since their standard discounted rate is $135 per night. So what are the issues here?

• The claims are inaccurate. For someone looking to buy into the "business opportunity" the claim (in this instance) is just outright false.
• To the consumer, if your "agent" is paying $10 more for the room than the standard lowest published rate for the same room category...what are you paying?
• To the supplier, although this instance is certainly not a special rate, do you really want this splayed over the internet?

Attention Travel Suppliers

There was a time when commissions paid to travel agents were confidential. Apparently this is no longer true as the commissions for YTB were published on their site for all to see! Once RCI made their decision to fire YTB, this info was pulled from the site.

But, why are you paying top dollar for someone to NOT handle a sale for you?

Tony Tells Us About $100,000 a Month Income

Tony explains that for a $449 one time fee and $49.95 a month, you will be able to make $100,000 per month. For the math challenged, that is $1.2 Million a year!

Rufus, His Boogers, and YTB

A quick search on YouTube has discovered some of the YTB "travel agent" marketing tools. The question to the consumer is....

Do you trust these people with several thousand of your dollars to plan your vacation?

Here, Rufus talks about his YTB experience (along with boogers in his nose...seriously)

MLMs andTravel is a Bad Combination

Welcome to a new blog. This blog is being set up to emphasize the point that MLM companies have no real place in the travel industry beyond being a source of referrals.

Several travel suppliers have already ceased doing business with several companies and more are likely to follow. There is an online petition from the agency community that has started a grass roots effort to bring the fallacies of these businesses to the eyes of the travel industry as whole.

If you want to see why these MLM/Card Mill businesses are bad for the industry. Check back here often and explore the links, documents and form your own opinion.