Criminals In Our Midst?

I found this quote from a Level 1 Director who hosted one of the Founder's Tour events:

"The Founders Tour was a special event that allowed us to see the hearts of our leaders on a personal level. Coach, along with Level 7 Director Ron Head, opened the meeting with the steps they have taken to start this one of a kind business we all know as YTB! To experience first hand that our leaders would take the time to speak to us and share with us what motivates them to be the best is incredible! Thank you Coach and Ron for your tremendous leadership and vision." Christopher Paraldi - Level 1 Director.

I am not sure why it is "incredible" that the leaders of a company to talk to their "employees" but hey, I am still learning.

Now I did some checking and Christopher Paraldi has only been in YTB since December 2006 and he is already a Level 1 Director. This is impressive in and of itself, but what is more impressive is that Chris has just completed his federal sentence for running a $22 million dollar illegal gambling ring. I guess this does prove one thing. YTB really does believe in their unofficial motto: "Yale or Jail, anyone can join." I am sure anyone who has attended one of the recruiting seminars has heard this--or possibly the "sister slogan", "it doesn't matter if you come from Penn State or the State Pen, you are welcome at YTB." Well, they do say you are a reflection of the company you keep.

Below, you can read about the $22 million dollar illegal gambling ring he ran as well as the slap on the wrist he received in terms of a sentence.

TWO PLEAD GUILTY IN GAMBLING RING
Operation raked in more than $22 million
By MIKE HOYEM, mhoyem@news-press.com
Published by news-press.com on May 12, 2004

Two men who were part of sports gambling ring that raked in more than $22 million during a 10-year operation in Lee County pleaded guilty Tuesday in federal court.

Todd R. Meady and Christopher Paraldi, who are both 27 and from Cape Coral, went before U.S. Magistrate Judge Sheri Polster Chappell and admitted violating the federal Wire Wager Act. Each man faces up to two years in prison and has agreed to forfeit illegal profits from what Sheriff Rod Shoap has called “the biggest gambling ring in Lee County history.”

Each man also has agreed to cooperate with federal prosecutors. In exchange, prosecutors say they won’t oppose their requests for lenient sentences. The ring operated under the names Player’s Edge and National Sports Consultants and advertised nationwide that it could give gamblers “inside information” on sports events.

Gamblers from across the country would call a 1-800 number connecting them with ring members, who went by aliases such as Niko Turner and Dan “the Man” Wilson. The ring began selling bogus tips in September 1993 and raked in more than $22 million until it was broken up, according to federal court records.

The ring wasn’t discovered until December 2002, when a sheriff’s deputy responded to a fire alarm at a south Fort Myers office park. The sheriff’s office arrested 14 men April 8 after a 17-month investigation that was aided by five federal agencies. Officials also have seized more than $8 million in illegal profits, including $7 million in cash, several expensive cars, homes and about 200 pieces of sport memorabilia ranging from a set of Jake LaMotta boxing gloves to autographed photos of stars such as Joe Namath and Muhammad Ali.

A third ring member, John D. Tartaglione, 32, of Fort Myers, is to enter his guilty plea today. Assistant U.S. Attorney Robert P. Barclift said seven ring members have signed plea agreements and will enter pleas in the next week to 10 days. He said those who enter pleas may testify against seven others named in federal indictments. “These are some of the witnesses if there is to be a trial, in addition to the undercover officers and some of the gamblers,” Barclift said.

And to be honest, the sentence was a slap on the wrist--180 days of house arrest and a 3-year probation sentence

THREE GET PROBATION FOR ROLES IN GAMBLING RING
By KRISTEN ZAMBO, klzambo@naplesnews.com
August 10, 2004

The first of three Southwest Florida men accused of working for an illegal sports betting operation were sentenced Monday to probation for their roles in the ring.

Former Kansas City Royals baseball player Todd R. Meady, 27, of Cape Coral; his brother-in-law, Christopher Paraldi, 27, of Cape Coral; and Tampa resident John Dominick Tartaglione, 32, previously of Fort Myers, each received three years of probation from U.S. District Judge John E. Steele.

The men were accused in the spring of conspiracy to violate the Wire Wager Act by working for two south Fort Myers companies that doled out sports betting advice and illegally referred clients to offshore casinos to place their bets.

"I did something wrong," Meady told Steele in court Monday. "I accept responsibility for my actions."

The sports gambling ring is considered to be the largest of its kind in Lee County history. Prosecutors say staffs at Player's Edge Inc. and National Sports Consultants gave bettors tips on which bets to place and at which betting parlors, referring customers to offshore casinos in the West Antilles and Costa Rica.

The casinos reported back to the companies with detailed accountings of which teams their clients bet on and the wager amounts and provided the companies with customers' account balances, according to the federal indictment. Player's Edge and National Sports Consultants then received money back from these casinos ” about $70,000 a month in advertising costs ” after clients placed their bets with these casinos.

College-educated Tartaglione worked as a stock broker before joining the gambling operation, said his attorney, Scott Moorey. When the stock market took a dive, Tartaglione decided to try the more lucrative betting service. He worked there in telephone solicitations and gave sports betting advice. He owned a 2.5 percent share of National Sports Consultants, Assistant U.S. Attorney Robert Barclift said.

Moorey said he told Tartaglione when he joined National Sports Consultants what services he legally could provide, but Tartaglione was misled by his bosses who told him he wouldn't be breaking the law, Moorey said.

"I've always been an outstanding citizen," Tartaglione said in court. "Clearly, I made a decision that was disastrous. I want to apologize to my family, particularly my wife and my kids."

Tartaglione, who pleaded guilty in May, also was sentenced to 180 days of house arrest. He could have received between six months to one year in jail. Meady also was sentenced to 180 days of house arrest, but his punishment won't start for three weeks, Steele ruled, so Meady may finish doing rehabilitation work on his home. He also must complete 25 hours of community service.

Meady joined the Kansas City Royals as a pitcher in 1995 after he was a 12th-round draft pick selected from Milford Academy High School in Connecticut, according to Major League Baseball draft records. Meady joined National Sports Consultants about 20 months ago, after he injured his shoulder, said his attorney, Peter Aiken.

Paraldi, Meady's brother-in-law, was working for the company and helped Meady start as a phone solicitor. Meady worked his way up to a salesman and blew a $40,000 college scholarship, Aiken said, because he was making so much money selling insider betting tips that weren't based on insider information.

Paraldi, who now works as a loan officer, said he was assured by company owners that their attorneys said their actions were legal. However, staff lied to clients about the validity of their betting advice and he knew that was wrong, he told Steele.

He said he knew there "was too much money going on too easy," Paraldi's attorney, Lee Hollander, said. "He's a grown adult, judge. He knew what was up."

Paraldi, who owned 2.5 percent of the company, also was sentenced to 180 days of house arrest and must complete 25 hours of community service.

Of the 14 men charged this spring with conspiracy to violate the Wire Wager Act and operating an illegal sports gambling operation, all but three have agreed to plead guilty. Another co-defendant, Jai Pasquale, 28, of Fort Myers, agreed Monday to plead guilty in a deal with prosecutors. His plea hearing is scheduled for 1:30 p.m. today.

I began this post a week or so ago, and it has just now come to my attention that Chris is a regular reader and commenter of this blog. Welcome Chris. Maybe now you can shun the "anonymous" moniker and say hello?

Home Based Tax Deductions

Here is a column from CNN regarding tax deductions for a home based travel agent. One point I want to highlight is where it discusses writing off FAMS.

As long as you are a profit-seeking travel agency business - even if you operate out of your home - you can deduct all business-related expenses on the federal Schedule C form. This applies whether the travel is local or international. Meals and entertainment are generally also deductible, says Martin Chan, a Philadelphia CPA. Note that the primary purpose of any trip for which you plan to deduct expenses must be business. You cannot deduct expenses from family vacation or leisure trips.

Protected With A Blanket E&O Policy? Think Again!

The other day, I sent an email to Mark Pestronk regarding a blanket E&O Insurance policy and the protection or coverage it offers to an RTA. This is self explanatory.

February 22, 2008
Hi Mark--

Someone asked me a question and I had no clue and thought you might know.

A client books a trip with an RTA or Independent Contractor and something goes horribly wrong and they sue the "agency". Where does the liability fall? I know YTB says they have a blanket E&O policy for their 140K agents. I am sure their website disclaims liability. I am sure they would say the RTA is an independent business and disclaim liability. So, where does the liability ball fall? Does it make a difference if the transaction is completed by the client online by themselves? Or does liability shift if the RTA sells and processes it by themselves. It just seems to be such a grey area and one that is untested to date.

Any thoughts?

Hope all is well.

John

and the reply....

February 27, 2008
John:

It is not a gray area, really.

Liability for negligence or breach of contract falls only on the IC, not on the host. As a practical matter, the host will get sued anyway, as the consumer and his attorney cannot tell the difference.

Insurance does not affect my answer one way or the other. If the host's insurance covers the IC, it does not follow that the host has liability to the consumer.

Finally, the website disclaimer tends to deter suits against the party or parties named in the disclaimer. Again, it does not affect liability for negligence of breach of contract if something goes horribly wrong.

Mark

Law Offices of Mark Pestronk, P.C.
910 17th Street, N.W.
Suite 800
Washington, D.C. 20006

Phone: (202) 833-1900
Fax: (202) 315-3677

We Are Popular!

This week, we have been viewed by people on all 6 inhabited continents in the world! Thanks to Buenos Aires and Madagascar for bringing in South America and Africa!

Is YTB Getting A Bang For The Buck With Mancini?

Last year, YTB kicked up the training a notch by hiring Marc Mancini to private brand his travel curriculum. Marc is one of the brightest people I have ever met and certainly knows his stuff. He is respected in the industry and YTB could not have chosen a better person and organization for their training programs.

Some have said Marc has lost credibility by "selling out". Perhaps, but business is business and modifying his curriculum for 140,000+ "agents" is probably a very profitable and shrewd business move on his part.

However, I am not sure YTB is getting the bag for their buck! I was reading a recap of the first course in the Mancini curriculum and it appears that while the training is being offered, very few are taking advantage of it (or very few are being able to pass it).

I have said for a long time (and still do) that YTB is not engaged in the sale of travel as a primary business. Travel is a means to "legitimize" and perhaps legalize the recruiting end of the program so it falls outside of the pyramid laws. I think this recent blurb from the YTB Travel Compass supports that:

For completing Course 1 of the YTB E Campus within 60 days of launch 5 lucky winners won a free cruise for two. Congratulations to :
Randy Mabry of Albemarle, NC
Marsha Garrard of Sherrills Ford, NC
Luz Paez of Moreno Valley, CA
Carma Hilliard of Loveland, CO
Cindy Reyes of Corona, CA

Wow, 5 out of 140,000! Now I am sure that there were many more that are taking MORE than 60 days to complete the course, but this course was released in November and considering it is all online, 60 days is plenty. I wonder how many actually took the time to enroll--and paid the fee. My guess--not many.

Will be interesting to see the results of the second class and the third which was just announced this week.

If Anyone Is Feeling Charitable

In case anyone is feeling charitable, my daughter is involved with a fundraiser at her school to raise money for the American Heart Association. It is called Jump Rope For Heart. If anyone would like to contribute, there is a secure web page that will allow you to do so.

I promised her I would get the word out.......

To access the site, CLICK HERE.

Thanks!

Fighting Amongst The Ranks?

Maybe I am reading a bit between the lines here but I am wondering if there is not some bad blood between Reps and RTAs?

In another forum, (scam.com) a Rep was discussing his travel perks and someone posted the following:

"The issue is that if you are working the recruiting side, why are you taking perks for the travel people"

Now, I am not in YTB, but if I was, and if I was interested in selling travel like some of the RTAs are..I would seriously resent this implication.

Is it a problem for rogue reps ruining the business for the RTAs? Similar to rogue RTAs ruining the business for the Traditional Travel Agents?

As I think about this, look at EAB and all of his incessant babbling--he was not selling travel but was high on the perks. Look at the guy that may have invented Dr. Seligman--perks. Look at the director who gave me a "bad" presentation. All in the name of recruitment. All for the downline. It seems that in order to keep the recruit pipeline open, promises are made regardless if they can be kept!

So, YTB RTAs, is this a divisive issue? Are the Rep tactics hurting your business and reputation as you try to make a buck? Is YTB corporate condoning this and allowing non-qualified people to obtain the credentials? Could this be a reason for the loss of IATAN accreditation? The ability to sell Royal Caribbean?

There ARE many in YTB that are serious about selling travel. It seem to me that the pimping out of credentials--even the internal ones would actually hurt an RTA business.

Inquiring minds want to know!

More BS From Bob Seligman (no PhD)

I re-listened to the audio file and took a few more notes, and (surprise) discovered a few more discrepancies. I am sure if you listen to the 45 minutes you can find even more.

• Seligman claims he is a guest lecturer at Harvard, Wharton, and Stanford. My Harvard source is unable to locate the name anywhere associated with Harvard. A search of Wharton's site turned up nothing as did Stanford. Hmmm.
• Seligman said that he was knowledgeable of business practices because he is "a financial columnist" and "a published author". Well, guess what? Not much is coming up on that front either.
  
• Seligman also referenced General Electric and "his friend" "Jack Walsh". Well if he is referring to the former CEO of GE, it is Jack Welch. Now maybe his friend "Jack Walsh" is the guy that sweeps the floors in Fairfield.
• Seligman stated that Harvard Business School said YTB was "the business opportunity of a lifetime." Again, no real substantiation there. Looking at their website, there are few references to "MLM" or "Network Marketing" and certainly none to YTB. I have also been told (unsubstantiated) that Harvard Business School has derided MLM as an invalid business practice.
  
• Seligman says that he suspects that Coach, Scott and Kim are "smarter" than Barry Diller and have "outsmarted" him in travel because Barry Diller spent $5B for Expedia, but YTB offers the "same thing" for $500. He claims that YTB is "better" and "provably better" than Expedia. Uhm, OK. As my daughter might say, "whatever."
  
• Seligman claims that the average adult in the US spends an average of 6.5 hours watching television and 2 hours a day on the computer outside of work. His pitch was to cut an hour off of the television and concentrate on YTB and you can make 100X your investment. That "statistic" although he says is provable, this seems very excessive to me.
• Seligman, in his closing statement, said that Bill Gates is worth $50 Billion dollars and explains that it is "9 zeros folks". Uhm, maybe it was just a mispeak, but it is 10 zeros. One would think that the closing point in a presentation by a financial guru would not make that error!

A lot of people will say so what? Well, I think this is an issue. Regardless of who originated the Doctor, his credentials cannot be substantiated at all. These same credentials are being used by numerous Reps as they try to recruit people into the YTB program. Without knowing that the credentials are bogus, people will take him at face value. Anyone who may make a decision to join YTB based on this is being duped into the program. I am not sure, but if an RTA wanted to press the issue, I would bet some Rep might be on the look for this. What is more reprehensible is that YTB, by their silence, is endorsing this type of "marketing". GO ahead and tell them anything you like as long as you sign them up.

Just an interesting aside, I have said that I believe that Seligman is really a fabrication by a few Directors of YTB to enhance the recruiting efforts. After all, one would think a "published author" and "financial columnist" would have some information publicly available. The audio file is hosted at a domain called seligmanaudio.com. According to WHOIS, the owner is a company called Domains By Proxy which is a company that hides the identity of the true owner of a domain. Without a subpoena or a formal investigation, the actual owner remains unknown. Odd? Perhaps. The domain was just registered a few days ago.

A Blog Note

New feature! Down at the bottom of each post is a Digg icon. Looks like the pale yellow icon in the graphic for this post. Digg aggregates good blog and news posts worldwide and ranks them, so if you like a post you read, please Digg It by clicking on the icon! It looks like this:





Also, I discovered a cool little widget. Look at the map on the right and you actually see how many people are reading the blog and their approximate location in real time!

Very cool.

More "Old News" The Final Chapter

After two recent posts, it has been said (ad nauseum) that YTB has resolved the issued in Lindauer's letter. As it pertains to YTB (not their other ventures), there were four major points which were not in compliance with "State and Federal Marketing Laws and Regulations". While one of the issues may have been addressed after the fact, the rest remain unresolved to my knowldge. The following is an excerpt from Ted Lindauer's letter of January 3, 2008 which was sent via UPS Overnight to Scott Tomer and the Board of Directors of YTB International, Inc.

A. Compliance with State and, Federal Marketing Laws and Requlations. (The matters described in this Section A have been learned from the public websites of the various YTB International, Inc. subsidiaries in use on December 15, 2007).

1. YTB Reps are required to purchase CRTA Training in order to participate in multilevel commissions in several sales programs including, but not limited to, commissions on the sale of travel, commissions in the Car Referral Program and commissions on the purchase of travel by members and affiliates of non-profit RTAs. These required purchases in each instance violate the civil and criminal provisions of multiple states' antipyramid laws and lottery laws, constitute deceptive trade practices under Section 5 of the Federal Trade Commission Act, violate the U. S. Postal Service Lottery regulations and constitute the unlawful offer and sale of unregistered investment securities under state and federal securities laws.

Travelpro has provided a document that says the Reps are not required to pay for the travel agent training to receive the payment in this program. That is true, but the document was produced after receipt of this letter. The problem may indeed be resolved, but it was solved out of reaction. Travelpro has also said it was resolved before this blog posted about the Lindauer letter in mid January. That has no bearing.

2. The description of the Car Referral Program is such as to require that the participating RTAs and YTB Travel Network of Illinois, Inc. register as automobile salespersons and/or automobile dealers in various states. No such registrations have been made.

The documentation provided by Travelpro and anyone else simply does not address this. I do know for a fact that in Maryland and in Pennsylvania, one must have an individual license to sell cars. Has YTB acquired the proper licenses for their 140,000 RTAs that are offering cars for sale on their sites?

3. The Two Fly Free program offered to the public by RTAs of YTB Travel Network of Illinois, Inc. constitutes the offer and sale of Travel Club Memberships and/or Club Memberships and/or Discount Buying Service Organization Memberships requiring the obtaining of licenses and the posting of surety bonds in various states prior to their offer and sale. These licenses have not been obtained to date in all of the states which require such licenses.

This program is still being heavily promoted on all RTA sites. Have the required bonds and licenses been acquired for the 140,000 RTAs that are promoting this product?

4. The disclosures provided in connection with the promotion of the RTA medical/dental/prescription program are insufficient and result in YTB Travel Network of Illinois, Inc being an unlicensed insurance provider (PPO) in various states. In addition, any direct or indirect monetary benefit received by a YTB company or anyone affiliated therewith in connection with the purchase of these plans by RTAs must be adequately disclosed. Further, California law prohibits the offer and sale of the prescription plan until the plan provider has registered with the appropriate state agency.

I am not sure how many RTAs have opted to purchase this insurance, but I wonder if the issues have been resolved. Have the disclosures been corrected? Have the disclosures been made? Has YTB applied, been approved and complied with the California regulations?

YTB may have addressed one of these four issues and everyone on the YTB front seems content with that. AS Mark Ewing has asked, why is there not even some minimal questioning. If you are serious about your business, Your Travel Biz, why are you not concerned?

More "Old News" Part 2

Well, it is Saturday and I suspect that the RTAs and Reps are continuing to contradict themselves about Ted Lindauer. All of them have the inside track at YTB. Some insist he is working at YTB, others have spotted him in Memphis getting off a plane with Coach for a Founder's Tour event, others have seen him working in his office at the Red Carpet Day, and others say he is not working there. The guy seems to be the Elvis of YTB. But I have sent Ted an email (so far unanswered) and I did make two calls to YTB headquarters yesterday asking for him only to be directed to a generic voicemail one time, and being told that he does not work there any longer. So, maybe the folks that saw him at the various events saw an apparition, or maybe he was just picking up some personal stuff. The reality is that he is no longer employed there, no matter the insinuation on his site.

In the meantime as the YTBers were debating the status of Ted, Mark Ewing posted an outstanding comment on yesterday's blog entry. I think it is important to bring this out of the comment section and offer his opinion for everyone to see--YTB folks, suppliers, interested parties, traditional travel agents, and even any regulators that may be reading.

Blind faith and ignorance are just that: Blind and ignorant. And... Ignorance is not bliss.

The fact is, that this information came from one of YTB's own legal staff. A major insider.

It can be assumed that his legal understanding of YTB is far greater than the people on this blog.

It can also be assumed that he would not have posted the demand for resolutions letter without a lot of thought.

Regardless of his intentions, my intentions... or anyone else's intentions.... the letter states clearly that YTB is in violation of civil and criminal laws.

The direct quote is "These required purchases in each instance violate the civil and criminal provisions of multiple states' anti-pyramid laws and lottery laws, constitute deceptive trade practices under Section 5 of the Federal Trade Commission Act, violate the U.S. Postal Service Lottery regulations and constitute the unlawful offer and sale of unregistered investment securities under state and federal securities laws."

Regardless of your personal beliefs, this is a very serious statement.

Remember, this is coming from an MLM attorney, who was direct council for YTB, who states that he is a very close friend to Coach Tomer, and is a shareholder in YTB International, Inc.. This is not some misguided RTA, or someone that is out to get YTB. The letter is addressed directly to the board of directors, with an immediate demand for resolution.

What everyone here needs to be concerned with, is what has happened to these issues. Why did Mr.. Lindauer post this message to the general public. Why did he take it down so fast, without clarification on the demand for resolutions? Why hasn't YTB given the proper S.E.C. required public notice of these resolutions? What is really going on here?!

Just because Ted took down his letter, does not mean that the problems just went away. GET REAL FOLKS! If anything, this raises a MAJOR RED FLAG with YTB, YTB Leadership, and YTB's legality. WHAT IS GOING ON HERE?!

As an RTA, a YTB rep, an outsider, an insider.... You should be demanding to know what is happening with the resolutions disclosed in this document!

The fact is, that this effects current and past RTA's a lot more than it effects non ytb'ers.

Before you spend a lot of time and energy trying to put a positive spin on this.... or trying to argue this issue away.... Stop and ask yourself who and why you are trying to protect here? Aren't YOU more important than YTB?!

As an RTA, aren't you worried about yourself, and your investment in your business?

Who comes first? You....or YTB?! If you are going to represent YTB, don't you have a right and an obligation to make sure that YTB is operating legally? Your pride and loyalty in YTB should be backed by a legal business. You should be demanding that YTB takes every measure and precaution to insure that it is legal!

You shouldn't have to be trying to put a positive spin on this.

You shouldn't have to be arguing this.

That is not part of your job description. It is unfair of YTB to put this burden on you.

You paid your money on the premise that you were buying a legal business. You deserve answers.

So, for all of you RTA's on this blog, you can continue to blindly defend and protect your company.... but that is not going to change anything. It is not going to protect you from the issues that have been disclosed. Ignorance is not bliss. And covering up a crime is in itself a crime.

The fact is, that each and every you should all be angry and upset with this information. You should be demanding clarification on all these issues, as you have invested your time, money, and energy into this business. You have a right to know the facts! Make them answer to these issues...not you. You shouldn't have to feel that you need to make it right. THEY SHOULD MAKE IT RIGHT!

You, as RTA's are ignorant and stupid if you turn a blind eye to this.

It should really piss you off that this issue has just been swept under the rug. You should demand that YTB's board of directors should account for each and every issue brought forth in this demand for resolution letter. THIS IS VERY SERIOUS. Your businesses are on the line here!

This is not about RTA's vs.. Traditional Travel Agents. This is about YTB's legality.

You should demand that YTB fixes all of these issues. to insure that your business is going to be strong in the future. Doesn't that make sense? (Unfortunately, logic may be to much to ask for here on this blog.)

I really question the ethics of someone that continues to promote and sell a business after information like this has surfaced concerning the legality of the business.

If I were in YTB (which I am not) I would make damn sure that these issues were corrected to the satisfaction of the law, before I would involve anyone else in the business. I would be worried about my risk of being sued, or worst, charged with a crime. I would be concerned for the well being of others...and my own well being.

Remember, ignorance is not bliss.

WARNING: As an RTA, you might want to seek out legal council before you continue to promote and sell YTB. You may want to find out the legal implications selling a business with the disclosed issues. You need to find out what are your legal responsibilities here. Can you be held personally accountable and responsible for these issues when you sell this to someone else? Can you personally be sued or charged with a crime? Are you putting your future, and your family's future in harms way?

Like I said, like it or not, this is very serious.

More "Old News"

I know this is "old news" so please save the bandwidth and just don't say it! As many know, YTB's attorney was fired and he posted a very disturbing letter on his website. Less than two weeks later, the letter was removed and it seemed that he had made amends with YTB. But the whole thing does not sit right with me. Ted Lindauer and I exchanged emails and in one he said, "Hello John. A great blog." So I wonder what has changed?

A licensed attorney does not make those types of allegations if they were false--calling YTB's bluff in a sense. I just do not see how YTB could have corrected them all in a matter of weeks--particularly when they were dealing with several programs that YTB is currently promoting. Well, I am not the only one that noticed. Mark Ewing has posted this commentary on YouTube and I feel that Mark makes some very strong points. The biggest one is that every Rep and RTA ought to be asking questions of the leaders--not blindly following them. And the ironic thing is that Mark is IN network marketing so there is not really an agenda there.

A Wake Up Call For Suppliers & Everyone Else

Yesterday, a column appeared on MSNBC about a group of people that were screwed out of their vacation--sort of.

Now, I think the customer should share some blame for not realizing a mistake, but regardless, my contention is that it likely would not have happened had there been a properly trained agent involved in the process. While this fiasco involved Joystar, it could very well have happened to any of the MLM agencies out there that simply recruit and cast untrained, unprofessional card carrying "agents" to handle the travel of customers.

The gist of the story is that a group of 73 booked with a new untrained "agent" associated with Joystar. The quoted price was about half what it was supposed to be, likely as a result of rebating and lack of training. Rather than address the issue, the agent quit; after all there was no real financial investment in the business. This left the booking in the lap of Joystar that ultimately rebated its commission to help ease the pain for the customer. Like the group that got the shaft from another untrained agent in Baltimore, Joystar was probably not legally responsible, but they did step up to the plate and help out a little. Shortly after this was disclosed to Celebrity, Joystar lost their ability to sell the RCI brands.

I think we all can see the problem here and the end result is not pretty:

• Joystar lost their ability to book all Royal Caribbean products.
• The customer has a bargain of a cruise but a very bad taste in mouth for agents.
• The agent is no longer in the business and apparently is unrepentant.
• Joystar looks bad for "hiring" the agent in the first place and then not "completely" owning the problem.
• Celebrity Cruise Lines look bad as they did not contribute to the solution other than allowing Joystar to rebate. But potential cruisers now wonder how serious Celebrity is about retaining qualified people to represent their product.
• Travel agencies in general look bad because of another bad egg.

This is a perfect example of why the "travel agency in a box" is a bad, bad idea. There is a lot more to selling travel than having a website, some company created credentials, and an easily purchased CLIA card. At some point, this industry needs to recognize and authorize professionals to represent them and eliminate the hobbyists. When a company boasts that they enrolled tens or hundreds of thousands of "agents" in a year, it should raise a red flag.

Someone showed me a government report that said in 2006, there were 102,000 travel agents. One company alone has bragged that they have created nearly 100,000 "agents" in 2007 alone! Hello? Is anyone home? How can 100,000 agents in a year begin to match the experience and professionalism of people who have bee in the business for a lot longer. How can they concentrate on selling travel and learning travel when they are pressured to recruit more people into the program? What impression are they leaving with clients? What is the impression left behind about the cruise line or tour operator, car rental agency, hotel, resort, or airline?

While the MLM business practice is shady at best, a substantial part of this blame rests squarely on the shoulders of the suppliers and the organizations that continually dole out credential cards like they are dealing a hand of 7 Card Stud. To all the vendors and to CLIA....when will you realize that prostituting out your product is probably NOT the best way to go?

A Former RTA Speaks

I received this email from a former RTA yesterday. He requested that I not include his name, but his story, I imagine, is very typical.

The reason I'm writing is to tell you that you are 100% about this company. I was once a YTB RTA and I can tell you that from my experience and my perspective, the guys running this company are a bunch of people that are interested in whatever enterprise they can engage in to make a buck...never mind the legality or morality of it. (See YTB Cars, etc.) Ultimately, I guage YTB to be the lastest in a long line of MLM's that actually got off the ground enough to make waves and a little money, nearly all of which is cocentrated at top.

The real shame of this company is that, like all MLM's (I had not been involved in one before, but imagine they are all like this) is that they coach unsuspecting saps on how to rip off friends and family. They put fast talkers in front of a room full of poor dopes that are just looking for something, anything to get them out of their rut. People that have never been in business for themselves, people that have never sold or recruited people. Basically, the complete opposite of people that should be attracted to YTB were it a legitimate enterprise. These unsuspecting people are told just enough to be dangerous and given a bunch of unsubstantiated statistics and "real life" examples and told to get after it. The sky is the limit!

The thing that really makes me dismiss the entire thing is that fact that their model could actually be a real business. They just choose not to run it that way, because it would be too much like real work requiring real business acumen and real results...something I imagine the leadship can only produce in the vacuum that is MLM. The concept is legit and their websites are nice and functional. They could have set this up to frachise the system to people "in the business" or aspiring Travel Agents...that would run it like a business, not like a part time job. However, I imagine a conscious decision was made at some point that it would be easier to con non-business people by the thousand than "sell" business minded individual by the dozen. It's unfortunate and dishonest. YTB is succesful because it prays on all of the personality traits that "get rich quick" types have. Vanity, Income potential, percieved importance, no need to extensive knowledge or training.... the list goes on. These are the same traits exhibited by the principles. In fact I once remarked, "well, if those guys can do it, then anyone can"

MLM Riding A Downward Trend?

As the MLM crowd will crow about 80 million Americans booking travel in the Internet, another authority seems to have spoken.

I wonder if there is a correlation between the growth of the online MLM website renters and the decline of satisfaction with purchasing travel online? Ya think?

Wonder why the MLM crowd would jump on a bandwagon that is in a two year downslide? Maybe it is NOT about travel after all. From Travel Trade:

Consumer satisfaction with major online travel players has dipped to an all-time low while satisfaction with the e-commerce sector overall has risen, according to the American Customer Satisfaction Index (ACSI).

Blimey--Even The Brits Are Onto The Scam

Well it appears that YTB is #2 in the UK and they have not even launched there! But I am pretty sure this is, yet another list they had not intended to top.

From a February 3, 2008 article in the Sunday Times the headline reads: The 13 best travel scams: From Floridian fraudsters to fake Peruvian police, these are the scoundrels out to scam you.

This internet scam, known as “card milling”, is on the increase. Greedy travellers are told that by spending up to £260 on a travel-agent ID card, they will become eligible for industry-insider rates, meaning huge discounts on flights, hotels and, most commonly, cruises.

You cough up the credit-card details, your ID card arrives – and the first time you slap it down on a reception desk, you’re laughed out of the lobby.

The problem is becoming so widespread that Royal Caribbean Cruises has just announced a crackdown on card-mill chumps – if you flash one of these cards, not only will you not get a discount, you won’t be allowed to book at full rate.

Now what "card-mill chump" could they be talking about that was cracked down upon by Royal Caribbean?

There is something to be said about a reputation preceding you.

Another Opinion On MLM

I am always glad when I realize that it is not just me. I discovered this very recent analysis of MLM over the weekend. Rather than link to it, I am including the entire text. as I feel it important to read. This piece has touched on most of the points I have been talking about for months and it appears that the author and I are in agreement. But I am sure all of the anonymous posters from the MLM side will say, "oh, but that's not us."

Multilevel Marketing: The Fundamental Truth

Amauri DaRocha / February, 2007

What is the fundamental difference between multilevel marketing and traditional business models?

The truth is that traditional business models and multilevel marketing share a lot in common. However, there is one fundamental difference and it is the root cause of controversy surrounding multilevel marketing companies.

The most widely held assumption about the difference is that multilevel marketing companies encourage their sales representatives to recruit additional sales representatives (downline) and are paid commissions from their downline. Thus, as recruits get new members to join their downline, and their downline recruits get their own downline, the levels continues to grow and, a pyramid structure is formed.

However, recruiting is not, in and of itself, the fundamental difference. In fact, most sales organizations have managers that profit from the efforts of their sales team. And these managers are also responsible for recruiting sales agents that will help them increase their profits. And those managers have managers above them that are paid based on their performance too. In fact, most companies are based on a pyramid structure, that rewards individuals based on the performance of those people recruited, from the CEO on down. So how can getting paid for recruiting be the fundamental difference?

All companies that grow must recruit. However, most companies recruit upward, where as multilevel marketing recruits outward. Let us use a hypothetical example to help illustrate the point. In this example, we have Mark who just graduated from high school and started working at Best Buy as a customer service representative. If Best Buy used the multilevel marketing model, than Mark would be encouraged to start recruiting his downline (other customer service reps) before he ever finished his paperwork with HR. Even though Mark is not a proven salesmen, a proven recruiter, or a proven manager — three skills sets Mark must possess in order to be successful.

Now, in the real world, if Mark was hired at Best Buy, he would have to prove himself as a good customer service rep and leader, before he would ever be promoted into a management position. Only than would he be responsible for hiring new customer service reps. Why? Because traditional companies absorb a significant part of the cost to develop their employees into assets. This forces them to be efficient in their recruiting process, because they can not afford to hire millions of deadbeats in order to find one diamond in the rough.

Multilevel marketing companies, on the other hand, do not worry about having an efficient recruiting process, because they are not absorbing the cost for developing employees into assets. That burden is placed on the employee (sales representative), and often times to the benefit of the company. Millions of deadbeats are recruited who they know do not have the necessary skill set to be successful. Why? Because they are structured to generate revenues from the recruiting process (recruiting for recruiting’s sake). Thus, they recruit outwards — trying to suck in as many warm bodies as possible, with the expectation that only a few will actually stick.

Here’s why this model naturally creates controversy.

Profiting From the Misfortune of Others

“And that's the trouble with multilevel marketing. You make money on your ability to use people. Once you sign on, you hardly have a choice. Not that you want anyone to fail, but you can't hit the jackpot unless you build the network, and that means signing up as many recruits as possible — most of whom have no chance of making the grade.

http://www.inc.com/magazine/19980601/941_pagen_2.html

Many multilevel marketing companies are perceived as being leaches, because they are structured to profit on the misfortune of others. Not that they want people to fail, but it’s inevitable. Let’s face it; the great majority of people in the world are not cutout to be good salesmen. Just like the millions of people who tryout for American Idol, who will never make it because they just can’t sing worth a lick. Being a good salesmen is hard — it’s not for the faint of heart. Which is why the great majority of people are destined to fail in multilevel marketing. And while the companies know this will happen, they continue to churn-and-burn through new recruits in order to maintain their growth.

Additional controversy surrounds those companies who also profit by selling their representatives motivational tapes, books, and seminars. They use the rationale that anyone can be successful if they just know how. And anyone can know how, if they just pay to learn. This is a false promise, because most people will never be good salesmen, no matter how much training they receive. It is nothing more than another way for the company to profit from the misfortunes of their recruits.

Bad Customer Service

Imagine going into Starbucks to get your morning cappuccino. But instead of getting the very knowledgeable and friendly barista who greets you every morning, you get an ex-convict with the customer service skills of a chimpanzee. After making a complete mess of your cappuccino you ask to speak with his supervisor. When the store manager comes out, you discover the manager has only been working at Starbucks for a couple of weeks and hasn’t a clue on how to run the register, offer you a comp card, or even how to fire the chimpanzee he just hired last night. Needless to say, if Starbucks hired and promoted as freely as multilevel marketing companies do, they would have a severe reputation problem when it comes to customer service.

Unfortunately for consumers, most products and services being sold through multilevel marketing are significantly more complicated than coffee. Now imagine a 70 year old salesmen who has never turned on a computer trying to sell you the latest Dell notebook. How effective will he been in satisfying your needs as a consumer? How many Pre-Paid Legal sales reps have more than a basic knowledge of the legal system? How many Herbalife sales reps have backgrounds in nutrition?

Misleading Customers

When someone lacks the necessary knowledge to sell a product or business opportunity, they will naturally fill in the holes when put on the spot with something that sounds good, but is often unrealistic or simply not true. It’s hard to sell something with “I don’t know.” But that is the unfortunate reality most sales representatives face in multilevel marketing.

And the problem is not only caused by ignorance related to the product or business opportunity. Most traditional companies — especially post Sarbanes-Oxley — ensure their employees are being trained on ethical behavior. While this does not eliminate unethical behavior, it does help prevent it. In multilevel marketing companies, ethical behavior goes unchecked. So even when people have knowledge about the product or business opportunity, they do not have the ethical integrity to stop themselves from misleading consumers.

Misleading Recruits

Would you accept a job offer from a company if you knew you didn’t have the skills necessary to be successful, and you would likely be fired within a few months? Most people wouldn’t. But that’s the reality of multilevel marketing. And when coupled with the need to churn-and-burn through mass numbers of new recruits, multilevel marketing companies are left with few options other than to mislead potential recruits into believing they will be successful. How do they do it?

Most people are not just money motivated, but are money ‘desperate’d — and as such, they can be easy targets for people selling the “dream”. Who wouldn’t want to make more money while working less? It’s a completely legitimate pursuit. However, multilevel marketing opportunities will rarely “make-good” on this promise. No matter how hard you try to change the laws of economics, it’s just not as easy as they want you to believe. And if you are having problems seeing this, ask them what percentage of representatives are successful. The numbers will not lie.

In fact, the only way multilevel marketing companies can make you believe you’ll be successful, is to keep you focused on the dream and not the facts. They’ll bring in a highly charismatic speaker, and just like your church minister, he’ll have you laughing, clapping your hands, and stomping your feet. But at the end of this highly entertaining and motivating presentation, little will have been said about specific details on how to make it work. They oversell the dream and undersell the business plan. Next, they’ll bring up a bunch of people to give testimonials on how successful they’ve been. Why? Because, testimonials are an easy substitute for real statistical facts. Testimonial is only the truth of one person, whereas statistics are the truth of everyone. If I bring in 10 people to tell you how much they love a product, you’ll start to believe that product is the best thing ever. But when I tell you those are the only 10 people out of 100 that love the product, you’ll know that product is worthless. Testimonials are the equivalent to fools gold in multilevel marketing.

Paying a High Social Price

An old proverb says to avoid mixing business with pleasure. Why? Because personal relationships (friends and family) are typically not built to endure the trials and tribulations of the business world. This is never more true than when you are an unqualified salesmen trying to sell your friends and family the dream. They will either resent you for trying to involve them in a scam, or they will blindly follow you into an opportunity that is destined to fail. And at the end of the day, you may have paid the price for your failures by burning bridges.

Conclusion

Multilevel marketing is a legitimate and legal business model. It has been proven successful by a number of companies in a variety of industries. And, like any business model, those people who are qualified, passionate, and determined will be successful. However, the great majority of people are not. The question you must ask yourself is, “are you one of those people?” Or are you just so infatuated with the dream, that you’ll allow yourself to believe anything?

This article may be used in it’s entirety as website content as long as it includes the following reference to http://www.mlm-alert.com

An Olympic Minute

It seems that my posts might be getting back to YTB. On February 6th, I discussed (in parody) the fact that the YTB packages for the Olympics must not be selling since the number of packages sols reflected "9" consistently on all of the packages. Somehow, I did not feel it was a coincidence. Well, it seems YTB has taken action.

Not the kind of action that would make sales, it appears that on the website, all the packages now have put in the ">=9" in that field. I guess that will allow them to claim they have sold some ubiquitous number greater than 9. (Edit: the direct URL does not work. Makes it difficult to sell. Go to the link now--a RTA site and in the bottom left corner is a photo/link to the packages)

And to be honest, it makes more sense to let the consumer know how many spots are LEFT!

Yeah, I guess those packages are just flying out the door!

Network (MLM) Marketing And Cults? A Relationship?

Over the past six months or so the term "kool-aid" has been tossed around a bunch. It is a reference to the Jim Jones and The People's Temple in Guyana back in 1978. Many comments on here have indicated that MLM is very "cult" like.

I found a definition of "cult" that appears in several places and seems fairly consistent. What do you think?

Three ideas seem essential to the concept of a cult. One is thinking in terms of us versus them with total alienation from "them." The second is the intense, though often subtle, indoctrination techniques used to recruit and hold members. The third is the charismatic cult leader. Cultism usually involves some sort of belief that outside the cult all is evil and threatening; inside the cult is the special path to salvation through the cult leader and his teachings. The indoctrination techniques include

1) Subjection to stress and fatigue
2) Social disruption, isolation and pressure
3) Self criticism and humiliation
4) Fear, anxiety, and paranoia
5) Control of information
6) Escalating commitment
7) Use of auto-hypnosis to induce "peak" experiences

Of course, there is a positive side to cults. One gets love, a sense of belonging, of fulfilling a special purpose, of being protected, of being free from the evils of the world, of being on the path to eternal salvation, of having power. If the cult did not satisfy needs that life outside the cult failed to satisfy, cults would probably not exist

** I think it is funny that a film about cults (graphic) is represented by a pyramid!

Oh, One More Thing...

Over on the Travel Weekly forums a few weeks ago, a disgruntled former RTA brought up an interesting point about their former YTB website. Now I fully realize that this RTA is the only one in existence and is the same one interviewed in Texas and referred to in the LA Times story and the Chicago Tribune story, but regardless, it is an interesting question.*

It was mentioned that the recruiting websites (REPS) are left up indefinitely--even though the rep may be inactive or have quit--because YTB keeps them on the books forever--sort of like Maryland Gubernatorial election.

It also seems that the RTA sites are also left up indefinitely even though the RTA may have notified YTB that they have quit.

I understand the reasoning--there may be marketing material out there directing people to those sites and if the site is not there--poof there goes the lead or possible sale.

But what happens when some consumer digs out the flyer that was left on a car at the mall, or that business card that was picked up at the pizza joint, or even a friend that may not be aware that the RTA has quit?

Do they blindly book assuming it is benefiting their friend? And what happens to the commission earned? Is it a perk for HQ? Is it shared with the old upline?

YTB has mentioned lifetime income, does this commission ultimately go to the RTA even though they may no longer be in the program?

I know when an employee leaves, we do look at the bookings in house and make a determination--usually they are paid, but my gut tells me this may not be the case with MLM.

MLM, Travel &, Business Opportunities Rank High On List!

The FTC released their 2007 Top Twenty List and wow looks like these MLM travel companies have cleaned up. With positions 9, 13, and 19! Congratulations you broke the top ten! And since some of the MLM companies are striving to be number 1 on all the lists, I expect to see some substantial movement in 2008!

Take a bow and please keep your acceptance speeches to under 60 seconds, with YTB alone, the thank yous could take 303,000 minutes!

1 Identity Theft
2 Shop-at-Home/Catalog Sales
3 Internet Services
4 Foreign Money Offers
5 Prizes/Sweepstakes and Lotteries
6 Computer Equipment and Software
7 Internet Auctions
8 Health Care Claims
9 Travel, Vacations, and Timeshares
10 Advance-Fee Loans and Credit Protection/Repair
11 Investments
12 Magazines and Buyers Clubs **
13 Business Opportunities and Work-at-Home Plans
14 Real Estate (Not Timeshares)
15 Office Supplies and Services
16 Telephone Services
17 Employ. Agencies/Job Counsel/Overseas Work
18 Debt Management/Credit Counseling
19 Multi-Level Mktg./Pyramids/Chain Letters
20 Charitable Solicitations

**And with the Buy 2 Fly Free Program and the Magazine program, YTB seems to have landed an unprecedented 4th spot on the list--#12

Here TraVerus...Come Here Boy!

Boy, just reading some of the posts over on Scam.com and I can see that YTB does not have a lock on ignorance. They even may be losing that race to TraVerus.

Talk about cocky and ignorant all rolled up into one package--I wish they woudl blabber on incessantly like YTB does and then we could take them to task a little easier and relieve a little pressure!

Here TraVerus...come here boy...

To Blindly Go Where Instructed

Let's talk about being blind to reality for a minute. To those in the MLM game, are you getting all the commission your company says you are entitled to receive? Do you know what I am talking about?

I am talking about overrides. They are a staple of profitability for most agencies. My question is does your company have any override agreements with the vendors? I would imagine so since the volume they do as a "host" is significant for sure.

These revenues are not discussed in two (TraverUs and YTB) agreements I have seen, and with that "ommission", I would think that the "agents" are indeed entitled. My guess is that they are NOT distributed at all and just pocketed by the company. A question that needs to be asked of your "host" is why are your overrides not being passed along to the people that earned them? In a traditional host or franchise model, the host or franchise receives the override and then pays the individual agency a percentage according to their agreement. I know one franchise might retain 30% of the override and pass the rest along. But make no mistake, these overrides are significant and they cover all travel types--air, car, hotel, cruise, tour, and yes even non-commissionable air bookings from the GDS.*

I did an informal survey of 142 professional travel agents on overrides and this is what I found out:

• 47% of them receive an override from one or more airline
• 58% of them receive an override on one or more cruise lines
• 40% of them receive an override on one or more tour operators
• 58% of them received overrides between 4% and 8%
• 12% of them reported that their consortium/franchise/host does not share the override

So, let's look at this from a YTB angle. Let's also look at this as if NCFs did not exist and the entire cruise fare is commissionable.

If YTB can sell $150M of Carnival Cruise Lines, they would receive 16% commission on that or $24M. Of that, 60% is doled out to the RTAs or $14.4M.

I am confident that an organization that can sell $150M for Carnival would be the beneficiary of a substantial override. I might venture to say it is as high as 10%, but let's call it 8% to keep within the majority of our survey. That means that YTB is receiving an additional $12M in commission for your hard work. At 60% the RTA should be receiving $7.2M.

Now at 150,000 RTAs, that is only $48 a year additional, but we already know that close to 95% of the RTAs do not sell. So if we take that $7.2M and divide it into the 14K RTAs that DO sell, it seems that that is an additional $515 each! This amounts to almost what the average RTA earns in travel commissions in a year--on one vendor!

So--are you guys getting it? Maybe someone ought to ask that questions because it is NOT addressed in the agreements and it technically IS commission and it is as a result of your efforts.

But on second thought..nah. YTB would never pull the wool over your eyes!

*When I mention air, I am talking about an airline paying an override for market share. All major US carriers and most International ones offer back end overrides ranging from 5% to 10%. Then I talk about non-commissionable airline sales, I am talking GDS segment fees and overrides. When an airline ticket is booked, whoever does the booking will earn somewhere between .25 and $1.00. If they have enough bookings in a period, the bonuses can be significant. I am wondering with the Travelocity agreement if they (Travelocity) are sharing those revenues with YTB since there are so many air bookings.

Inside a RTA's Brain

The following was an RTA's initial post to a travel agent forum. No one provoked, prodded or otherwise instigated the poster; it just started this way without too much benefit of knowing anything more than what was told in a recruitment presentation.

Brick and Mortar Agencies will be like dinasours soon enough. The INTERNET will WIN, more and more are booking on the Internet each and every day. Why don't you pick on Expedia, Priceline, Travelocity or even the Airlines who will book travel packages, they are taking a hugh amount of business away from the "Brick and Mortar Agencies".....MLM's whether its travel or something else they work and we work and we make money. Get a life Brick & Mortar Agencies, stop your crying and complaining, this is Business and Travel is Big MONEY and you all know it to be true. It's a big Pie and I want a piece, if you have a book of clients good for you, so do I.

(PS. I have done plenty of Traveling over the last 23 years, to many places, so yes I am an expert, I always travel first Class and at the best locations. So I have plenty of knowledge and can share that personal knowledge with those who want the information. its not ROCKET SCIENCE.... Its a VACATION!!!!).

What I find very interesting is that the RTA feels that the traditional agents feel threatened by competition. That simply is not true. We feel threatened because of her last paragraph.

The poster has traveled. Therefore he or she is a travel professional.

The poster could not be further from the truth and this is exactly why we say that MLM is bad for the industry. I have said it before, but it bears repeating--if I sell a watch on eBay, I am not a jeweler.

This poster is so ill prepared to assist his or her "clients" when something goes wrong. I have also heard that the support offered by YTB to their own agents is lacking as well, so how can a client get any type of reliable professional service from a situation such as this?

This further demonstrates ignorance of the industry--which seems to be the norm. One director (in comments to the Crystal/Carnival post) seemed dumbfounded that commission on a cruise could exceed $1,000. He still doubts it I believe! I venture to say that most RTAs are unaware that Carnival pays more than $100 commission.

But What About China?

But what is happening with those China packages? Almost a week ago there was a parody of a press release. But it seriously was asking what the heck was happening with those China and Olympic packages. Seems like they are not flying off the shelves as expected! Any updates? I wonder how the YTB/Olympic Store is doing? I have not heard about any run on the Cafe Press stuff, but maybe that is what the big USA Today news might be about!

Mountains From Molehills

Over the weekend, someone sent me an email asking why I continually made mountains from molehills when a YTB RTA or Rep had made a mistake. I pondered that for a bit and realized that he is probably right--I am making mountains from molehills; but molehills can be just as dangerous.

A recent post discussed the way an RTA handled a transaction. She collected cash from the client, paid for the travel with her credit card, and circumvented the system to relieve YTB from their share of the commission due. The person who sent me the email indicated that it was ONE person that made ONE mistake. I don't think so. It was ONE person that was caught. I am not a professor of statistics or probability (but I do have a call into Dr. Seligman to help me) but what are the odds of me finding the ONE RTA that is doing this out of 140,000?

What are the odds of me finding the ONE Rep that is using a fictitious "doctor" to lend credence to the program?

What are the odds of me finding the ONE RTA that is unaware of the difference between sales and commission?

What are the odds of me finding that ONE recruiting meeting that was not up to YTB standards?

What are the odds of me hitting the power ball on Friday night?

The answer in all of these is "not too good". While many would like to believe that these are isolated instances, why is it that I am able to come across them so easily? The issue is not with ONE rogue RTA or Rep. The issue is with YTB enforcing it's own policies and programs and demanding compliance.

I believe YTB selectively enforces things. If it is good for recruiting (where the money is), is YTB willing to look the other way until it causes a problem like mlmbuzz.com. YouTube videos were all the rage until it was beginning to bring unwanted attention and then they were squashed.

As someone pointed out, YTB is perfectly able to see bookings that are entered under their number on the vendor side, but are not reported on the sale side. Why are these sales not questioned? I suggest one reason might be to actually allow for "wiggle room" in reporting sales numbers. Maybe it is not too bad to have a RTA claim that they make X dollars a year selling travel? I don't know.

I do know that any enforcement is sporadic at best and it appears that the higher up in the pyramid you are, the more immune you are to any ramifications.

So what is it? Is it just me..the luckiest guy in the world to find ten or twelve scofflaws? Or is there a problem?

Cease And Desist

Just developing...it is rumored that TraverUs has been issued a Cease and Desist Order by the State of California. Apparently it is in regard to their use of the CST number belonging to Travelocity.

Something Really Stinks Here!

In their daily (it seems) press release on February 5, 2008, YTB once again clouded any real numbers that might be released to the public.

(Please see correction at bottom)

YTB International, Inc. (Pink Sheets: YTBLA) ("YTB" or the "Company"), a leading international provider of Internet-based travel websites and home-based independent representatives, today announced that it ended 2007 with more than 130,000 RTAs, compared to 8,870 in the first quarter of 2005. The Company paid its Reps and RTAs more than $65 million in combined marketing and travel commissions through the third quarter of 2007.

What we have here is apples and oranges. The "sales force" is RTAs--those that sell travel. Yet the commission reported is combined for the Reps and the RTAs.

Something smells here. According to the YTB report I received at the Founder's Tour, YTB paid out $90,666,140 in marketing commissions ALONE for the full year. Assuming (I know you hate when I do that) each quarter was equal, that would equal a payout of marketing commissions of $67,999,605 for the first three quarters--for the Reps alone. This does not include travel.

Now, the release does indeed say more than $65 million, but if it was more than $70 million you better believe it would have said that.

So, is YTB saying that the RTAs earned nothing and actually owed the company $3 million? I really do not understand. Why talk about the travel people and then include the opportunity people in the payout? It really makes it hard to figure out. Oops, I may have answered my own question.

Since there are two separate businesses, why can't we see a press release saying that there were 305,000 reps who earned a total of $90 million dollars and a total of 140,000 RTAs that earned a total of $12 million dollars. It eliminates the smoke and mirrors and would make it so much more clear. Scratch that--another questioned answered!

Do I see a restatement in their future, yet again?


CORRECTION: I pulled some incorrect numbers from the SEC filing and it does appear that YTB did in fact pay just over $65M in commissions out for the first 9 months of the year. The numbers I pulled were gross commissions received as was pointed out in a comment. However, it still does not explain why commissions were lumped together and not separate yet there was no differentiation of the Rep earnings versus the RTA earnings. It also does not address why the numbers that were presented at the Founders Tour are so vastly different.

What IS She Thinking? Breach of Contract? Credit Card Fraud?

Sometimes I have to wonder what crawls into some people's heads when they post on the Internet. It becomes even more incredulous when you are operating in a company that freely admits that their business practices may be deemed illegal in the future.

Yesterday on another completely public forum, an RTA not only explained how she was defrauding her own credit card company, but possibly breaking seller of travel laws (if they exist in Michigan), and violating her YTB agreement in one fell swoop.

Well, one might argue, there is anonymity on the Internet. That is true to a degree, but really now, when you make admissions like this in a public forum and then follow it up with your email address, I just have to wonder. Toss in a public profile identifying her home town and, well it does not take the CIA to track her down.

Harry Anderson, a casual friend of mine who used to live in New Orleans and was instrumental in helping to rebuild the city moved away to the mountains because he felt the City was "stuck on stupid". I imagine if Harry is reading this now, he would have the same opinion of Rose Travel!

I get everything that you have all said.... But I am quite smart, my travel website monthly fee is free to me...If you know the platform and how YTB works, I know longer pay the monthly reoccuring fee. Also, I understand all about 100% commission.... I have been in sales for 27 years, (I'm 47) I understand that I need to be an expert in the field to service thoses who call me about travel, I will also have my CLIA card soon. Just as you were once GREEN, so am I, but thats the nature of being new to any "Sales" industry. I am a fast learner and have already booked serveral trips, and not through my website, I have booked them directly through the vendor....and guess what I earned 100% of the commission. (I did not make you or anyone in the industry look bad when I spoke directly to the Vendor...my most recent booking was with "Beaches" and yes I earned 100% of the commission, I did not share it or split it with YTB). I also have had bookings from my website from people who were referred to my site that I do not even know, so I get 60%...I am OK with that, I did not do anything to earn more than that, I never met the travelers or spoke to the travelers, so again 60% for doing nothing is still good to me.

To Yvette: you can reach me via email at rose.travel@sbcglobal.net, as I am interested in getting more details from you. I am a business woman and I always keep my options open to hearing what you have to share with me. I am a open minded person so I will listen and not judge you or anyone else for that matter.
Thank you for all your comments.

And in a subsequent post after the error of her ways was noted:

I did not violate anything, took the net rate (charged it to my Company CC) and invoiced my client the full rate, they wrote me a check and there you go....100% commission. (FYI... I was paid prior to charging the trip). So I am in compliance, wouldn't you agree?

And if that was not bad enough, a Rep peer of hers who offers the following credentials:

Have been a rep since 2001 - just not active. Not an RTA.
My IATAN card is through my host I've been with since 1996.
My CLIA card is through my own company.
Tom

...offers a resounding endorsement of her actions.

Some RTA's are smart enough to get with a host or get their own CLIA # and book direct with suppliers. I recommend this to any RTA that isn't within a State that has a SOT# requirement. Why earn 60% when they can earn 100% ? BUT - still do the marketing business and recruit people.
Tom

So, let me ask a few questions to a few different groups here...

• Consumers ...how comfortable are you knowing that this may be happening to your transaction?
• Fellow YTBers...how do you feel getting 60% when she is getting 100%?
• YTB corporate...how do you feel that you seemingly have lost complete and total control over what your RTAs and Reps are saying and doing under your name?
• American Express, Visa, MasterCard or Discover...how do you feel about awarding points or perks for a transaction such as this?
• Attorney General in Michigan....how do you feel about Michigan consumers transacting business in this manner?
• Shelby Township Michigan...is this business entity violating any local laws or ordinances?
  
• IRS...how do you feel about this person likely writing off a customer's vacation as a business expense?
• Suppliers...how do you feel about your liability and your reputation should the final payment not be made?
• Consumers again ...do you think this is a single "rogue RTA"? Or do you feel it may be a bit more prevalent with 140,000 of them enrolled in the program?
• Teachers...how the hell did this "quite smart business woman" graduate from fifth grade?
  

YTB Olympic Tours Selling Fast

API -- Wood River, IL -- February 6, 2008

And they're off--the exclusive partnership between YTB and Shanghai Spring Tours for the summer Olympics in 2008 is off to a blazing start. YTB is the only authorized seller for SST in the US and has committed to sell 3000 tours to the Olympics in Beijing during the summer of 2008.

As soon as this initiative was announced late last year, their crackerjack team of 140,000 travel experts leaped into action and vowed to sell these packages to friends, family and co-workers. The ingenuity of these professionals knows no bounds. They have even established a state of the art e-commerce site to promote the YTB Olympic packages with specially designed logo merchandise.

YTB travel professionals have been seen on the various travel websites reporting on the sales as they seemingly fly out the door. People are being encouraged to book now as all space will be gone in a short time. It is rumored that an advertisement in a national paper will supplement their already brisk sales making them the number one provider of guests to the Beijing Olympics. It is hoped that this show of support will gain influence with the Chinese government and open the door to the Imperial Palace and allow YTB to recruite more RTAs in China.

In order to pump up the sales force and really get them enthused, the management of YTB took their top producers on a cruise--the Birthday Bash. The cruise featured such renowned figures as Phil Piccolo. It is rumored that everyone on board also was able to listen to the ruminations of Dr. Bob Seligman, PhD, RTA. The end result must have worked. RTAs were seen jogging off the ship ready to tackle the world and sell 3,000 packages to China. It has also been reported that the grocery stores in Nassau are just getting their kool-aid stock back to normal.

Back on January 2, 2008, it was reported that in a wild coincidence, YTB had already sold EXACTLY 9 spots on each of the 14 tours available for a total of 126 passengers. After the Birthday Bash Cruise, we can see just how enthused these RTAs are about selling travel--especially Olympic travel.

This evening, the official website is reporting that a total of 126 passengers have been sold. When questioned about the fact that not one sale had been made by a sales force of 140,000, company president J. Kim Sorenson said, "This is part of our plan. We are waiting on the Coach to call the play and we will book them all at once. One YTB, One Day, One Olympics--this is how we are legitimizing the business." Sorenson continued to say that he felt that by March they woudl probably have nearly 127 packages sold. When questioned about the daunting task of legitimizing YTB, Sorenson somewhat evaded the question by asking another question, "Do you have any idea how much it costs to have Success magazine feature you as a legitimate company of the month?"

So, there you have it. The YTB Shanghai Springs partnership is off to a fast start, well , maybe for a sumo wrestler in the 50 yard dash.

About YTB. YTB has two businesses. One is free and allows you the license to remove money from people's wallets by signing them up for a program that will never make them any money. There is no cost for you to do this. If you are looking to shell out $500 and $50 a month, they have another program that will allow you to receive approximately $70 per year for your investment. Of course there may be additional costs involved. With the travel business, you will receive a credential card that will cause travel suppliers to laugh in your face. With either business, you will get a discount card for your local grocery store where you receive 50% off Kool-Aid powdered drinks. This includes all flavors.

Note: In case some of the readers are slow (not naming names but you know who you are and so do I) this is parody! The Olympic gear is a real site, as is the tour site. Seligman is a fraud and Piccolo is a scammer extraordinaire!

Quiz Answers

When the question was posed, the blog had been live for 100 days. The first quiz reflected domains that accessed this blog an average of five times per day. The second quiz reflected domains that accessed this blog an average of one time per day.

It took a little bit to gather some steam, but right now, some people are taking note. Now, what they are noting is unknown of course. Also unknown is if the access if for business or unauthorized personal use of the company computer!

I was surprised at some of the names as well. We are very well read for being a little blog out of nowhere with an average of 877 unique visits per day now for the past month with over 70,000 pageviews. People are spending an average of just over 5 minutes reading the site on each visit.

We have had people from 62 countries and all 50 states read this blog over the past month.

Just thought those were some interesting numbers.