The Facts Half-Truths About YTB--Part 8

Today, let's take a look at the eighth and last tab on the new YTB site called www.TheFactsAboutYTB.com . We have saved the best for last!

Fact Check:

The first thing to note is that the URL is "fast"check not "fact" check. A Freudian slip? You tell me.

Rhode Island. A lot of truth here, but it was not YTB that "voluntarily" shut down operations. When they were confronted by the DBR, they made the decision to shut down. It should be noted that at the time they shut down operations, there was already significant progress in the RI legislature to repeal the agency licensing laws. Rather than risk any suits or penalties, YTB likely felt it was better to wait the few months till the legislature approved the new budget which did away with funding for the program.


YTB a Pyramid. YTB has some good info here, but it is flawed. Apparently the Attorneys General in several states also feel it is flawed. Just a cursory look at any of the SEC 10Q or 10K filings will demonstrate that YTB is indeed a pyramid scheme. The majority of their money is earned from recruiting. The websites they "provide" are nothing more than a rebranded site from Travelocity which is available to anyone for free. Of course the true litmus test will be in a court. It may be in California, Florida, Louisiana, Texas or in Washington, DC if the feds become involved. YTB feels they skirt the law by offering travel as an afterthought. If they were interested in being a travel agency, why not eliminate the MLM component of the business model? The answer is too simple--because they would be out of business. The recruiting drives the pyramid. And if the current numbers are indicative, recruiting will dry up pretty quickly in 2009!

Card Mill. YTB was dubbed a Card Mill by Royal Caribbean which terminated their agreement. YTB was dubbed a Card Mill by ASTA. YTB was dubbed a Card Mill by IATAN who rescinded their accreditation. YTB appealed this decision and the decision was upheld. The only entity that does not deem YTB to be a Card Mill is YTB itself. If it looks like a duck.... YTB uses the argument that they sold $414M ($211M) and that proves them to not be a Card Mill. Well, let me put it in a different light. According to their own figures, each of their "agents" sold $1500 in travel in 2007. Does this seem like a profession to you? Or maybe someone buying a trip for themselves. If each agent sold the minimum required by IATAN for a legitimate credential, their sales would be upwards of $6.9 BILLION. It also does not help that CLIA has discovered YTB to be a cash cow for them and is not addressing the loopholes that allow YTB to continue to operate as a Card Mill.

California Attorney General's Lawsuit. They are not commenting on this as they should not be. However, many Reps and RTAs have bragged that Scott Tomer disclosed information about the suit at several large meetings. Regardless, this will be decided in the courts and there is not any "settlement" talk at present. One thing that YTB does not mention here is that the AG was investigating them for 18 months and trying to get them to comply with the State laws. Apparently YTB woudl not comply and the suit was filed. Why did YTB not comply? Why did they not disclose this material information in any of their SEC filings? Why did they not inform the field of the investigation? Why did they allow insiders with inside knowledge of this investigation to sell off huge chunks of stock during the investigation? Isn't this insider trading? Michael Brent, Coach Tomer and others made a LOT of money off of stock sales when the stock was trading high knowing full well that a lawsuit that likely will kill the company was imminent.

Royal Caribbean. Royal Caribbean did a brave and a good thing and made a decision at to what was "good business" and what was "bad business". YTB says they were singled out--they were not. There were several agencies that also were terminated. YTB also says that Royal Caribbean never notified them. Well they did and Royal Caribbean published that notification in the trade press but did not disclose the names of the recipients.

IATA/IATAN Status. This paragraph is factually correct, but it does not say WHY this move was taken. YTB was charged with illegally re-selling the credentials and was terminated by IATAN. Initially YTB thumbed their nose at IATAN feeling they were not needed. When their recruiting started to slide (IATAN was used as a huge selling point) YTB appealed their decision and hired Al Anolik to represent them. The initial decision was upheld and YTB was required to remove all references to to IATAN from their business. Something that has been done corporately, but not in the field. Many Reps are still claiming they can get IATAN, and many business cards and CRTA cards. One RTA just the other day claimed that IATAN would give her a card when she proved her travel sales. She was corrected rather quickly.

Negative Information about YTB. While YTB may consider the negative information a "success tax", most companies woudl not. While YTB may eb very successful in the MLM industry, they are far from it in the travel industry. What they have managed to do is to take an industry and use it to further an agenda to recruit. Travel is an ancillary means to achieve their desired results. Yes, travel is sexy, desirable, and alluring. This is the selling point and it has been effective for YTB as they have been able to recruit 138,000 people to pay the price. However, when you boil it down to dollars and cents, it is not worth it. The RTAs pay in an inordinate amount of money for a subordinate amount of return. Just look at the most recent 10Q--the RTA paid YTB $97.7 million dollars. In return they received $16.2 million. These are cold hard numbers. No spin, It is incredible that YTB has the nerve to liken themselves to companies such as Microsoft, McDonalds and WalMart. Perhaps YTB does not realize it but all of those entities actually sell a product.

Franchising. The initial announcement about franchising came out just before the attorney general filed suit. This was a last ditch effort to stave off litigation and it did not work. There has been no further discussion of this to my knowledge, but it is interesting that on this site, YTB claims that the MLM will not change, they will merely call it a franchise to gain more acceptance of the public. I suspect that some regulating authority might have something to say about that!


Stock Prices. Of course there is no comment on that. But if yo look at any of the public records you will see that the principles have been ditching the stock left and right. Michael Brent is the largest shareholder and rather than take his chances, he entered into a Sales Plan to divest himself. Strangely enough, the Coach himself is the minority shareholder in his own company. One might think if you believed in the longevity of your own product, you might invest in it. Well then again, maybe Coach is reading the writing on the wall as well.

REZconnect & YTB. This is the way that YTB was able to become a publicly traded company without any oversight or review by the SEC. It is doubtful that had they gone the traditional route that approval would have happened.

Better Business Bureau. YTB tries to belittle the effectiveness of the BBB. It is true they are not a government entity. It is not true, as some of the YTB Reps have said that you need to pay the BBB to get a good rating. YTB cites the number of complaints against Orbitz, Priceline and Expedia. Yes they do outnumber the ones that YTB has, but YTB has suggested we look at the record and compare.

How does YTB fare when you look at the number of complaints per dollar of travel sold? Not too well I am afraid.

• Orbitz .0000002
• Priceline .0000003
• Expedia .0000001
• YTB .0000004

So, YTB has twice the level of complaints with the BBB as Orbitz when you base it on travel sold. And as is typical with most MLM companies, when people end up losing money, they are embarrassed and ashamed that they fell for the ruse and likely do not report it. Orbitz, Expedia and Priceline are all legitimate travel agencies with trained personnel selling a product. They are not selling smoke and mirrors and the promise of riches and traveling like an insider.