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 YTB was dubbed a Card Mill by IATAN who rescinded their accreditation.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.

The Facts Half-Truths About YTB--Part 7

Today, let's take a look at the seventh tab on the new YTB site called www.TheFactsAboutYTB.com :

Awards:

Princess Cruise Lines (nor Cunard) would comment on YTB and any awards they may or may not have won. However, I assume this is an accurate description. Certainly with 138,000 sales reps they ought to be a top seller for almost EVERY vendor. But I am sure if you break it down to production per agent, it is not nearly as impressive.

Carnival's Pinnacle Award. YTB has used this award as a sales tool for many years and I believe they got the words confused. You see, at every recruiting seminar I have attended, every power point presentation says "YTB has won the Pinnacle Award for the last three years". What I guess they really meant was "YTB won the Pinnacle Award three years ago." It was funny, but when questioned about the Pinnacle Award, Vicki Freed (who was with Carnival at the time) stated that she only remembered them getting it one year, not three. Of course the YTB Reps and RTAs denied this and insisted that it was three years in a row. They even insisted they won it again this year even after the winners were announced!

Apple Vacations Platinum Agency. First off, according to the Apple Vacations site, they are not a platimun agency but a Golden Apple Agency, but this could be an oversight as well. Yes, it is an award, but it is not that difficult to achieve. For Platinum, your agency needs to send a minimum of 1000 passengers per year with Apple Vacations. With YTB, that equates to .01 passenger per RTA. Not overly impressive on the individual level.

The Facts Half-Truths About YTB--Part 6

Earlier this week I said that the "Values" page was the shortest page in the site. I was wrong, it is the second shortest. The shortest is the one for today--SUPPORT. But again, no surprises that there is not too much YTB says on the support issue. Today, let's take a look at the sixth tab on the new YTB site called www.TheFactsAboutYTB.com:

Support:

First Class Training is indeed a travel training program. While it is a very minimal program, it is a step in the right direction and it was developed as a result of the current lawsuit by California against YTB. Formerly, this class was called Certified Referral Travel Agent Training (CRTA) and while the title suggested something about travel--the curriculum was anything but. When confronted, YTB developed something about travel. It is an open book online course completed in 4 hours and there is a costs for the RTA to do this. To be candid, it needs to be pointed out that in your $449.99 start up fee, and your ongoing $49.95 monthly fee, travel training is NOT included.

The YTB e-Campus by Marc Mancini is another good step in the right direction. The classes are not really "unique" to YTB as they advertise as they are the same curriculum that Marc has been teaching for years. They are however a very nice income stream for YTB. The classes are licensed in bulk to YTB and then YTB charges the RTAs individually. It also needs to be noted that YTB is very behind in releasing these classes--or maybe they have not paid for the classes yet. The initial concept was to release a unit per month, but in the year plus that it has been around there have only been a handful of units released. And finally, while YTB will not release the numbers, the percentage of RTAs taking these classes is woefully minimal.

The YTB National Convention. Well, what more proof do you need that this is the "largest annual event in the travel industry" than a YouTube video produced by Beryl-Martin--a company privately and wholly owned by Scott Tomer, Coach Tomer, and Kim Sorensen. Ironically enough, the California Attorney General served YTB papers on the eve of their convention charging them with operating a pyramid scheme and fraudulent business practices. Fake seemed to be the theme of thhis year's convention--fake statue (which has it's own story), fake Ray Charles, fake attendance numbers, etc.

Please note that there is not a single mention of any support that might be offered to the people that purchase travel. But we already know how they support that.

The Facts Half-Truths About YTB--Part 5

Today, let's take a look at the fifth tab on the new YTB site called www.TheFactsAboutYTB.com :

In The News:
This by far is the most amusing and deceptive page of the site. Most of this has been rehashed, but here we go again.

• Inc. Magazine--it was a paid advertisement
• Funshine East Travel Trade Show--39 Vendors for a sales force of 138,000 is ridiculous. Apparently most vendors do not see value in paying to attend. It needs to be noted that of the 39 vendors, a lot were YTB related companies--YTB Cars, YTB Flowers, the YTB Store, etc.
• Saturday Evening Post--YTB paid to have Coach Tomer on the cover.
• Sorensen named "influential". This is true, but Jack the Ripper was also influential. Sorensen was named influential not for any good brought to the travel table, but for infusing the industry with 100,000 untrained people looking for free trips and upgrades calling themselves travel agents.
• #26 in Travel Weekly. Again, true. But the numbers are self reported and not verified by the publication other than to have an executive say they are right. And again the actual article states that YTB RTAs only produced $211M and not $414M.
  

So, it seems that the good news for YTB must be purchased. As for the bad news, no one needs to look too far. Just do a Google search.

As a matter of fact, here are a bunch of not so good news stories that YTB neglected to include in the "In The News" section:

IATAN Seems To Be The Card Of Choice

Travel Weekly is reporting that Outrigger Resorts will now be requiring an IATAN card upon check in for any industry rates. But for those that are not cardholders, they can take their specialist course and qualify, but they will require references from other suppliers that verify individual productivity.

They are not interested in using a CLIA card as an identifier since it is not automated. I suspect also because of the loopholes afforded amateurs to obtain the card.

According to an Outrigger spokesperson, determining who was qualified at check-in is a problem for Outrigger and many of its competitors. Wonder why?

Kudos to Outrigger. If possible, my Hawaii business lies with them!

The Facts Half-Truths About YTB--Part 4

Today, let's take a look at the fourth tab on the new YTB site called www.TheFactsAboutYTB.com :

Values:
This is one of the shortest pages on the site (if not the shortest) and there is probably a reason for this. YTB seems to be a bit short on values themselves.

Coach is pictured with his saying, “If it ain’t true, don’t say it and if it ain’t right, don’t do it.” It is a nice PR piece, but I would like to present the following:

• Funneling millions to Beryl Martin(a company that is owned by the Founders) for all marketing materials and convention props aka. statue of liberty is right in Tomer's eyes.

• Convincing people to buy a website to sell travel which can be obtained for free from Travelocity is right in Tomer's eyes.
• Purchasing a plane and millions of dollars in property at above market prices from Board members and then selling it at a loss a year later is right in Tomer's eyes.
• Creating a comp plan where 80% of the RTA's make $0 and less than one half of one percent are making a livable wage is right in Tomer's eyes.
• Even though less that one half of one percent(163 out of 300000+) makes any money, marketing the "opportunity" as a way to make millions is right in Tomer's eyes.
• Making questionable loans to Directors and then having to write them off at the expense of shareholders is right in Tomer's eyes.
• Meridian Bank loan deals that contributed to the Bank being taken over by the State and Feds is right in Tomer's eyes.

They discuss the compensation plan, but this plan is nothing special. Sure it is unique to YTB as anyone's plan is unique to their company. However the deception lies in that they market it as unable to be changed. Well, the program has been changed numerous times--sometimes for the better, and sometimes (like most recently) for the worse.

The Facts Half-Truths About YTB--Part 3

Today, let's take a look at the third tab on the new YTB site called www.TheFactsAboutYTB.com :

Identity:

This is a nice fluff piece and makes for a good brochure, but is once again laden with half truths and misleading statements.

This first paragraph discusses their ethical standards and the experience of their Board and Corporate Executives. Here is what they do not say:

• They are being sued by California for deceptive business practices
• They are being sued in two separate Class Action Suits for in excess of $100M for deceptive business practices.
• That YTB and Coach Tomer is personally being sued for deception when he convinced a gardener working at his mansion to give up and sell his business to join YTB as an employee and was subsequently fired.
• That YTB has been the target of investigations in the past.
• That YTB is currently the subject of statewide investigations in at least three other states other than California.
• That YTB knew about the California problem for 18 months and never disclosed it to the SEC or their field.
• That YTB insiders sold a lot of stock during the California investigation while it was still marketable.
• That YTB was delisted from the OTC markets for irregular accounting practices.
• That YTB filtered $6M or $8M for their Statue of Liberty stage prop to a privately held company owned by Tomer and Sorensen.
• That YTB has made numerous poor business decisions costing the company and mor importantly their shareholders millions--purchasing a jet from a Board member and selling it for a loss. Purchasing real estate from a Board member and selling it for a loss.
  
• The list goes on....

YTB talks about being international. They do not mention that because they did not want to adhere to the TICO regulations for operating in Toronto, that they were almost run out of Canada and only saved themselves by being reactionary and buying a flailing retail location--Sunrise Travel.

YTB discusses the DSA and how YTB is the only travel company that is a member. Well, the DSA has nothing to do with travel. It is a lobbying organization for the MLM businesses. YTB did not mention if they were members of any travel related organizations like IATA, ASTA, ARTA, OSSN, or NACTA. Don't look. They are not. The only industry affiliation they have is with CLIA.

The Affiliate Health Plan is a money maker for YTB. They do not disclose this but according to Thayer Lindauer (their former attorney), YTB is acting as an ILLEGAL insurance agent and subsequently earns commissions on any policy that is purchased by an RTA. It needs to be noted (as it is not stated on the site) that this is a bare bones policy and offers very little coverage and classifies YTB as an illegal insurer in many jurisdictions since they have not received the appropriate licenses.