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The Case of YTB
By Mark Murphy
Published on: November 25, 2008
I’ve received a number of requests in the last few days to address the current situation with YTB International. According to many in the industry, some of the older legacy travel trade publishers are “legitimizing” this company as a travel agency in their editorial pages as well as at their events. This has a lot of agents who are working hard in these difficult times “hopping mad.”
So let’s take a look at this business known as YTB. What is it exactly? It’s a multi-level marketing firm brought to you by the same folks who learned their trade at a business known as A.L. Williams Insurance. For those who have never heard of this insurance company, you’d be wise to steer clear. Their business model is similar to the YTB model in that regardless of what you know, you can be an insurance agent and advise your friends and family across the kitchen table. It’s a scary thought for those who take protecting their loved ones seriously, yet this business has grown and succeeded since the 1970s by capitalizing on ignorance, misplaced trust or a combination of the two.
Indeed, there are many independent insurance sales agents from this organization that have full-time jobs framing houses or doing plumbing like the now famous “Joe the Plumber.” They moonlight and provide insurance “advice” or simply “recruit” others to become “financially independent.” Does this sound familiar?
The YTB business is one where the focus is on recruiting and getting individuals to set up their own “travel store” online, as if customers are suddenly going to appear and start booking thousands of dollars of travel at some no-name website. Indeed, one needs only to look at the compensation earned by these “entrepreneurs” to understand that the only thing being built is the business owned and controlled by the people who actually run YTB and those who buy its over-the-counter stock.
Here’s the “fine print” at the bottom of the YTB 2007 Income Disclosure Statement: “An ‘Active Rep’ is defined as Any Rep who received a check in 2007. The average annual income for all Reps in 2007 was $299.95, and the median annual income for all Reps in 2007 was $97. In 2007, 80.92 percent of all Reps received no income at all. The earnings of the Reps in this chart are not necessarily representative of the income, if any, that a YTB Rep can or will earn through his or her participation in the YTB Compensation Plan. These figures should not be considered as guarantees or projections of your actual earnings or profits. Any representation or guarantee of earnings would be misleading. Success with YTB results only from successful sales efforts, which require hard work, diligence and leadership.”
What’s a bit ironic is how YTB notes that “these figures should not be considered as guarantees or projections of your actual earnings or profits.” They really stepped out on a limb on that one given the fact that the average “earnings” don’t generate enough to pay for the average individual YTB website, the backbone of how this organization actually makes money.
And that leads me to the Federal Trade Commission (FTC) and how they view multi-level marketing and network marketing companies like YTB. The FTC advises that multi-level marketing organizations with greater incentives for recruitment than product sales are to be viewed skeptically. The FTC also warns that the practice of getting commissions from recruiting new members is outlawed in most states as “pyramiding” And by the way, YTB is currently still under indictment by the California attorney general.
There are certainly some who have joined YTB with the intent of building a real travel business. I’d encourage those folks to explore the many other host travel agencies that are there to support them and their efforts in actually selling travel. As for those trade publications that believe businesses like YTB are real travel agencies, I’d like to suggest they reexamine the travel agency market and the truly professional agents that are part of it.
Mark Murphy
President & CEO
Performance Media Group, LLC
mmurphy@pmgemail.com
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