Bermudians hoping to buy into an online travel business being promoted by former Opposition Leader Wayne Furbert are being warned not to expect big profits.
A Bermuda Sun investigation suggests that most people investing in YTB in the U.S. make their money by recruiting new subscribers, rather than from selling travel.
Mr. Furbert - who plans to launch YTB in Bermuda next month - denied yesterday that the company is a pyramid scheme.
The Bermuda Sun investigation also revealed that U.S. travel organizations are beginning to back away from YTB, calling it "a card mill" because its agents lack bona fide travel credentials.
Cheryl Hayward-Chew, vice president of Meyer Franklin Travel, confirmed travel suppliers are beginning to refuse discounts to YTB. She said people should do their research before signing up and warned that the people who are likely to make the most money are people at the top - those who buy in early.
There is heated debate on the Internet as to whether YTB is a pyramid scheme - whereby the money of new investors ends up in the hands of those at the top.
The conclusion reached by several websites is that it is a so-called "multi-level marketing scheme (MLM)", which has several elements of pyramid selling, but is legal.
New members invest $500 to buy into YTB and then to pay an additional $49.95 per month to have their own travel website. They make money from signing up new members and also receive commissions from travel bookings.
Mr. Furbert said since signing on with YTB he has set up his own website, and described it as no different from quickertix.com, which is owned by C-Travel, or expedia.com.
But the Bermuda Sun has learned that cruise ship company Royal Caribbean International and the International Airlines Travel Agent Association (IATAN) have both terminated their business relationship with YTB, calling it a "card mill."
Lisa Bauer, senior vice president, North American sales for Royal Caribbean, said in a letter to travel agents that Royal Caribbean "has a fundamental concern with the business practices of these companies" and that it is "taking this action in an effort to prevent a growing and troubling trend within the travel industry."
Required standards
IATAN has taken a similar stance because YTB travel agents do not meet its required standards of working a minimum 20 hours a week or earning a minimum of $5,000 in commissions or salary annually.
Mrs. Hayward-Chew said: "Whenever these opportunities come up - whether it's a travel scheme or something else - one has to ask, who wins? Too often, the people who get taken advantage of in situations like this are the people who haven't done their research.
"I've read through the details on the YTB website. The earnings in this scheme aren't for those who sign up. The money is made by the people who sign up other people. It's about making money for a few people at the top of a multi-level organisation.
"In this case, as in so many others, if it seems too easy, too good to be true, then it almost always is."
Mr. Furbert said he did not want to get into the technicalities of YTB, but said: "This is a legitimate business. It trades on the stock exchange."
The website Scam Types.com concluded last July that YTB was not a scam, despite the requirement to buy into the scheme, to recruit new members and also the monthly fee.
But it stated: "The only drawback I can see is that the travel industry is highly competitive so making sales and recruiting members may be extremely hard."
An article that ran in the Chicago Tribune in December found most YTD agents in the U.S. who make money earn their income by selling websites, not travel, and that many agents are out of business after a year.
The article worked out from documents filed with the U.S. Securities and Exchange Commission that the average YTB agent made $82 in commission for 2006.
YTB admits that the vast majority of its income is made from the sale of travel websites to agents at $50 per month than it does from actual sales of travel. In a filing with the SEC on late last year, YTB said: "Fees from hosting websites that we offer to home-based representatives make up over 70 per cent of our revenues. While our business model is based primarily on website hosting our various products and services, we do intend to pursue other sources of revenue to lower this percentage."
YTB went on to state that if there was a "substantial decrease" in the number of websites that it hosts then "our financial condition, results of operation and future growth may be substantially impaired."
YTB added that its business model could be harmed by possible law changes because it walks a fine line as a multi-level marketing business, and it could fall afoul of laws aimed at pyramid schemes.
"We are subject to the risk that...our network marketing programme could be found not to be in compliance with applicable laws or regulations."
Meanwhile, Mr. Furbert said he was offering Bermudians a business opportunity and that YTD is setting up operations in Canada and the Bahamas.
The Chicago Tribune article also quoted a warning about multi-level marketing plans on the U.S. Federal Trade Commission website.
It said: "Plans that pay commissions for recruiting new distributors inevitably collapse when no new distributors can be recruited. And when a plan collapses, most people - except perhaps those at the very top of the pyramid - lose their money."
I was with YTB and gave up 6 business just to reach my powerteam, they teach you to leave people behind. I did not see it as a business where success was open to everyone just the people at the top. Because of this I left and started with another company.
YTB looks really bad right now to a lot of people. I felt it was a waste of my 500.00 even though I did make money my main goal was to be able to help others and I could not, it was not duplicatable for me.
People need to seriously look at the YTB Comp Plan before just jumping in, many never make any Bonus you hear about, and many never make it into the power team. I would have to say my experience was simular to being in Amway they use the same brain wash tactics if you fail it is your fault not because of the Comp Plan not being workable.
Posted: Tuesday, March 04, 2008
Comment by:
John Frenaye
YTB Mom--I am saying that TTAs do not take families on FAM trips. FAM trips are for furthering your professional education NOT a cheap vacation for you to write off. What you are doping is WRONG and the suppliers are slowly seeing this. You keep talking about Disney--I certainly hope they are reading these comments, because I KNOW they woudl be very interested to hear your "business plan".
Posted: Monday, March 03, 2008
Comment by:
YTB Mom
John Frenaye, are you telling me that TTAs dont take their families on FAM trips? Then why do they give discounts for more than one person to go? Yes, they are for continuing my education, and that is what I use them for. Disney and the entire area has changed since I was last there. Now I know, and I can tell families first hand who ask me about Disney exactly what I liked and what I didnt like and maybe save them some money because I actually did an inspection of some of the most popular attractions as well as some of the ones people might choose just because of the cheap price. I get to write these trips off anyway because I homeschool and use these trips for the kid's education as well. Because of what I do, I can create many trips for other homeschoolers and make if affordable for them. Because of the money I make with YTB I can afford to take these trips as well. My husband and I could not afford do this and keep our credit scores as good as we do with our "day jobs." You would have to be in the "middle class" to know what it feels like to work so hard just to make ends meet because we pay for the rich to get richer and the lazy bums and illegal aliens to have high-dollar cars, cell phones, free food, and a 100% free medical plan. Like I said before, YTB gave me that opportunity, I took it, used my common sense, treated it like a business, therefore I prosper where otherwise I would not have.
What about the more than 100K that get suckered into borrowing money they dont have or having their parents take out a second mortgage on their homes to to college with the dreams of being able to work 9-5, buy a house with more money they dont have with the picked fence, get married, have two cars, two kids, etc? Take a look at the statistics on how many of them have 20K left over to spend whereever they want after student loans, mortgages, car payments, credit cards, and medical bills go unpaid and they have to file bankruptcy? Not everyone who gets suckered into going to college finishes either. You see, not everything is going to work for everyone, but YTB is working for me as well as the people over me and under me. Why shouldnt anyone have the right to try it. Why do people like you defend the ignorant who think that just because someone paid money to start a business that they should succeed or get their money back?
At this point in my career with YTB, I tell people I know personally and people I know who are vacationing that I have a website they can book all kinds of travel on as well as other things of interest. (They can buy flowers and cars too, but Im not claiming to be a florist or a car salesman.) This is not wrong in any way, shape, or form. I also let them know that they can book that same travel and make a commission from it if they are interested, and I give my website for that. I share my "honest" testimony and I either get another person on my team (whom I help get the point of where I am) or another person booking travel on my site. Also, we have a program that guarantees making 6K with YTB or they will make up the difference. Whats so hard about that?
Furthermore, I didnt give you my personal income statement, but I can assure you that if you used your college education to come up with that figure for me, you got ripped off, and Im glad you dont handle my bank account.
My arguement to you is this.....There are YTB RTAs booking travel, there are RTAs doing it right. There are RTAs not booking travel, there are RTAs not doing it right. Keep in mind there are also doctors and lawyers who also bought credentials and not doing it right either. (If you knew what I knew, it would scare you!) This business is not for everyone, but it is obviously for some. I would hate to know I talked someone out of an "opportunity" that could change their quality of life just because I was being willfully ignorant and hell-bent on only seeing the negative. Then again, those who have common sense will really be able to read through all of this just as I did.
If you want to debate and educate the world on something that only has a negative, then spend more time explaining and researching real scams like the housing market and the banks who created all those loans for all those people losing their homes that is creating part of reason I have to have a second job anyway. When you get done with that, use your finer education and writing skills to convince our government that we have an illegal alien problem. Because of the two issues just mentioned, our government has "borrowed" money from China to give to the middle class and poor to try to "stimulate" our economic status. BTW..Ive got people lined up ready to use that money of a vacation they will be booking on my site :) You are not going to save the world from disaster by bashing YTB.
What you need is a good vacation. Go to any YTB website, create your own dream vacation, compare the same to all the other websites, and tell me which one you would choose if you had a middle-class income.
While you are busy with that and whatever it is that you do for a living, my family and I will be making final plans for the long dreamed of swimming pool we will be putting in our back yard this summer because of what I make with YTB and making arrangements for the cruise I plan to take my entire family on for Christmas. If you do the math here, the pool alone adds up to more than 20K :) God Bless!
Posted: Wednesday, February 27, 2008
Comment by:
John Frenaye
YTB Mom--what you are doing is 100% wrong. FAM trips are for furthering your education--not taking your kids to a long desired Disney trip and writing the expense off because you now feel you are a travel professional. You bought a credential and it is wrong.
RTA Vs TTA---glad you brought that document up. I believe it is the document that indicated that of the 305K reps in YTB that 246K of them earned NOTHING in 2007. I also believe it is the same document that shows that .0033 of the people in YTB are earning more than $20K a year. Yes that is right. For every 100K people that are suckered into this program, 358 of them will make more than $20K. If you want to make more it is even worse.
So explain to me why it is so great--one more time.
Thanks for your income earning "statement" I see that you seem to have issues with decimal places and numbers.
Please check on my blog over the next few days--I have a lot of very good eye opening information for you.
http://notravelmlms.blogspot.com
Posted: Monday, February 25, 2008
Comment by:
YTB Mom
I live in Myrtle Beach, SC. Our population is less than Bermuda, but people flush in and out of here every single Saturday. People who are vacationing (kinda like Bermuda). So where do you see that I or anyone in Bermuda will run out of people..duh! No I am not a TA; I am a CRTA with a CLIA. I dont book travel. I direct every vacationer with an out-of-state plate I see to my site by exchanging business cards. If I get a business card, I get permission to contact them. Im a medical transcriptionist, wife, and mother and homeschooler of three who by the grace of God was given an opportunity through YTB to win the war on the middle class without anyone asking for my vote! Because of YTB and keeping it simple, we dont have to lower our standards or change our spending habits just to make ends meet. We get the added benefit of great tax benefits too. We are now able to take our kids to Disney and on many other great family vacations like our parents did. I get a good rate by booking through the FAM plan, use it as a tax write-off, and keep the memories forever without ever having to turn on CNN to see what is going on in the rest of the world. My chances of really reaching true retirement (which BTW is an income level and not an age) with YTB is a lot better than the goverments plan of SSI. As for the gov shutting us down, even they wont bite the hand that feeds them :) I have no PhD or any other degree, but then again common sense has yet to ever cost me a dime. If those who oppose would spend half as much time making an effort with YTB (pass out a card with your website on it to someone already on vacation) as they do opposing it, you might have an ah ha moment and realize that time is money and money is time :) Go for it!!
GO BERMUDA!! YTB 4EVA!
Posted: Friday, February 22, 2008
Comment by:
RTA VS ta
Mr.John Frenaye
My mom told me. If you dont know the answer to a question.ASK....
https://www.ytb.com/BackOffice/downloads/YTB2007IncomeDisclosureStatement.pdf
Now if you want to know what the owners made.... IT'S A PUBLICLY TRADED COMPANY! NEXT! JOHN ALL 130K PEOPLE DIDNT GET IN AT THE SAME TIME ( DOES THAT HELP YOU MATH? )AS FOR MY 1099 FOR 2007 WAS 89, 200,52.00 HOW ABOUT YOU? TA! Resistance is Futile."
Posted: Wednesday, February 20, 2008
Comment by:
John Frenaye
RTA Vs TA--I said I agree with the market share. You are indeed moving some market share to YTB but the issue you fail to recognize (yet point out) is that these people are untrained. There is an article on MSNBC about an agent that was not trained that made a HUGE mistake on a group cruise of 73. http://www.msnbc.msn.com/id/23238817/
No, it is not YTB but it could have and likely will be.
Collectively, 140,000 RTAs have paid $84 million dollars to YTB this year in website rental fees alone! If their claim of selling $500M in travel is true, they MAY pay out $30 million to the reps. Collectively they lost $54 million dollars. Where did it go? To the top of the pyramid and to the executives at YTB who are NOT being paid via a pyramid scheme. Are you also aware that the executives--not the RTAs--are receiving travel overrides from the suppliers. These can amount to equal the commissions. Any way you slice it it is a bum deal. You seem vocal...care to put up some proof that you are making a living in YTB? How about a half-living? How about earning money that might put you over the poverty line?
Posted: Sunday, February 17, 2008
Comment by:
RTA'S VS ta's
MR. John Frenaye. You have a habbit of avoiding the issues.
I might spell somethings wrong, I might even write something incorrect, but it's better to say "I is FREE!" Than to say "I have a JOB!!! "( NOW back to the real Issues )
Let me help you. MARKETING 101...
If you have 10 reps and each only sell $100 dollars worth of Travel for the year. How much did TRAVEL company Expedia.com. make off of them?
The answer! ZERO! So if I have a hundred REPS that only do 100 dollars each HOW MUCH DOES Expedia.com. Make off of them.
The answer! ZERO!
If I have 100k REPS that sell $100 dollars each for the year. How much does Expedia.com. make? ZERO!
Can you say MARKET SHARE!!!DUH!!!
THE COMPANY IS GROWING BECAUSE IT HAS MORE REPS DOING JUST A LITTLE BIT EACH.
AFTER AWHILE WHEN THEIR FRIENDS AND FAMILY NOW START TO BOOK WITH THEM... THAT LITTLE ADDS UP.
NOT Expedia... who is NOW GETTING MARKET SHARE???
Posted: Saturday, February 16, 2008
Comment by:
John Frenaye
RTA Vs TA-- your post was so poorly written I did not understand it when I read it. So with your latest post, I did re-read it and unfortunately it is still poorly written and understandable. For someone who claims to be a marketing expert, I would think that you might be able to explain whatever it is you are trying to explain a bit better.
Posted: Friday, February 15, 2008
Comment by:
RTA VS ta
Mr. John Frenaye
You have not responded to my reply to you. Is it because it made since?
or is it that you only look for people the use @#% words.
![Wayne Furbert: “This [YTB] is a legitimate business. It trades on the stock exchange.” *File photo](http://bermudasun.bm/SiteImages/Article/36427a.jpg)
