Punishing article about YTB and other “card mills”

This article levels some heavy duty criticism at YTB and other “card mills” or travel related MLMs.

First they criticize the YTB line encouraging people to sign up and get their little slice of the 7 trillion dollar travel industry. When asked where the $7 trillion number came from, J. Kim Sorensen (president and CEO of YTB Travel Network) said it may have come from Forrester, a Cambridge, Mass-based travel research company. Forrester says they never did.

So is this a case of false advertising? Why doesn’t YTB’s president know where that number comes from? Did he make it up?

The next critical comment comes in the form of statistics:

In 2006, YTB made 72 percent of its revenue from the sale of online travel stores and monthly fees and 15 percent from travel commissions. Another 11 percent comes from the sale of training programs and marketing materials and the rest (less than 2 percent) comes from franchise fees and “other.”

Now the article implies that this means most people who try YTB will lose money by quoting something from the FTC on MLMs in general inevitably collapsing. I’ve said it before and will say it again: most MLMs don’t require a big investment. When my wife started her NuSkin business I think we paid nothing to sign up, and then around $250 + $15/month or something for a website (which was optional). So we weren’t really investing our life savings.

Now YTB charges $500 + $50/month so that’s expensive for an MLM. And the criticism is valid. With NuSkin, you can make more money by recruiting people into the business but you can make a living just selling the products. I really wish I knew what percentage of NuSkin’s profit came from product sales because YTB’s 15% from travel sales seems extremely low.

The third criticism refers to travel perks. YTB advertises that their agents are eligible for them though in truth most don’t deserve any. One person who quit YTB said that in his experience people laughed at him when he showed his YTB card and asked for a travel agent rate. That’s probably because of my own criticism that anyone can join so you get a lot of bad people.

The fourth criticism explains why most YTB agents don’t deserve discounted travel: the average YTB agent makes $82/year in travel commissions. Now when you’re paying $500 + $600/year, that $82 is pretty crappy.

The fifth criticism is that 97% of YTB agents last less than one year. Ouch. 97% of them wasted their $500 sign up fee. I don’t remember exactly, but I think with Nuskin the number is about 85%. Of course with no $500 sign up fee it hurts a bit less…

The sixth criticism is that it takes YTB forever to issue a refund. The article doesn’t explain what kind of refund the person who quit was eligible for. My guess is that the $500 sign up fee was lost but that if you pay the $50/month fees in advance you should be able to get them back. You just might have to wait a year and file a BBB complain to get the refund…

All in all it’s a pretty damning article.

Filed Under: Travel stocks & business

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Comments (7)

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  1. Ron says:

    Global Travel International does the same crap. Its whole concept is membership volume free profits — vs. providing competitive travel booking website that your clients can use. I.E. If my folks found a great rate on Alamo, I’d have to book it with GTI’s IATA #, and submit the co0nfirmation # — they can’t just book it via GTI’s website because a higher rack or disocunted-rate-that-isn’t will be showing.

    In fact, most of GTI’s communication throughout the year will be on incentives for signing up other members, as you get more for that ($50 or so) than any commission. The overall customer support is horrific and GTI will attempt to bill you for a renewal membership (even if you state in writing that you wont be renewing).

    All in all, if you’re with a small business, a sales rep who’s expenses are initially out of pocket, or a family that travels a ton — $10,000 in travel x 5% commission=$500 — the commission rebates may be worth the membership rate. But in this internet day/age, people can easily find better deals by being vigilant consumers, tracking flights/hotels/cars rates and utilizing opaque websites (i.e. Priceline, Hotwire).

    Too many tools and choices out there — which is the same reason that YTB and GTI should be avoided.

  2. I too joined NuSkin but invested 10’s of thousands and had some success until they announced they we’re using aborted baby placentas in their skin care products, this

    around the time aids came into the national

    news. The company was also front-loading.

    $7 Trillion worldwide is a pretty well used

    figure by all the travel companies. I cannot

    prove it’s correct. Can you prove it is not?

    The company also sells travel businesses, it takes time to gear up your business and learn the ins and outs of the travel business. It wouldn’t matter is our company sold $1 Billion in travel business a year, you and other distractors would find something wrong with it.

    Watch and see if it does not happen.

    Your fall-out figure is a lie. Also your claim that YTB is a card mill, also a lie. I have concentrated my efforts on recruiting and setting up travel companies, not selling travel, yet..as a result, after 5 months I still have not received a card, although I have had travel

    bonuses paid to my recruits. Again a lie.

    Who are you and why are you lieing about our great company? Just wonder.

    RobertsResorts.Net

  3. OH…that’s ok…your not lieing just repeating someone elses lies. Right

  4. Earl is cardless? says:

    I got my YTB card less than 2 weeks. Got scammed though, the hotels laugh at me when i try to get upgrade. I am filing complaint with BBB.

    Don’t buy the YTB scam.

  5. James Trotta says:

    You’re trying to make this a bit personal Earl. I don’t know why you want to call me a liar. I think I’m doing my best to give a well-rounded view of these network marketing companies.

    What’s the lie? TYB is a card mill because anyone with $500 can get a card. Now the card won’t be accredited and no one will think you’re a real travel agent but that’s OK as long as you’re happy with your great company!

    How is the 97% drop out rate a lie? What’s the real number? The article said:

    “At the end of 2005, it had about 21,000 registered travel agents. In 2006, it added about 59,000 new ones, but at the end of 2006 it still had only about 60,000, a net gain of about 750 registered travel agents for the year. Nearly 97 percent of its travel agents lasted on average less than one year.”

    How do you invest tens of thousands of dollars in NuSkin? The whole point of network marketing is you don’t invest much money to start your business. Sounds like you’re the liar – I don’t believe you’d be stupid enough to invest all that money unnecessarily. Investing a lot of money in a network marketing business is actually the best way to fail because big investments are hard to duplicate.

    I’ve never heard of this baby placenta in Nusksin products thing. A google search didn’t reveal anything so this looks like a 1-person rumor to me… Another lie?

    I’m not here (as I’ve said many times before) to talk anyone into or out of network marketing. It’s good for a handful of people and bad for most people. To find out which type you are, read: “Your First Year in Netowrk Marketing”. That book tells you what it will take to do well in a business like YTB or NuSkin or Amway or Nikken or GTI or whoever.

  6. AQ says:

    I had considered coughing up the $500/50 to YTB, until I read your posts about what a scam they are. I’d be better off paying full price up front or shelling out the tuition for travel school and get my IATA accreditation “the hard way”–especially if it means that I won’t get an eyeroll and a laugh tossed my way for trucking out something from a card-mill.

    As for Earl, I wouldn’t pay him much mind–if you look at his website, it’s nothing but a huge ad for YTB complete with its penny-stock share price. That seriously vested interest combined with his abusive comments here is enough to make me avoid YTB like the plague.

    AQ

  7. William says:

    Great Article. All MLMers have to have a large group to make any money. Most large teams go from one Opportunity to another. It is sad but YTB is almost History. So is Traverus Travel Network. Which is sad to say. I been in both. Learned alot.

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