Y T B International Inc

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BBB Accreditation BBB Rating Business Contact and Profile Business Management Additional Locations and Phone Numbers Customer Complaint History

Government Actions Advertising Review Additional Information BBB Copyright and Reporting Policy

BBB Accreditation

BBB Rating

Based on BBB files, this business has a BBB Rating of F on a scale from A+ to F.

• 113 complaints filed against business
• Government action(s) against business.

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The BBB has received numerous complaints regarding this online travel firm. Complainants report that YTB misled them with offers of inflated earnings, refused refunds once consumers realized the program was not as advertised and was difficult to contact. These complaint patterns are reflected in the complaint statistics below.

Business Management

Additional company management personnel include:

J. Kim Sorensen - President
J. Lloyd Tomer - Previous Chairman of the Board
Andrew F. Cauthen - Corporate Secretary & C O
Robert Van Patten - CEO

Additional Locations and Phone Numbers

Customer Complaint History

When considering complaint information, please take into account the company's size and volume of transactions, and understand that the nature of complaints and a firm's responses to them are often more important than the number of complaints.

BBB processed a total of 113 complaints about this company in the last 36 months, our standard reporting period. Of the total of 113 complaints closed in 36 months, 29 were closed in the last year.

Government Actions

On May 14, 2009, California attorney general Edmund G. Brown Jr. completed an agreement forcing YTB International to stop the deceptive marketing of its largely unprofitable travel Web sites and prohibited the company from charging consumers nearly $500 to recruit others into its endless chain scheme.

"YTB falsely promised customers they could get rich quick by selling travel online," Brown said. "In reality, customers were reeled into an elaborate pyramid scheme and most never earned a dime. Today's settlement ends YTB's pyramid scheme by arming consumers with hard facts and eliminating the need to sign up for this largely unprofitable Web site."

On August 7, 2008, Brown filed suit against YTB (also known as yourtravelbiz.com), its affiliates, and founders to end the pyramid scheme and stop YTB's false and misleading marketing campaign. May 15th's stipulated judgment, filed with the Los Angeles County Superior Court, accomplishes this by:

- Prohibiting false and deceptive marketing;
- Requiring that YTB provide consumers with information in a clear and conspicuous manner about how difficult it is to make money by selling travel through YTB;
- Prohibiting the company from charging nearly $500 to recruit others into the scheme and requiring that new member recruitment be done using a free online demonstration;
- Limiting income from "downstream sellers" (e.g., people who have been recruited and who have become recruiters themselves);
- Eliminating perks and other incentives for joining; and
- Making it easier to quit.

Many signed up to sell travel or to obtain travel discounts, but they quickly found it virtually impossible to make money selling travel. A plane ticket from Los Angeles to New York, for instance, would only yield $3 in profit. An international ticket from San Francisco to London would net only $6 in profit.

In 2007, the annual median income for those selling travel was $39.00, less than one month's cost to operate the Web site. The majority of consumers who purchased YTB Web sites made no money through the sale of travel, and many lost money through continued Web site operations.

By contrast, recruiting others to purchase Web sites, and having those purchasers recruit others to purchase Web sites (and so on), was much more profitable. Members earned money based on how many Web sites they sold, as well as how many Web sites those they recruited sold. These multi-level sales, combined with the required purchase of the $449.95 Web site, formed the foundation of YTB's pyramid scheme.

The stipulated judgment ends this pyramid scheme by:

- Prohibiting false and misleading marketing and requiring that consumers be provided with information about how difficult it is to make money through YTB. Until now, YTB has made wildly misleading claims about how much people can earn from selling travel. This included videos of YTB agents driving luxury cars and holding up $10,000 checks, and making misleading statements about millions of dollars earned in commissions. The stipulated judgment requires YTB to provide consumers with information in a clear and conspicuous manner about typical income earned by website purchasers, typical cost of operations, the number of people who quit, and the number of people who have not earned commissions. This allows consumers to see that most YTB travel sellers make no money, and in fact rack up high costs.

- Prohibiting YTB from charging consumers money in order to recruit others. Until now, the only way that consumers could demonstrate the Web site is if they had already purchased one for $449.95. The stipulated judgment requires YTB to establish a free demonstration Web site that must be used when recruiting others. This will reduce the incentives for people to purchase YTB Web sites, which are largely unprofitable when used to sell travel.

- Significantly limiting how much people can make from individuals they have recruited and who have become recruiters themselves. Sixty percent of recruiters' sales must come from persons who are not themselves recruiters; otherwise, their income will be reduced.

- Prohibiting YTB from:
- Issuing travel credentials in California and advertising that travel discounts, perks and tax-write offs are available by purchasing a website.
- Stating or implying that their travel rates are comparable with those of travel booking sites such as Expedia or Orbitz.
- Providing any recruitment bonuses or compensation based on the recruiter's purchase of a Web site.

- Requiring YTB to open up its operations to scrutiny by the Attorney General's Office. The Attorney General's Office will have access to all YTB marketing materials, events, meetings, gatherings and presentations to ensure the company is complying with the agreement and California law. YTB will also register as a franchise with the California Department of Corporations as required by law.

- Requiring YTB to make quitting easily available by fax, email, or telephone.

- Requiring YTB to pay $1 million in penalties, costs, and restitution to California victims who filed complaints against YTB.

In filings with the SEC since Brown's 2008 lawsuit, YTB stated that there is "substantial doubt about the Company's ability to continue as a going concern." Also, it revealed that in 2008 and the first quarter of 2009, YTB has lost $5.9 million from its operations. The number of internet Web sites sold decreased 75% in first quarter 2009 compared to first quarter 2008, and the total number of Web site owners decreased 53% in first quarter 2009 compared to first quarter 2008.

Advertising Review

BBB has no information regarding advertising review at this time.

Additional Information

According to filings with the Security and Exchange Commission, for the first quarter of 2008, only 12.5% of YTB's net revenue was derived from the online sale of travel, while almost 80% came from the recruitment of people to join their online travel business. Based on the number of Referral Travel Agents (RTA) listed in these filings, the average amount made by each RTA through the sale of travel through their Web site for the first quarter was $27.75; on pace for a yearly income of $111. It costs an RTA about $600 a year for the upkeep of their Web site, not including the initial $449.95 start-up fee.

In addition, the International Air Transport Association Network (IATAN) confirmed that their relationship with YTB was severed due to "failure to maintain standards of accreditation." YTB disputed IATANS actions, but upon review the actions were upheld.

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ID: 110220794
Report as of November 22, 2009 09:39
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