A pyramid scheme is a non-sustainable business scam that generates money primarily by enrolling other people into the scheme, without any product or service being delivered. Eventually, the whole scam collapses under weight of its own deception, and everyone but those at the very top lose.
The key to detecting a pyramid scheme is to look to use of the products or services at the end user-level – not the growing numbers of enthusiastic investors. Even if thousands of individuals are buying $1500 starter kits of revolutionary herbal supplements, you want to make sure end users are buying and using the stuff. The reality may be that the totality of company sales is furnishing garages and spare bedrooms with pallets of aging alfalfa.
Always verify the truthfulness of the sales pitch. That’s the lesson from the chart below, constructed from the lawsuit filed by the CA Attorney General against YourTravelBiz.com, an alleged pyramid scheme. (see YTB INTERNATIONAL: State of California v. YourTravelBiz.com (PDF)) The travel agency franchisor is alleged to be in the business of selling $1000 "online travel agencies" that never sell travel… they just sell more $1000 travel agencies.
| THE YTB PITCH | THE YTB REALITY* |
| YourTravelBiz.com agents will easily make hundreds | Only a tiny fraction of YourTravelBiz.com consumers earn enough money to offset the required fees. |
| Sale of travel to friends and family alone will yield hundreds or thousands of dollars in commissions. | The actual median annual travel commission earned is $0. |
| Minimal effort by the consumer will earn thousands; With increased effort the consumer can earn $5,000 to $10,000 in travel. | Almost no consumers manage to earn such amounts through the sale of travel. |
| Examples show large travel sales commissions and earnings indicate the significant income potential of YTB. | The typical consumer sells no travel in a 12-month period and earns nothing from the |
| Referring travel agents will receive valuable travel discounts worth | Many vendors and suppliers refuse to honor YTB’s travel credentials |
| The financial benefits of the YourTravelBiz.com business opportunity easily offset the fees. | The vast majority of YourTravelBiz.com consumers lose money |
| YTB International operates a legitimate business | YTB International operates an illegal pyramid scheme |
| Consumers are guaranteed substantial earnings if they purchase YTB proven marketing materials | Few consumers earn a profit and the vast majority lose money |
| The YourTravelBiz.com business has experienced “spectacular” growth and will | The attrition rate of YourTravelBiz.com "agents" is extraordinarily high. Like all pyramid schemes, the advertised growth is unsustainable |
| YTB International & YourTravelBiz.com have sold millions of dollars of travel. | Much of their travel sales is their own participants’ personal travel or travel sold to other participants |
| * Reality as defined by the California Attorney General’s Complaint |
Related: YTB INTERNATIONAL: YourTravelBiz.com Defenders Say It’s Not a Scam
YTB INTERNATIONAL: Is YourTravelBiz.Com a Pyramid Scheme?
Is YTB International, YourTravelBiz.Com a Scam?
YTB INTERNATIONAL: State of California v. YourTravelBiz.com (PDF)
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If someone is pitching YTB that you can earn hundreds of thousands of dollars selling travel, that is someone speaking independently of YTB because YTB NEVER made those claims. What YTB says and delivers is that they will pay you 60% of the commissions earned from any travel one sales. For those that sale more travel their commissions will be higher and for those that sale less travel, obviously their commissions are lower. Is it possible to make thousands of dollars in commissions? You bet it is, but it takes work and effort.
Honestly and Truly, it does not take much in travel sales to offset your fees, but YTB never makes that claim.
YTB makes no guarantees whatsoever. How can they? If you work you business and you sale travel, you can make a significant income. The problem I see is that people think they can pay out $449.95 to buy their business, never invest any time into working the business, never invest any additional money into education and marketing and they are supposed to become a millionaire. This is an assumption that people draw, but not a promise that is made by YTB. In fact, they tell you if you do nothing, you will make nothing.
YTB is not a scam nor is it a pyramid or ponzi scheme. It is as legitimate as McDonalds, you just have to put time and effort into building your buisness.