YTB Reaches Structured Settlement
Back in April we got word of a “tentative” settlement with California concerning this notion that we are some sort of gigantic pyramid scheme. I got word yesterday afternoon that the word “tentative” has now become “final”. I have to admit, when I read Jerry Brown’s press release, I was taken aback over his choice of words that he has “brought an end to an elaborate pyramid scheme“.
What brings calm to this situation for me, was clicking the link to the actual legal document that was signed and filed with the courts. I would also suggest to everyone in YTB that we focus on the legal documents here, and not get caught up in the spin of what YTB can and can not do.
YTB has been in discussions with California for the last two years. Fact is, YTB is ALREADY doing the vast majority of what’s mandated. There are however a couple of new items, which we will let you decide if they’re all that difficult to abide by. If you’ve been doing things right all along, there really shouldn’t be any changes in the way you conduct your business.
What I find interesting is that YTB is being required to file with the California Department of Corporations (DOC) and gain approval to sell franchises. Yes, franchises. From my understanding, documents are already in the hands of California at this time and it will take some time to get everything ironed out. (90 days plus according to the filing.) If a franchise is in the works for California, I would speculate that like everything else that we’ve put in place because of California the franchise will also go company wide. Currently I am aware of 14 states including California and Illinois that will require this type of disclosure to move forward. From all the phobias about MLM, I can only see this as being a positive move.
Question: Is this one of those pyramid deals?
Answer: No it’s a “franchise”.
It doesn’t matter that a franchise has many of the same features of an MLM, it’s the public perception here that counts. ;-P
Why YTB is required to do this and no other MLM is, I really couldn’t tell you. Fact of the matter is, YTB’s been singled out (once again) and we’re required to move to this franchise model in California and now possibly Illinois.
So let’s look at what’s “changed” here.
We must “change” as to not require a Website Seller to be or become a Website Owner, and shall not require a Website Owner to become a Website Seller. Since we’ve never required anyone to do one the other or both I really don’t see why this is even in here. That disclaimer has been on our Marketing Sites for years, and has also been part of our presentations.
No Website Owner shall promote, market, offer, sell, or make any representations regarding the Website Owner opportunity unless the Website Owner is also a Website Seller. If I own a Travel Website, and want to sell websites, I have to also be a Website Seller. I can however be a Website Seller only, which of course remains a free position with the company.
Many in the business didn’t understand why the booking engine link was removed from our marketing sites a while back. It was much easier to show our “product” this way. Many as well don’t see why YTB sends out a Travel Compass on Thursdays, and a Biz Report on Fridays. Why not combine the two?
Effective June 1, 2009 the Website Owner opportunity shall be separate and apart from the Website Seller opportunity and Defendant’s marketing, promotion and information regarding the opportunities shall be strictly separate. Information about the two opportunities shall not be combined in any brochure, flyer, advertisement, e-mail, internet advertisement, or any other writing promoting either opportunity.
Point is, the company made this separation ages ago and has little effect on how we currently promote the two opportunities with the exception of our live opportunity meetings. Thus the creation of the Travel Parties at the beginning of the year.
There shall be no fee to become a Website Seller, for any training or certification or exam related to becoming or remaining a Website Seller, or for any aspect of becoming a Website Seller. Mind you, “Website Seller” is formerly known as a “Rep”. Can anyone remember a time when YTB charged a single red cent for any of this?
We’re all aware of the Income Disclosure Statement we currently hand out. Like that’s a “new change”. We do however have to provide one for Travel now as well, but not together of course. (Remember the opportunities are separate.)
You know that about the SEC filings that states how many RTA’s we have, how many joined, and how many dropped out. Again, like that’s a “new change”.
The disclaimer we currently use for California that no one can guarantee your success, not everybody makes money in YTB, and that you don’t have to become a Website Seller is another “new change” that we’re already doing.
At this point in time, you may be asking yourself…what HAS changed?
Effective June 1 2009, Defendants shall provide a demonstration website for all Website Sellers to use to market the Website Owner opportunity, and all Website Sellers shall use the demonstration website and shall not use any other website to demonstrate the Website Owner opportunity.
Why? Because….
Website Sellers shall not represent or imply that a Website Seller must or should purchase a website in order to be successful as a Website Seller or that the purchase of a website may be used to help Website Seller sell websites. Why checking out BandBVacations.com won’t work for anyone who needs to check out how our booking engine works is beyond me. OF COURSE people want to see the “product” and if I didn’t have one, I’d show them one of the THOUSANDS readily available. But it makes the AG happy, so we’ll use a “demo” site to show people how this works.
Defendants shall not pay a Website Seller the full amount of such compensation unless at least 60% of the Website Seller’s total personal sales volume is derived from Website Owners who are not also Website Sellers. Meaning that you now need to limit the amount of Website Sellers in your business. You actually want people that are solely interested in selling travel. If you look at the Income Disclosure Statement from 2007, it documents that 80% of the people in YTB didn’t recruit a single person you quickly realize that’s not going to be hard to do.
The idea here is an attempt to limit the amount of income Website Sellers make. (Also known as “recruiters”.) Clearly, California and the “experts” who designed this didn’t bother looking at the Income Disclosure Statement when they designed this rule. With only 20% of the company acting as Website Sellers, it’s not going to be very difficult for Website Sellers in the company moving forward to make that 60/40 split. Unfortunately for California and other critic who have a phobia about “recruiters”, they got too caught up in the actual income and not how the large sums of income were actually made.
I’m willing to bet, much like the minimum booking requirements that are now out the window which we agreed upon years ago (that didn’t slow us one bit) that this too will be modified when they see how this new rule doesn’t work they way they want it too. I don’t mean to be nasty here, but this is a perfect example of how the Anti-MLM just follow along with the myths and don’t look at the documentation provided. What they think is a huge drawback in the compensation will hardly effect a single recruiter who knows how the numbers really work.
Oh, and if by chance this little 60/40 split does work, guess who keeps the money. Coach, Scott and Kim. The very 3 men they are trying to bleed dry of money.
Moving on…
There will be a 14 day “cooling off” period for anyone who is looking at the business. Mind you, during this period there will be documentation provided by the company to help them make an informed, educated, business decision. Commissions available, market share, the training provided, and company tools to help them become either a Website Owner or a Website Seller. (All part of the “franchise disclosure laws”.) All franchises have a “cooling off” period in the required states.
And finally…why the AG even needs to put this in here just goes to show how STUPID some people are when it comes to promoting their business. We are now restricted from spouting off income, compensation lifestyle, pictures representing homes, vehicles, or leisure activities to imply we live “the good life”. This is a business folks. And while these things can certainly be enjoyed from owning a business, don’t flaunt it in order to put someone in the business.
Also, none of us are tax experts, so don’t make claims about tax deductions without first telling them to consult a CPA before writing anything off.
So…what did all this cost YTB? Here’s the kicker and it wasn’t even close to the $25 million filed in order to “protect consumers”.
$400,000 went for a fine directly to the state. $475,000 went to pay the legal fees for the state…and $125,000 went the the ‘victims’ who claimed they got ripped off. Almost 90% of the money paid, the state will keep, leaving the ‘victims’ with the remaining 10%.
So much for helping out the consumer.
Not quite the monetary penalty that everyone claimed it would be. In one regard however, the simple filing worked like a charm for those who laid claim that California was poised to shut YTB down. Many listened and left. Some out of choice. Some out of necessity because their businesses had been ruined since they couldn’t or wouldn’t fall back on the product that got us where we are today. (Travel)
In closing…I wish I could tell you that it’s all behind us. However, it looks like Illinois was waiting in the wings and within hours of the final settlement being filed, Illinois has now decided to jump in to take their share.
Not sure how this will play out now that the franchise model is in the works. We did know this was a possibility and I suspect the franchise was brought in to prevent states from “piling on”. How this will all play out, even with all the “changes” we’ve made because of California…
Right now…I couldn’t tell you.
One thing I can tell you is this. Our Founders, Executives, and Attorney’s are working on a solution. I’d advise you to stay focused as well on the solution instead of the problem.
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May 16th, 2009 at 9:35 am
Before your post I read the settlement agreement and said to myself “YTB is already doing all of this”. Perhaps the demo site was new but just about everything else was already in place. If it was already in place then YTB was guilty of what? And the AG is touting some kind of victory? To recover 1/25th of the original amount sued for tells me that they really didn’t have much to bank on in the first place. And knowing the founders of YTB I doubt they have any problems whatsoever letting the AG office see the books. Just so frivolous and now Iliinois wants to follow suit (no pun intended). Well, if I remember correctly this is not the first time our founders have been to this rodeo.
May 16th, 2009 at 1:40 pm
The new demo site is going to be an outstanding marketing tool for us Medic. I found out what it will do yesterday and it’s exactly what I’ve been asking for. For an internet marketer like myself, it’s also a lead capture page with auto responders and click tracking to let you know when someone visits.
I also found out more about this 60/40 rule. The key here is the 3 people you need to refer BEFORE you qualify to sign up as a Website Seller. (Paying only a $50 referral fee, kind of like they do with Direct TV) We help them sell 3 Travel Stores (Website Owners) as Associates, (they themselves are one as well) then they qualify and can upgrade to a Website Seller if they want. If they do upgrade to both Website Owner and Website Seller as the “rule” implies, we now have 4 Website Owners total, with only 1 that qualifies as a Website Seller AND Website Owner in the new rule.
That’s 75% who are NOT Website Sellers and Website Owners well above the 40% who are not both that California wants. All your commissions, bonuses, and residuals remain intact and pays out 100% just as they did before.
I can tell you that most will simply remain as Associates, happy with the $50 referral fee. For the builders (sorry “recruiters”) who want to go after the big money and bonuses, it’s still wide open. Even if everyone wants to eventually upgrade, due to the way it’s structured, it would be virtually impossible to fall below 75%!!! (LOL!!!)
Tim Logan quoted Robert FitzPatrick about how everyone thinks this Demo and 60/40 rule limits our income. They think it will improve the lopsided commissions between website sales and travel sales and somehow even it out.
The actual “heart” of the matter is that none of these Zealots understand MLM well enough to figure out how to stop it. They have no idea what they just did and how it applies to our model. (Look at how John, Ainsworth, Moron, and all the others are telling you that your incomes been cut.)
This new “rule” proves how clueless the lot of them are. ;-P
May 21st, 2009 at 10:11 am
[...] that the company has overcome the allegations in California that some claimed would put YTB out of business, (the California AG’s and critics goal by the [...]
May 21st, 2009 at 5:55 pm
[...] that the company has overcome the allegations in California that some claimed would put YTB out of business, (the California AG’s and critics goal by the [...]
June 2nd, 2009 at 9:03 am
[...] that YTB is not following the new guidelines and rules based on the settlement that we reached with California in the middle of May. About all I can say is, let [...]
June 10th, 2009 at 8:14 am
[...] shut YTB down turned out to be nothing more than smoke and mirrors when it was all said and done. (We are still in business in case you hadn’t heard.) Law suits happen. It’s part of being in business, especially when you change an industry [...]
June 22nd, 2009 at 8:44 am
[...] need to control free enterprise and exaggerate every move the company makes, is another. With the legal attacks combined with the mud thrown up on the internet via blogs, forums, and message boards, a year over [...]
June 22nd, 2009 at 8:53 am
[...] need to control free enterprise and exaggerate every move the company makes, is another. With the legal attacks combined with the mud thrown up on the internet via blogs, forums, and message boards, a year over [...]
June 22nd, 2009 at 10:28 am
[...] need to control free enterprise and exaggerate every move the company makes, is another. With the legal attacks combined with the mud thrown up on the internet via blogs, forums, and message boards, a year over [...]
June 22nd, 2009 at 10:31 am
[...] need to control free enterprise and exaggerate every move the company makes, is another. With the legal attacks combined with the mud thrown up on the internet via blogs, forums, and message boards, a year over [...]
June 22nd, 2009 at 10:47 am
[...] need to control free enterprise and exaggerate every move the company makes, is another. With the legal attacks combined with the mud thrown up on the internet via blogs, forums, and message boards, a year over [...]
July 9th, 2009 at 8:11 am
[...] awards, recognition as a top seller of travel, moving foward with our franchise model, and a settlement over some very ugly accusations. This is another positive change, if for nothing else than to put an end to those silly questons [...]
July 15th, 2009 at 8:01 am
[...] I attempted to cut out all the nonsense and spin by asking everyone to actually read the filing instead of following the propaganda and spin elsewhere. For the most part, people did actually take the time to read the settlement and some of the bullet points that I documented at that time. [...]
July 17th, 2009 at 5:02 am
[...] all know by now how successful California was in shutting YTB [...]
July 29th, 2009 at 8:06 am
[...] timed lawsuit claiming YTB was a gigantic pyramid scheme. Now that’s it’s a year later, California is settled, and the meritless class action filed following California by a couple of ambulance chasers has [...]
August 10th, 2009 at 7:06 am
[...] should be noted that the hemorrhaging of our RTA’s has slowed significantly in part due to the California settlement. While there was an enormous amount of speculation over California winning it’s argument of a [...]
August 24th, 2009 at 7:43 am
[...] the ink was able to dry on the California Settlement on May 14th, Lisa Madigan, the Illinois Attorney General, filed their civil complaint against YTB and the [...]
September 2nd, 2009 at 11:41 am
[...] shabby for a company that’s been a very heated topic in the travel industry, had it’s share of legal battles and has been a daily rant for a select few with a false and limiting belief that Direct Sales is a [...]
September 2nd, 2009 at 7:29 pm
[...] Not too shabby for a company that’s been a very heated topic in the travel industry, had it’s share of legal battles and has been a daily rant for a select few with a false and limiting belief that Direct Sales is a [...]
October 9th, 2009 at 9:47 am
[...] company as whole, none of this would have happened. They’re Reps at heart. After a fight and successful settlement in place in California which not enabled YTB to continue doing business in the state, but kept our compensation plan in [...]
February 1st, 2010 at 7:02 am
[...] properly in conjunction with a settlement that will transform YTB Travel Network into a full fledged franchise model (instead the bogus pyramid scheme mantra proposed by critics) and documentation supplied by Travel [...]
April 19th, 2010 at 8:23 pm
[...] year later, the economy is turning around, the California suit is behind us, and the Class Action was thrown out as redundant, immaterial, impertinent, or scandalous [...]
July 20th, 2010 at 7:05 am
[...] he “brought an end to an elaborate pyramid scheme” in a very amusing press release. Legal documents however confirmed that all the time and money spent on the litigation pointed directly to the hoops YTB jumped [...]