Is YTB A Pyramid Scheme?

When I was fortunate enough to be introduced to and join YTB about a year and a half ago, I had no idea how many times I would be confronted about whether or not YTB is a pyramid scheme or not. It didn't matter whether or not I was talking to friends, family or complete strangers about the company, this question always seemed to surface. So I thought it would be a good idea to start this blog by addressing this issue. Is YTB a Pyramid Scheme?

First, I think we must define exactly what we're talking about when we use this term. As its name indicates, the pyramid scheme is structured like a pyramid with one person, the initial recruiter, at the top. This person recruits a second person, who is required to "invest" "X" amount of money that must be paid to the initial recruiter. In order to make his or her money back, the new recruit must also recruit more people under him or her, each of whom will also have to invest money. The process continues until the base of the pyramid is no longer strong enough to support the upper structure because there are no more recruits.

In short, when speaking of a pyramid scheme, most people will say that: 1. You must recruit others to join the company in order to make any money at all, and 2. Only the people at the top make money while those at the bottom spend and lose money.

This is indeed a pyramid scheme, but what some people may not know is that it illegal. It is a fraudulent means of getting people to pay money into a company or business enterprise with the promise of getting unusually high returns, but without giving them anything of substance for the money that they invested. In other words, not only is running a pyramid scheme against the law, but one way of clearly determining if a business is a pyramid scheme is by evaluating the product.

The questions that need to be asked are: 1. Does the company provide a product or service in exchange for the investment received? 2. Is the product or service truly valuable and worth the investment? In short, if there are no substantive products or services offered for the investment, the business very likely falls into the "pyramid scheme" or "scam" category. Conversely, if the company does provide a viable product or service, it is not likely to be a pyramid scheme or scam.

Now that we understand what a pyramid scheme is, back to our question: Is YTB a Pyramid Scheme? Why not evaluate it to see.

1. YTB is a publicly traded company. Why is this significant? Because since pyramid schemes are illegal and not legitimate businesses, they cannot be publicly traded. As a publicly traded company, YTB is tightly scrutinized by the Securities Exchange Commission. One of the duties of the SEC is to ensure that the companies that they regulate uphold the highest ethical standards possible for the protection of investors. This year, YTB's application was approved to be listed on the American Stock Exchange. This approval further substantiates the credibility of YTB as a legitimate and legal corporate enterprise.

2. YTB offers substantive products to sell. The YTB product includes seven travel business websites which include:
a. Marketing
b. Travel Booking Engine
c. Sporting Events, Concerts & Theater Tickets
d. YTB Flowers
e. YTB Cars
f. YTB Golf
g. Honeymoon Registry

These products that the YTB business owner receives is a business unto itself, opening the way for consumers to make purchases of the same products from the same suppliers that they would be buying anyway, and paying the business owner up to 60% of the commissions.

3. Recruiting is not the only way to make money in YTB. The YTB companies offer two unique and powerful business opportunities, that of referring travel agent or "RTA" and that of independent marketing representative or "REP". The travel agent opportunity has an initial fee under $500 and a monthly license fee of $49.95. There is no fee or travel agency purchase required to be a REP. You may choose to participate in one or both opportunities. If anyone joins YTB and chooses to focus solely on the travel side of the business, they can make a great living by selling vacation packages, cruises and many other travel-related products. You can also earn commissions simply by pointing people to your websites to book their own travels. The key to success in YTB, as in any legitimate business, is to treat the business as a business and not as a "get rich quick scheme." If you do this, a lot of money can be made on both or either side of the business.

4. YTB is an approved member of the DSA. On September 18, 2007, the Board of Directors of the Direct Selling Association (DSA) approved the membership applications of 11 direct selling companies, including the one submitted by YTB! YTB has met all requirements necessary for full membership in the association. As part of those requirements, the DSA reveiwed YTB's marketing and business plans to ensure compliance with all provisions of DSA's Code of Ethics.

"The members of the Direct Selling Association pride themselves in their commitment to the highest standards in business ethics," said DSA's President Neil Offen. "By applying for membership in the association and going through a rigorous approval process, these companies are saying they take their ethical obligations to their field salesforce and to the ultimate customer seriously and are willing to make a public pledge to that effect."DSA's Code of Ethics gives the direct selling industry one of the strongest self-regulatory codes in business today. All member companies are not only required to comply with the Code to be admitted to the association, but must also continue to uphold and promote the Code as a condition of continuing membership in the association. DSA's Code is enforced by an independent code administrator who investigates and prescribes remedies in response to salesforce and consumer complaints against member companies.The Code itself includes provisions requiring truthful disclosure of product information regarding price, grade, quality, quantity and availability. The Code expressly prohibits pyramid schemes, deceptive or unlawful consumer or recruiting practices, misrepresentation of earning or sales potential, inventory loading and unreasonable entrance fees. DSA is the national trade association of the leading firms that manufacture and distribute goods and services sold directly to consumers. Among its more than 220 active and pending members are companies selling both via a party-plan method and in the traditional person-to-person style. In 2006, U.S. direct sales were more than $32 billion with more than 15.2 million direct sellers nationwide. The vast majority are independent business people - micro-entrepreneurs - whose purpose is to sell the product/service of the company they voluntarily choose to represent. Approximately 90 percent of direct sellers operate their business part-time. For more information on direct selling,visit the DSA website at http://www.dsa.org.

So the short answer about YTB is that while it, like most businesses and organizations including corporations, churches, the military, nonprofit organizations, etc. has a pyramid STRUCTURE, it IS NOT a pyramid SCHEME. There is a world of difference between the two.

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Regina Osei is a successful mentor and coach who teaches her YTB Team members and other business owners how to succeed in business and how to market their businesses using diverse strategies and approaches both online and offline. If you are interested in starting your own online travel business and want the benefit of a mentor who is committed to your success, join our team today at http://regina.vacationmedia.net. If you have questions, e-mail me at: reginaosei@gmail.com or call 901-221-1630(1)