LOS ANGELES (CN) – YourTravelBiz.com bilks its members out of hundreds of millions of dollars in a “gigantic pyramid scheme that is immensely profitable to a few individuals on top and a complete rip-off for most everyone else,” California Attorney General Edmund Brown said in a lawsuit filed in Superior Court.
The company, which has hundreds of thousands of members, entices new members with ads showing ostensibly successful “agents” driving Porsches and waving $10,000 checks. Members pay $449.95 to join and $49.95 per month to maintain what Brown calls “essentially worthless” online travel agencies.
According to the lawsuit, a member’s only hope of realizing even a portion of the wealth the company advertised was in finding new members to perpetuate the pyramid. The company’s records allegedly show that, although more than 200,000 members paid $1,000 to join the scam in 2007, only 38 percent made enough in travel commissions to recoup the cost of one month of membership fees. Meanwhile, the founders of YourTravelBiz.com made $141 million in membership dues in 2007.
Brown sued the company and its four founders for $15 million in civil penalties and $10 million in restitution for California members, along with a permanent injunction against the company’s activities.
Brown says that the company, in additional to making false claims, ran an illegal travel discount program which gave members discounts only available to actual travel agents and operated its business without filing a required notice under California’s Seller Assisted Marketing Plan Act.