California Attorney General Jerry Brown is suing an online travel business for operating a “gigantic pyramid scheme” that recruited thousands of members with misleading claims that they could earn huge sums of money through its online travel agencies.
The suit names YourTravelBiz.com and its affiliates and alleges that its pyramid scheme only benefits members if they find enough new members to join the scam. Once enrolled, members earn money for each new person they recruit to join the scheme and not for selling travel packages. The company attracts new members by promising huge income opportunities via online travel agencies, but the average member makes nothing selling travel.
“YourTravelBiz.com operates a gigantic pyramid scheme that is immensely profitable to a few individuals on top and a complete rip-off for most everyone else,” Attorney General Brown said. “Today’s lawsuit seeks to shut down the company’s unlawful operation before more people are exploited by the scam.”
Company records show there were over 200,000 members in 2007 that paid $449 to set up an online travel agency with a monthly fee of $49. In 2007, only 38 percent of the company’s members made any travel commission. For a handful of members who made travel commission in 2007, the median income was $39, less than the monthly fee to keep the site. There are close to 140,000 of the company’s travel Web sites, all almost identical, on the Internet.
YourTraveBiz’s marketing materials include videos of people driving expensive sports cars, holding ten-thousand dollar checks, and claiming to be bringing in millions of dollars in profits. The company advertises through its Web site, and at conventions, workshops and nationwide sales meetings.
Brown charges the company, its affiliates, and the company’s founders J. Lloyd Tomer, J. Scott Tomer, Kim Sorensen and Andrew Cauthen with operating an “endless chain scheme.”
Brown is also going after the company for unfair business practices and false advertising, which include deceptive claims that members can earn millions of dollars with the company.
The lawsuit seeks to get a court order against YourTravelBiz.com that will bar the company from making false or misleading statements. It also seeks a civil penalty of $15 million and $10 million in restitution for Californians who were ripped off by the company.
