From across the pond, my friend, Scam sent me some information about another MLM business that is being accused of being a Pyramid Scheme.
Jerry Brown sues YourTravelBiz.com over alleged pyramid scheme
Some quick takeaways:
"Atty. Gen. Jerry Brown sued an Internet-based travel business Monday, accusing it of operating a pyramid scheme and seeking more than $25 million in fines and restitution.
The company, YourTravelBiz.com Inc. of Wood River, Ill., recruited tens of thousands of members with promises they'd earn big returns by setting up personal travel agency websites, the complaint said.
The business is "immensely profitable to a few individuals on top and a complete rip-off for most everyone else," Brown said. "Today's lawsuit seeks to shut down the company's unlawful operation before more people are exploited by the scam."
...***...
"The lawsuit in Los Angeles County Superior Court accuses YourTravelBiz.com of enticing individuals to pay more than $1,000 a year in fees with promises that they could become millionaires and qualify for deals available only to professional travel agents.
"In 2007, consumers paid over $103 million to Defendants for websites, but made only $13 million in travel commissions in a business Defendants advertised as the 'easiest way to make money' and earn 'serious income' without any selling," the lawsuit said.
An estimated 62% of 200,000 YourTravelBiz.com participants didn't earn a single travel sales commission in 2007, the attorney general's office said. The California lawsuit is the first by any state against YourTravelBiz.com, said Gareth Lacy, a Brown spokesman."
Will this affect Mary Kay? I know there are differences between Mary Kay and YTB, but what impact might the ruling on this case have on Mary Kay?
Thanks Scam for calling attention to this.
A whole blog devoted to Travel MLMs
Scam's original article on this
Posts
Essentially, what effect this has on Mary Kay, if any, will depend upon the verdict of this particular lawsuit.
ReplyDeleteJohn Frenaye has discovered that Illinois is preparing to file suit too, and Florida may be the next state to join them.
If any of these successfuly prosecute their case then it would seem likely that all 50 states will end up in the legal mix.
As the lawsuit seems to be targeting individuals within ytb, as well as the company itself, I would imagine that the results could have widespread ramifications for all multi level / network businesses, as well as every single individual who is associated with them.
Scam,
ReplyDeleteIt seems that the widespread ramifications of the results could go either way, wouldn't it?
If they (y.t.b.) are found guilty and forced to pay damages, all companies, businesses and those involved with businesses structured in a similar way are going to have to revisit their rules and the way they enforce them and hope that they won't be "next".
If they (y.t.b.) are found innocent, or the lawsuit is tossed out, (or whatever else happens where y.t.b. would be labeled "okay") then it will (may?) be a long time before anyone tries to go after a well established company that has an MLM distribution model. (on that note, it does not seem that ytb has as many years on, say, Mary Kay... do you know how long they have been around... how "established" they are in their industry?)
Also, if it turns out that they (ytb) were 'pyramiding', it will really depend on what activities they were engaging in that warrants the 'pyramid' label, and whether or not Mary Kay could be proven to be doing so as well... it seems.
I remember being approached by ytb folks (before you were discussing it on your blog. What was presented to me screamed scam!!! All of my questions were answered with vague uncertainties, and it sounded like nothing but trouble.
I think one of the reasons that companies like Mary Kay try to shy away from the "MLM" label is that pyramid scams tend to mimic MLM models and claim to be MLM models, and the confusion that is created makes that a very undesirable title.
It seems very probable to me that YTB can be a scam while Mary Kay can be not a scam. (sorry for the awkward wording, just trying to say establish that I have not intention of declaring either one with any level of certainty.
**
On a different note, the article you sent me (and I linked to in this post) cites a "Mark Ewing" as calling YTB a 'card mill' on youtube. I looked him up on youtube, and maybe I found the wrong guy, but everything about the Mark Ewing I found had "scam" written all over it! I don't know much about travel, but I do know a good scam cooking when I see one (thanks of course to my extensive reading on ScamTypes(dot)Com!!
Have you seen this "mark" guy?
What are your thoughts on his "offering"?
Do you think that Mark Ewing may end up on the pages of ScamTypes(dot)Com?
If Mark is little more than a scammer himself, how much credibility does that lend to the article in question?
Obviously, the credibility of an article written about a lawsuit is going to have little (to no) effect on the lawsuit itself!! And since I am, at best, a disinterested observer to the whole YTB thing, I decided not to inquire about the journalistic integrity of said article, but still!
Ok, I am rambling, and I could go on and on, but just thought I would make up for the (relatively) short post with a really long comment and get some of my thoughts out in the open!
No matter how the "cookie crumbles", it will be interesting to watch.
http://en.wikipedia.org/wiki/Multi-level_marketing
ReplyDeleteread this I think MK will be fine.
As usual I agree with Colleen. ;)
ReplyDeleteColleen
ReplyDeleteI would actually agree with you there in so far as I believe MK to be far more reputable than other multi level businesses I have read about.
The only possible issue I see with MK is in terms of those "..members "inventory loading" in order to qualify for additional bonuses..".
Obviously this may be just the odd individual who is trying to obtain/retain the car, etc but I am right in thinking this occurs to a degree arn't I?
David
ReplyDeleteI agree, this lawsuit could go either way.
As you summise, if it goes against ytb then I believe that would lead to much further scrutiny of a large number of other companies who operate a similar type of model / compensation scheme.
Likewise, if there is found to be no case to answer then the whole point becomes moot.
As for Mark Ewing, I hadn't come across that name prior to reading John's notravelmlms blog recently.
From the little I read I got the impression that he was involved with a rival to ytb in some capacity.
What effect this may have on his commentary on ytb is, of course, very much up for debate.
Will I feature Mark Ewing on my site?
I don't have any plans to do so at the moment (I have an mlm series to finish, A bigfoot series seems to be called for, and a post about the illuminati may provoke a few conspiratorial posts) but who knows what the future will bring.
Again, you are right to say that an article will not influence a court case.
However, I am hearing from several sources that this lawsuit may be spreading to other states, presumably after the result in California is known.
As I stated in my previous comment, I personally believe MK to be far more ethical than some other companies I have looked at, but that doesn't mean to say that their, or certain individual's, business practices won't be looked at if ytb come out of this badly.
Scam said
ReplyDeleteThe only possible issue I see with MK is in terms of those "..members "inventory loading" in order to qualify for additional bonuses..".
Scam you reading my mind!!! Believe it or not I have heard that MK is cracking down on things and although it would make bad business sense for MK to limit the amount of inventory someone can get
I do think they are going to be watching out for reports of frontloading!! If a person puts in an order on their credit card or debit card no big deal. If that card is lost or stolen and someone does it that is the time to crack down. One of the complaints with this agency is that people have not been getting commissions. MK has a 45 year history of paying commissions and being reputable as far as their product working and consultants and
Directors getting their checks. The only way MK would have a problem with frontloading is that if they were an MLM were the bigger commissions were based on recruiting and you couldnt make a decent profit on sales. Mary Kay was ahead of her time she didnt set it up back then like Amway did where most of the money came from recruiting she gave a 50 percent profit on orders and a lower commission on recruiting. For those who have been in longer yes I do remember if the order was lower than 600.00 you would only get 45 percent but that was a long time ago MK had to keep up with the times.
Mary Kay is HERE to stay! Let's not mingle in the affairs of other Direct Sell or MLM companies. I believe that Mary Kay is the envy of the Direct Sells industry...because MK has always been ethical, stuck like a ROCK by the Goal Rule, and lets not forget the GOD 1st, Family 2nd, and Career 3rd.
ReplyDeletehaute pink : Does Mary Kay sit at the right or left hand of God?
ReplyDeleteForgive my ignorance but I thought Mary Kay was a business, not a religion or, dare I say it, cult?
This comment has been removed by the author.
ReplyDeleteThis is John from http://notravelmlms.blogspot.com
ReplyDeleteMark Ewing, is a MLM expert. He was involved in several and the largest one escapes me but was shut down and he lost a lot of money. He had over 100K under him. His program now is not MLM and it is a curriculum to teach people how to organize group and affinity travel--and as the organizer, go for free. I don't think he is a scam and I have had many conversations with him and he is VERY well versed on the whole MLM deal.
My personal take on this YTB thing is that they will go down. With a civil suit there is discovery and they will find much more than they disclosed in the 18 months of "negotiations". I do know that there have been reports to many federal agencies about YTB as well--if they do anything is anyone's guess. My guess is that there may even be a criminal filing and the top level directors will be in a lot of trouble.
Mary Kay...I don;t know enough about the company to offer an opinion as to how it would affect them, but if the bulk of the income for the company is coming from signing on reps and not selling product, there is a problem.
See, in travel, the margins are so slim to begin with and you can only cut a cake so thin.
At the Right hand of GOD!
ReplyDelete-Just kidding ;)-
First, Scam, Mary Kay is a great company which have always upheld those aforementioned values.
Now, from my readings on this and "other" websites, I will admit that some of the people have NOT kept themselves or their personal MK business with those company values of integrity to achieve success. However, to go as far to suggest that Mary Kay,Inc - the business or its company vaules- a cult or a Religion is CLEARY insane.
I'm MADDDDDDD so that would make perfect sense to me.
ReplyDelete* Scam goes looking for the pencils to stick back up his nose *
(I'm not actually anti-MK if you hadn't realised, though I am generally anti-mlm).
Maybe it is true, then, that some ex-MK people are somewhat cult-like huh?
I'm sure a few people here will know to whom that refers ;)
Haute Pink,
ReplyDeleteYou said:
"Mary Kay is HERE to stay! Let's not mingle in the affairs of other Direct Sell or MLM companies. I believe that Mary Kay is the envy of the Direct Sells industry..."
Particularly, I am curious about the part "Let's not mingle in the affairs of other Direct Sell or MLM companies.". Do you feel that we should isolate ourselves from other things that are going on in the industry? If so, why are you posting here? The point of this blog is to look at Mary Kay from many different angles, and try to present a balanced view of Mary Kay. A lawsuit against a company that operates (or claims to operate) in a similar way as Mary Kay is, I think, very relevant.
If YTB is determined to be a pyramid scheme because portions of their sales force were making claims that were not authorized by the "corporate" company, then certainly Mary Kay could be in the same boat as, allegedly, there are members of the Mary Kay sales force that present and operate MK in a manner very similar to(if not exactly like) an illegal pyramid scheme.
So, why do you feel that we should not discuss this?
Also, on what do you base the statement, "...I believe that Mary Kay is the envy of the Direct Sells industry..."? Just a personal belief? Or do you have some evidence that Mary Kay is looked on with some level of envy by other Direct Sales companies?
Hi John,
ReplyDeleteWelcome and thanks for stopping by.
I find it interesting that while you assert:
"See, in travel, the margins are so slim to begin with and you can only cut a cake so thin."
And yet you feel that Mark, who from what I have seen, promotes that there is a lot of money to be made "doing what he does".
One of my 'mantras' is "If it sounds too good to be true, it probably is". Although, increasingly, it is my impression that, "If it sounds too good to be true, IT IS. PERIOD".
What I saw on his youtube clip and on his website led me to think, "this is too good to be true". I don't have the time, energy or desire to look into it, maybe he is, maybe he isn't, I really don't care.
I am, however, interested in where the YTB case goes, and what the ramifications of the findings of that case will have on other business models.
I know that the YTB/Anti-YTB crowds are VERY passionate about their position, and both go to great lengths to "make their point" on any blog that will let them!!
David,
ReplyDeleteHaute Pink has a point. I dont have concrete proof of this although give me a few days and I can find some quotes. I DO know that there are some companies who are envious of our car program because their requirements are tougher. The name recognition and also the commission plan are the envy of other direct sales companies not on a large level but on a medium level.
"BalancedMaryKay.blogspot.com is the envy of the blogosphere industry"
ReplyDelete- I dont have concrete proof of this although give me a few days and I can find some quotes.
Trust me, I could!
Even if I had to write them myself!
That's one downside of the internet - if you are determined then you will be able to track down something that can prove anything.
Hi David,
ReplyDeleteAgain Mary Kay, Inc is a great company. An single idea from an older, retired, mother created a legacy – a Billion dollar a year company- that has lasted for over 45 years and is now has the brand recognition (e.i. the Pink Caddies, the skincare, and makeup ) that even a great marketing tycoon would have loved to help create.
My quote of “ Let’s not mingle in the affairs of other direct selling and MLM companies,” was simply stating that Mary Kay cannot be compared to another company that is not offering the same products and or services as Mary Kay. If this was Arbonne, Avon, WarmSpirit, or BeautiControl then this would be relevant to our specific industry in Direct Selling.
YTB was not known in my area as a reputable company however that not everywhere however, I do agree with you that this good information but it not specific to your target market on this blog.
Forgive me if I’m wrong- America- and my sister IBC's,
perhaps this is just my opinion just like it was MY opinion when I stated that “Mary Kay is the envy of the Direct Sells Industry.”
As I said earlier the woman Mary Kay must have had keen foresight. She really did some revolutionary thing not only in Direct Sells but in BUSINESS. Not has a woman in this industry been so innovative in Business since Madame C.J. Walker in the 1900’s . As Colleen has stated there are many companies who have tried to do career outfits, car incentives,do the same company values and more. People have always looked the success of the Mary Kay Inc, and have tried to duplicated it some have made it work for them but most have failed.
There is this one movie that I LOOOVE it called Hell on Hells: The Battle of Mary Kay Ash. – this movie sort of makes my second point! It funny but I encourage you watch it. (Yes, that's off topic...)
Stay Haute 4 PiNk
Scam said:
ReplyDelete"BalancedMaryKay.blogspot.com is the envy of the blogosphere industry"
Oh, I know that's the truth!
Let me know when you find the proof!
Haute Pink,
You said (regarding this topic):
"...not specific to your target market on this blog..."
I beg to differ.
YTB is being accused of operating an illegal pyramid scheme.
Mary Kay has been accused of the same thing.
The only difference (currently) is that YTB is now being "officially" accused of it.
If the accusation of YTB is successful, that will set a precedent for people to accuse other "similar" companies of operating the same way.
The specifics of this case should be particularly interesting to "my demographic" because if, for instance, YTB is found guilty of 'pyramiding' because one (1) recruiter engaged in 'pyramid-like' activities, Mary Kay would be vulnerable if they had any consultants that were offering something that similarly resembled illegal pyramid activities.
I sincerely doubt that the case against YTB will be based on one or two isolated cases, and I am sure that the differences between Mary Kay and YTB are significant.
Nonetheless, once a precedent is set, all similarly run companies could be targeted with similar suits.
Simple answer, if it turns out that YTB is an illegal pyramid scheme, the facts of the case could go along way to implicating Mary Kay. But at the same time, that does not necessarily mean that Mary Kay is just because YTB is.
Didn't the same thing happen with Amway and now they are called something else. I don't think that MK has really anything to worry about I really don't however this is just my opinion. MK has a lot of lawyers that work for them, and you know that they are on top of their game. I guess time will tell. We will just have to wait and see. I personally don't see this as a MLM again just my opinion. I think if people are getting ripped off then something should be done however I don't think that MK has ever said that you are going to be a billionaire tomorrow. Some of these things do that I don't know if this one does. However, I can't help but say you should have read the fine print, they didn't make you sign up did they? I think that people need to take PERSONAL RESPONSIBILITY again this is just my opinion. Have a GREAT EVENING
ReplyDeleteGood morning from Colorado! I hope you are all enjoying your summer.
ReplyDeleteSince my name is popping up on this blog, I thought I'd drop in and share a bit. Nothing like hearing it from the source.
My name is Mark Ewing. I am a professional group travel organizer. I run several travel clubs. I am the founder of a professional organization for leisure group travel in the travel industry. And, I help teach people to become group travel organizers. As you might be aware, I have an online course. I am very proud of our course, and we stand behind it 100%.
I totally understand the "to good to be true" stigma, and that is why we offer a free intro course that explains the how and the why of what we do for a living.
There was a time when I was a young man, that if you told me that I could get paid to hang out at the beach and watch the girls in bikinis, I would have told you that it was too good to be true. But then I found out about being a lifeguard and a Water Safety Instructor (WSI). I did what it took to become a WSI and Senior Lifeguard, and I was able to enjoy that lifestyle for many years. It was not all about girls in bikinis. And, it was not a free ride. I had to take and pass certain courses. But the result was great.
Becoming a professional group travel organizer is very much the same thing. It is not a free ride, but it can offer an amazing lifestyle, if you do what it takes to become one.
You are all more than welcome to take advantage of the free online course, and judge for yourselves. You can get the intro course at http://www.RealVacationCareers.com (don't blame me plugging my course... it is only fair since some of you are trying to dog it!)
As for YTB, Mark Kay and MLM/Network Marketing:
For the record, I have never been a member of YTB, or any of its competitors. I am currently not associated with any MLM/network marketing company of any kind.
In the past, I have been extremely successful in mlm/network marketing. I have seen the good, the bad, and the ugly side of the network marketing industry first hand. In fact, I am known in the industry as a "heavy hitter" even though I am not your typical MLM'er. You see, I am not a big fan of most mlm companies. There are very few companies that I would call "opportunities". I think that the concept of Network Marketing and MLM is fantastic. Unfortunately, the reality usually sucks.
One of the major problems that are faced by Network Marketers (reps, RTA's, sales people...etc...) is that it doesn't take much to collapse even the best of businesses. (I call it the "chicken little syndrome") And, if the company is pushing the legal boundaries, one toe over the line can mean disaster. The public image of mlm/network marketing is bad to begin with. Throw a legitimate legal issue in the mix, and you can say goodbye to all your efforts.
There in lies one of the major problems; There are too many uncontrollable variables when you are just an associate. As a reo, you have no control over the company. You have no control over the other reps. You have no control over the media. etc... This means that you have no control over your distributorship. Years of hard honest work can be wiped out because one rep on the other side of the world makes an income claim. Or... any other issue can have the same result. And even though you thought that you were "self employed", you find yourself out of business and having to start over.
Mary Kay is actually one of the mlm companies that I consider as one of the "good" companies. I don't have any first hand knowledge of the inner workings of Mary Kay (which means that I might be wrong here), but what I do know is this: I know that my wife is always on the lookout for our local Mary Kay rep so she can purchase her favorite tube of lipstick. That to me is a major "good sign". Imagine, a customer that has no interest in being a Mary Kay rep, that wants the product bad enough to hunt down a rep. Lipstick is everywhere. And I don't think that Mary Kay's lipstick is the least expensive. And yet, Mary Kay has a lipstick that my wife can't seem to live without. So, to me, Mary Kay is truly a product driven company.
For most mlm companies, the product is only the "front" to have people go out an sell the biz-op. The biz-op is actually the primary product. I believe that this is YTB's short coming. When you hear from a Mary Kay rep, they try to sell you on the product. I have yet to run into a YTB rep that has tried to sell me travel first. All the YTB reps that I have come across all try to sell me on the biz-op. Most of them only try to sell me on the biz-op. And that is a major difference between the two companies.
Will YTB's problems effect Mary Kay? Who knows. It may actually improve Mary Kay. I doubt that it will hamper or hurt Mary Kay. MK has been established and has been accepted into American Culture for a long time now.
That doesn't mean that MK can't screw it up in the future.
Mary Kay has done an excellent job at branding and promoting products that are perceived as quality products. Most mlm companies haven't been able to truly accomplish this.
If you want to know where I stand with YTB, you can watch my YouTube video at:
http://www.youtube.com/watch?v=6sRwSinIksI
I am very aware that my videos do not make YTB'ers happy. I didn't make the videos for them.
You are all more than welcome to contact me if you have any questions about a career in the travel industry. (Please don't try to recruit me into your current biz-op. I have retired my mlm shoes, and I am busy building my own travel clubs.) My phone number is 303-575-1193.
Sincerely,
Mark Ewing
PS. My wife just placed another order with Mary Kay just a week or so ago. So she is well taken care of as well.
Mark,
ReplyDeleteWelcome and thanks for the clarification.
Unfortunately, I haven't the time to offer a proper response, other than to say that you have presented yourself quite well here and I thank you for your candor.
I will say (quickly) that I suspect the "problem" here is somewhat similar to the "problem" some have had with Mary Kay.
Namely, when you talk about your "dream lifestyle" or a MK IBC talks about her "dream lifestyle", I, or the person you are talking to, picture my, or our, dream lifestyle.
In some cases, they are not the same.
For instance, using your lifeguard illustration, I may want to sit on the beach all day, but I don't want to have to watch for drowning people all day while I do it.
Many hear key "cue words" and ignore the part about "work" and envision a "best of both worlds scenario" that is too good to be true.
It does seem that you go to some length to ensure that people get a good reality check (for free) from you so that they can make a well informed decision. It seems that is more than can be said for some who ended up on Pink Truth.
As I said, I must be brief right now, so I may have more to say later. I hope that I can use your glowing endorsement of Mary Kay in future posts?
Thanks again for stopping by.
Let me tell you in no uncertain terms that getting into Mary Kay Cosmetics is extremely dangerous! Recruiters consistently lie about everything, and the lies are perpetuated over and over:
ReplyDelete"MK marketing plan taught at Harvard" NOT!!!!
"MK is a dual-marketing plan" NOT!!!
"Executive income on part-time hours" NOT!!!!
"You can write off your personal use of products as advertisement" NOT!!!!
Make no mistake that MKC is a devious, corrupt company whose catchy motto "Enriching Womens' Lives" is anything but! Thousands upon thousands of womens'lives have been destroyed by following the advice and business practices handed down from their uplines: divorce (their widely taught "husband unawareness program"), foreclosures (ordering incentives and "short-term loss for long-term gain"), and bankruptcy ("fake it till you make it").
Beware! Mary Kay Cosmetics preys on womens' natural trust.
If this lawsuit being discussed here rests upon the fact that their salesforce consistantly lie about the "flopportunity", then yes, MKC will be next. And for the sake of innocent women, I truly hope it will.
Let me tell you in no uncertain terms that getting into Mary Kay Cosmetics is extremely dangerous! Recruiters consistently lie about everything, and the lies are perpetuated over and over:
ReplyDelete"MK marketing plan taught at Harvard" NOT!!!!
"MK is a dual-marketing plan" NOT!!!
"Executive income on part-time hours" NOT!!!!
"You can write off your personal use of products as advertisement" NOT!!!!
Make no mistake that MKC is a devious, corrupt company whose catchy motto "Enriching Womens' Lives" is anything but! Thousands upon thousands of womens'lives have been destroyed by following the advice and business practices handed down from their uplines: divorce (their widely taught "husband unawareness program"), foreclosures (ordering incentives and "short-term loss for long-term gain"), and bankruptcy ("fake it till you make it").
Beware! Mary Kay Cosmetics preys on womens' natural trust.
If this lawsuit being discussed here rests upon the fact that their salesforce consistantly lie about the "flopportunity", then yes, MKC will be next. And for the sake of innocent women, I truly hope it will.
Wow pfnm, now that you have said the same thing twice, tell me something:
ReplyDeleteAre you planning on sticking around to discuss the assertions you just made or are you just a cowardly spammer?
I suspect the latter, care to prove me wrong?
wow, I think someone has been reading too much pt.
ReplyDeleteJumping into the fray here...
ReplyDeleteScam said: "That's one downside of the internet - if you are determined then you will be able to track down something that can prove anything."
I totally agree. One thing about the blogosphere is that anyone can say anything. And I'm sure we've all read the anythings.
I trust academic text books and business journals. Well, one of the things I've heard is that the Mary Kay business model is taught at Harvard Business School. I didn't go there, so how would I know? Interesting though, I was conducting a skin care class at my own Alma Mater last spring, and one of the students in attendence handed me her text book from her business class, and there in Black and White was a picture of Mary Kay Ash and the story of her business...45 years later and it's really is being taught.
I have heard that Mary Kay is a member of the Direct Sales Association, and that they do not allow MLM's as members. I don't have verification about that in particular, however, the November 2007 issue of Direct Selling News, the association's official publication, ran a feature article on Mary Kay Corp. A bit of it stated, “Mary Kay does more than 300,000 tests annually—none on animals—to support the safety and efficacy of the products it introduces each year…The company’s 100% satisfaction guarantee ensures that if a customer is unhappy with a purchase, Mary Kay will either refund the purchase price or replace the product." The article also points to an effort that the Cosmetics, Toiletry, and Fragrance Association has undertaken, and indicates Mary Kay as a model company and an industry leader.
Business text books and trade journals are much more trust-worthy to me than blogs. I personally think that makes MK enviable, to other direct sales businesses as well as other cosmetics companies.