Jerry Brown (D)
SACRAMENTO, Calif.(Legal Newsline)-A lawsuit filed this week by California Attorney General Jerry Brown against an online travel business has sent ripples of concern through travel-related businesses.
The move by California sparked an investigation by the Illinois attorney general's office on Friday, furthering the scrutiny on the Illinois-based travel business, YourTravelBiz.com.
Travel Web sites and blogs exploded with activity following Brown's announcement Tuesday that he would sue YourTravelBiz.com for operating a pyramid scheme that recruited thousands of members with the promise of lucrative online earnings.
"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," Brown said. "(This) lawsuit seeks to shut down the company's unlawful operation before more people are exploited by the scam."
Brown said the company held recruiting seminars in major California cities. Marketing techniques showed members of the business driving luxury cars and living extravagant lifestyles.
Travel industry experts hailed the move, while quickly seeking to differentiate their business interests from the proliferation of pyramid-type online companies.
"This is great news for me and countless number of travel agents," said Steve Call, a travel agent who writes a blog for a West Virginia newspaper, "and I congratulate the states for finally taking action against (this company)."
YourTravelBiz.com's company records claim more than 200,000 members who paid between $500 and $1,000 to set up their own online travel agency, according to the California Attorney General's office.
"In 2007, only 38 percent of the company's members made any travel commissions," stated a press release issued by Brown's office. "For the minority of members who made any travel commission in 2007, the median income was $39.00--less than one month's cost to keep the Website. There are at least 139,000 of the company's travel Websites, all virtually identical, on the Internet."
The (Alton, Ill.) Telegraph, a newspaper based in the same city as YourTravelBiz.Com, reported the company is one of Alton's largest employers.
The newspaper called the $25 million lawsuit, "the toughest filed so far against the company since it stared operations seven years ago."
YourTravelBiz.com's Chief Executive Officer Scott Tomer said the company would vigorously defend itself in court.
Call said pyramid-based companies make "unbelievable and unobtainable promises" to people who become "instant" agents.
"With a horde of unqualified wonders out there claiming to be a professional travel agent and offering to get you a great deal," Call said, "I can understand why some folks shy away from the real travel agent."
Several travel Web blogs from New York to California made a point of listing their credentials to differentiate themselves from those associated with YourTravelBiz.com.
Many wrote of stories of being approached by members of YourTravelBiz.com and recruited to join.