California 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."
YourTravelBiz.com did not respond to calls to its home office, its public relations firm and its Sacramento attorney.
The company, which is traded over the counter, describes itself as "a provider of Internet-based travel booking services for travel agencies and home-based independent representatives." In April it reported revenue for 2007 of $141.3 million, up 177% from the previous year.
YourTravelBiz.com offers two ways to make money: commissions from travel sales and fees for recruiting other participants in what's known as a "multi-level marketing" program.
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.
Mark Ewing, who markets courses in how to become a professional group travel leader, has posted a YouTube video that calls YourTravelBiz.com a "card mill" that provides travel agent identification but doesn't sell travel services.
He said in a telephone interview that YourTravelBiz.com members recently lost accreditation as travel agents from the International Airlines Travel Agent Network, an affiliate of the International Air Transport Assn., an airline trade group.
"They sell the idea that if you belong to us, you'll get travel agent discounts without having to be a travel agent," Ewing said. "People have had their travel dreams squashed by this."