Amish AirlinesWhen choosing a network marketing company, make sure it has all five pillars for your success. With so many scams and bad plans out there, you have to be especially careful that the company is legitimate.

Don’t get fooled into thinking that just because a company has been operating for months or years, that it is legitimate.

The ultimate authorities are the SEC or the OAG or Industry Canada or equivalent body in your country.

All of these agencies are understaffed. They cannot possibly handle all the complaints they receive daily. They can only deal with the more blatant scams, with the result that many companies operate for years with part or most of their operations being if not illegitimate, at least unfair, immoral or unethical.

(We speak from experience having spent five years in a money swap, six months in a Ponzi, and a year in a company that we discovered to be an illegal pyramid!)

The crooks always outnumber the cops.

That’s why you have to fend for yourself. Become a critical thinker and ask the right questions – the same questions we would ask if we were buying a traditional brick and mortar business but we forget to ask when we are choosing an MLM.

The Attorney General has two main questions about any MLM company:

1. Would a person of sound mind pay this amount of money for these goods or services if there were not a business opportunity attached? If the answer is no, it’s a scam.

2. If the recruiting stops, does your money stop? If the answer is yes, it’s a Ponzi.

Michael Dlouhy taught us the two questions above and the 10K question below:

“How many active distributors do I need in my downline to generate a walk away residual income of $10,000 per month?”

We were helping a friend answer the 10K question for his company. We looked at four ‘MLM’ travel companies and found them all surprisingly similar. Here are our findings and comments.

Most travel companies charge $400 to $500 to get started, telling you that you are buying a business. But think about this …

Chimp GolfingYou send $500 to the company and what arrives by post or courier? What do you receive in a bag, bottle, or box?


You do not receive a weekend at a five star hotel similar to what you can find if you click here for more or a voucher for a day at the golf course for you and three friends. You do not receive a set of luggage or even a terrycloth towel or ballcap with your company name on it. Or you may be interested in staying in a hostel, you can check accommodation for staying in a hostel by searching the best deals on the internet, if you are visiting Toronto then short term rentals toronto will be both time-saving and crucial to booking the right accommodation for the trip.

As Michael Dlouhy says,

You get nothing but a card that says you might be a travel agent!

This is a clear answer NO to the AG’s question 1 above, and a clear indication that it’s a pyramid scam. And it’s how the travel companies become known as ‘card mills’ or ‘money swaps’.

Now where does that $500 actually go?

It moves from your pocket into the pockets of your sponsor, upline and the company.

Check the report at to see that one company makes about 90% of its income out of the pockets of the distributors – sign up fees, training events, and monthly website fees, with no goods or services being provided. Only about 10% of the company’s revenue comes from the retailing of travel. This means that almost all of the ‘commissions’ you can expect to earn in a travel company will come from recruiting.

We contacted three ‘travel agents’ we found online and none of them knew how much commission they would earn from selling a cruise. One actually said,

I never think about the commissions. There’s no money in that! I’m just recruiting and building my business!

We called and left a question with rep support at one travel company and they never returned our call. Our friend admitted that they were very difficult to reach, and the best way was to send an email and they might get back to you. So much for support.

One company’s monthly recognition and awards ceremony praised many ‘business builders’ for bringing in 100, 200, 300 new agents that month. In three pages of praise, there was NO TRAVEL MENTIONED. That is a clear YES to the AG’s second question, making the travel business a Ponzi.

One company actually uses an Aussie 2 Up pay plan, which is ALWAYS associated with a scam!

Most companies will charge you a monthly fee of $50 or so for your website, calling it a ‘booking engine’ or a similar high tone label. This brings up the question,

If I am selling travel for this company, why am I paying them $50 per month?

We now know that replicated websites cost about 11 cents per month each to operate, so you are being cheated here. See the AG’s question 1.

Now where does your $50 per month actually go?

Duck PickpocketYour sponsor and several upline receive $2 to $10 per month out of your pocket, and they call it ‘residual income’. This is NOT residual income, as residual income should be commissions based on the sale of goods or services.

One company pays five levels of commissions out of your pocket (nothing to you) amounting to $29. The company takes $21 from you each month for a website that should be free. NO TRAVEL has been sold in this part of the plan. This is a pyramid scam and a Ponzi scheme.

Note that in our discussion so far, lots of money has changed pockets, but NO TRAVEL HAS BEEN SOLD.

Let’s look at the legitimate, legal side of the travel business, i.e. travel!

We were surprised to learn that there is NO RESIDUAL INCOME from the sale of travel in your downline! One company gives you overrides once you have 500 people in your downline, which for most people means NEVER.

Answering the 10K question is then impossible.

There is no MLM component to the retail side of the business. If you want to earn a legal living selling travel, you will have to do it ALL BY YOURSELF. And this is not residual unless your customers buy from you month after month.

Let’s look at how tough that will be …

In one company, the travel providers pay the company a certain percentage of the retail price, and the company pays you 60% of that in legitimate commissions. Sixty percent sounds very good, but let’s take a closer look …

Chimp LimoCruises pay the best at 15%, or 9% to you.
Airlines pay you $3 per ticket, or less than 1%.
Airport transportation pays 10%, 6% to you.
Golf Courses 10%, 6% to you.
ABC Shows and Concerts pay 3.5%, about 2% to you.
XYZ Sporting Events pays 10%, 6% to you.
(We’ll average the above at 4% to you for tickets.)

To earn $10K per month selling cruises, you’d have to sell 10000/.09 =$111111 worth of cruises, or about 111 cruises per month at $1000 each, or about 3 or 4 cruises per day.

Airline tickets require 10000/3 = 3333 tickets per month, or about 100 tickets per day.

Booking airport transportation, limousines, etc. would require 10000/.06 = $166666 in sales. If the average limo ride is $100, that’s about 1667 rides, or about 56 rides per day. If you are in need of airport transportation, you can go online to to book your transport, or alternatively research local companies that suit you.

If a day at the golf course costs $100, you’ll need the same number of golfers as limo riders. 1667 per month or 56 golfers per day.

If concert tickets and sporting events tickets average $100 and you are paid 4%, that’s $4 per ticket you sell. 10000/4 = 2500 tickets per month or about 83 tickets per day.

In summary, in order to earn $10000 per month, you personally will have to sell one of the following or a combination of …

111 cruises at $1000 each every month
3333 airline tickets every month
1667 limo rides every month

1667 golfing days every month
2500 concert or ballgame tickets every month

Noah's ArkIt would make sense to concentrate on cruises, as they pay the highest commissions, but think about this …

Most people, if they can afford it at all, could go on just one cruise per year, not one cruise per month. That means that you will have to find 111 cruisers for each month of the year to make your 10K per month consistently. That means you will have to sell 111 x 12 = 1332 cruises per year and find regular customers to come back to you next year.

That’s selling three to four cruises per day. Whew!

You might want to talk to a bona fide travel agent about how realistic this goal is before you join a travel company.

Let’s simplify this by trying to compare apples with apples.

Most MLM’s require an autoship of let’s say $150. If you get paid an average of say 6% on your sales of various travel packages, that’s $9 per customer or rep. For 10K, you’ll need 10000/9 = 1111 customers every month.

The big difference is that with with an MLM company, these 1111 can be anywhere in your downline, but with a travel company, you have to find them ALL BY YOURSELF.

And they have to be repeat customers every month! If they don’t repeat monthly, you could be looking for as many as 1111 x 12 = 13332 customers! If we assume that half of them are repeat customers every month, you are still looking for 6000 to 7000 customers!

And if that does not sound tough enough, consider the fact that in some cases, you will not be able to advise your customers until you become a certified travel agent. For this reason, you should take a course for becoming a Travel Advisor as soon as possible so that you are certified early on in your career.

Monkey BabyImagine a customer asking your advice, and not being able to give an opinion as it would be illegal! Good luck gathering customers this way!

And if all the above is not discouraging enough, consider the fact that several cruise lines have severed relationships with some travel companies, and some hotel chains may not honour your $500 travel card. After all, why should you receive a discount if you are bringing no business to the hotel?

And … before joining a travel biz, you might want to consult with the governing bodies for travel agents to check the company’s standing.

And … you might want to check your company’s policies and procedures to see if you and your business are protected. That is another entire article. Stay tuned.

And … you might want to check to see if your company plans to move away from their MLMish model and move to a franchise model. More money from your pocket to theirs.

You will note that we have mentioned no company names here. Our intent is not to take on companies and end up in lawsuits. Our intent is to make YOU aware, and to help you become a critical thinker.

As Michael Dlouhy says,

You want to build it once, build it right, build it big, and build it to pay your children’s children.

From what we have seen, the travel business is NOT where you want to invest your time, energy, money and reputation, as it will NOT be a solid vehicle for you to attain the dreams and goals you have set for yourself and your family.

Bob and Anna Bassett
Skype bobbassett

August 6 2008 Update from Michael Dlouhy:

Michael Dlouhy has been explaining for years Why and
How YTB Travel was and is a “Scam” and the California
Attorney General has finally taken action to STOP them.

(We love to say “I told you so!” Bob and Anna)

August 6 2008 Update from Rod Cook at MLMWatchdog: