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Multilevel Marketing Update: Downturn May Expand MLM Influence

September 21, 2009 By: George Dooley

While Joystar is in liquidation and YTB International is besieged, are the problems of multilevel marketing firms and card mills behind us? Not according to Peter Stilphen , CEO of Coral Sands Travel and a knowledgeable critic of both multilevel marketing firms and card mills. In an interview with Travel Agent, Stilphen, one of the few agents who predicted the fatal flaws in Joystar’s business model and raised doubts about YTB, said the MLM problem is getting worse.

“I’ve identified several high profile companies that are either MLM’s or card mills or a combination of both," he said. "Most continue to recruit online using travel as a lure to attract consumers and naïve new travel agents. My immediate agenda is simply to get agents or others who want to get into this industry, to think before they act and if they are serious about selling travel to hook up with a legitimate, established host agency. I plan to continue working for a better and stronger independent travel agent along with the stronger host agencies and supportive suppliers with which they work.

“We will always have the bad guys in our business therefore, my self-appointed duty is to continue exposing them and providing insight to travel agents and suppliers hopefully, enabling them to make better decisions,” he continued. “Over the years I have written about the MLMs and card mills in an effort to educate and not to bash as some allege. The word is out there and many have taken up the battle.”

“We know that MLM business travel models operate in a similar fashion," Stilphen said. "Hype, deceit and lies may work well with the MLM’s in other industries but they will never work well with the retail travel industry. The reason is simply because, "There ain't enough profits in commission sales to make it work. That’s why you see these MLM’s working other areas by adding additional products, selling websites, recruiting other members and more recently using the social networking craze to expand the MLM model to more consumers looking for revenue and cheap vacations."

“The only ones who really suffer from MLM’s are the professional travel agents," Stilphen continued. "A fragmented travel agent segment and an uninformed group of consumers looking for legitimate business opportunities is being taken advantage of by the MLM dirt bags. When the professional travel agents, who now are affiliated with MLM’s, decide they have had enough of being dumped on, they will make a move to a legitimate host. But let’s hope it’s not too late as many Joystar agents found out.

“The MLM supporters remind me of a cult," he said. "I can understand why they dislike criticism. But the bottom-line is they find themselves as outsiders to the travel industry and somewhat embarrassed over their poor decisions in the past. Many good agents have moved forward and have joined legitimate host agencies.”

Stilphen believes that there many serious travel agents remain affiliated with MLMs and probably will remain there until the MLMs go out of business and the independent agent faces lost commissions. “This is what happened to Joystar agents even after many years of warnings," he said. "The agents that finally look ahead will probably get out before it gets really serious.

“The basic argument we make is that the YTBs of this world are primarily in the business of selling memberships and worthless websites," Stilphen continued. "Only about 15 percent of their revenue comes from travel commissions. This alone should warn the serious travel agent that they must go elsewhere. Those of you who aren't really travel agents but real MLM'ers, hang in there to the end. You deserve whatever consequences fall your way as you have added nothing to the travel industry.

“As for the serious travel agents who really want to sell travel and be trained properly to be a professional travel agent, it's time to do some soul searching," he continued. "You don't need to continue to be embarrassed by being affiliated with what California and Illinois and others call a pyramid scheme. Or apologize to clients for poor BBB ratings.

“In my opinion YTB and others will soon be out of the travel business," Stilphen said. "The operating losses, expensive court settlements and the general economy will probably put them to rest in the next few months. As the traditional brick and mortar travel agencies also continue to dwindle, there will be more experienced talent available. It up to the legitimate travel industry to reach these agents.

“The bottom line as it pertains to the MLMs and card mills is that it's time to really do your homework and seek a host agency that is supportive, financially stable and strongly believes in training and education,” Stilphen said. “More recently several MLMs have instituted training programs to create an appearance that they are falling in line with the industry wishes. However, most of these programs come with an additional cost when the traditional host agency includes it as a free benefit. . As long as the travel agent remains without definition, without an industry accepted set of standards, when the majority of suppliers begin to eliminate some of the greed factor, when travel agent organizations stop the flow of MLM agent members, we will see the end of the MLM model.”

Stilphen urges agents to use the many free resources available to them to help identify legitimate host agencies. Agents can also e-mail him at [email protected].

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