Burnlounge Refugees

I have been in the network marketing industry for a long time and have seen the worst and the best of what multi-level marketing has to offer. This blog is intended to reassure you Burnlounge Refugees that there are indeed some reputable, rock solid home business opportunities.

I am a Referring Travel Agent with YTB Travel. Before joining the company I did a lot of due diligence: reviewed this public company's SEC filings, personally met the Founders, determined that individuals can earn sufficient travel commissions to earn a profit without recruiting, read the representative Bill of Rights, the $6,000 minimum income guarantee, etc.

Who wants the embrassment of recruiting friends and family to join your business, only to find out down the road that the authorities are issuing restraining orders! That makes for difficult conversation around the Thanksgiving table :(

Over the course of the last few months, a lot of my friends have approached me to sign up with Burnlounge. I am always open to learning about the network marketing industry, so I agreed to go through the process, listened to the sizzle call, reviewed the website, attended a live presentation and then did a 3-way call with Rob DeBoer (one of the guys who was raking in the big bucks).

I love the promise of residual income offered by the network marketing industry. However, I hate that so many unscrupulous individuals have given multi-level marketing a bad name due to their greed and lack of understanding of the legal basics.

I am naturally sceptical. My professional background is as a CPA, auditor and corporate CFO, so I am used to doing my due diligence.

It was immediately apparant to me that the Burnlounge business model was severely flawed. All of the money was earned from the sign up fee. There was little likelihood of anyone being able to earn enough money on retail sales to cover even the initial investment. Consequently, the "little guy" would always lose.

Sounded like a classic pyramid scheme to me. Well, it turns out that the Federal Trade Commission came to the same conclusion and now thousands of hopeful entrepreneurs are going to see their dreams go down in smoke.

If you are one of these Burnlounge Refugees and can still dream about creating a Plan B income in a legitimate home-based business, please accept my invitation to do your due diligence on YTB Travel.

It may of may not be for you but it is a solid business model and is experiencing tremendous momentum. If what you see makes sense, we would love to have you join our Power Team and you will be assured of excellent systems and training.

• Call the 5-minute business overview by CEO, Scott Tomer at 800-201-5241
• View my online presentation site at http://www.referringtravelagent.com/
• Call our offices at 800-201-5195 and get your questions answered

Compare YTB to Burnlounge

My YTB Travel business ~ www.ReferringTravelAgent.com

Industry: Travel
Target Market for the retail product: People who travel, especially Baby Boomers with high disposable income
Corporate structure: Public – full disclosure
Track record: 4 yrs
Social Network Distribution: None
Cost to consumer: Same as Travelocity etc
Inconvenience factor: Low: book travel through a friend by book-marking a different URL

Worst case financial scenarios:

Initial Investment: $450
Monthly $50 x 12 : $600
Year One Investment : $1,050

Success from Home Magazine marketing option, $100/mo : $1,200
Guaranteed Minimum Commissions: $6,000
Guaranteed Profit to the “little guy” $3,750

[This worst case scenario assumes Zero travel commissions, Zero commissions from selling travel agencies, Zero discounts from being an RTA, Zero tax benefits].

Realistic Scenario would improve the outcome considerably:

Home Business Tax Deductions: Yes
Ability to write off Vacations: Yes
Approximate Potential Retail Profits: $120/cruise; $10/flight; $10/hotel night; $5/day car rental
Fringe benefits: Travel agent discounts of 40%+, upgrades, fabulous FAM trips
Direct Commission on Business Center Sales: $100
Amount Paid per 6 Sales cycle in Power Team: $1,300-$1,600
Attracts this business opportunity mindset: Matching bonus encourages perpetual recruiting and support.

Upside Potential for business builders:

Matching Bonus for Personal Enrollees: 50%
Bonuses for each 100 business centers added: $10,000
Bonus at 500 business center level: $25,000
Guaranteed Monthly Salary at Director Levels: $2,000 - $8,000
Benefits at Director level (500 active business centers): Health & Life Insurance
Bonus at 2,000 business center level: $50,000
Bonus at 5,000 business center level: $100,000
Bonus at 10,000 business center level: $250,000
Bonus at 25,000 business center level: $1 million

(Yes, YTB has actually paid $1MM bonuses to two representatives, both of who I know personally - this is real).

FTC declares Burnlounge a pyramid scheme

For Release: June 12, 2007

FTC Asks Court to Shut Down Illegal Pyramid Operation

On June 6, 2007, the FTC filed a complaint in the U.S. District Court for the Central District of California against BurnLounge, Inc. The complaint charges that BurnLounge sold opportunities to operate on-line digital music stores that was, in fact, an illegal pyramid scheme. The agency is seeking a permanent halt to the illegal pyramid practices as well as other illegal practices alleged in the complaint.

According to the FTC, BurnLounge recruited consumers through the Internet, telephone calls, and in-person meetings. The sales pitch represented that participants in BurnLounge were likely to make substantial income. BurnLounge recruited participants by selling them so-called “product packages,” ranging from $29.95 to $429.95 per year. More expensive packages purportedly provided participants with an increased ability to earn rewards through the BurnLounge compensation program.

The BurnLounge compensation program primarily provided payments to participants for recruiting of new participants, not on the retail sale of products or services, which the FTC alleges would result in a substantial percentage of participants losing money.

The FTC specifically alleges that the defendants operate an illegal pyramid scheme, make deceptive earnings claims, and fail to disclose that most consumers who invest in pyramid schemes don’t receive substantial income, but lose money, instead. These practices violate the FTC Act, the agency alleges.

The FTC has asked the court to halt the deceptive practices and misrepresentations and to freeze the defendants assets, pending a trial, to preserve them for consumer redress. At a hearing on the FTC’s request for a temporary restraining order, on June 8, 2007, BurnLounge’s attorneys asked for more time to respond fully, and U. S. District Court Judge George Wu ordered that a full hearing on the FTC’s request for a preliminary injunction and asset freeze be held on June 19, 2007, after which he will rule on the FTC’s requests.

In addition to naming BurnLounge, Inc., a Delaware corporation based in New York City, the Commission’s complaint also names: Juan Alexander Arnold, of Studio City, California; John Taylor, of Houston, Texas; Rob DeBoer of Irmo, South Carolina; and Scott Elliott of Forney, Texas.

This case was brought with the invaluable assistance of the Office of the Attorney General of South Carolina.

Over the last 10 years, the Commission has halted 17 pyramid schemes and has collected almost $90 million in consumer redress and tens of millions of additional dollars in suspended judgments.