Why did the ACCC declare TVI Express a pyramid scheme?
Last week an Australian Federal court banned Travel Ventures International (TVI Express) from being promoted in Australia.
The plaintiff, the Australian Competitive and Consumer Commission (ACCC) claimed that TVI Express was a pyramid scheme and obtained injunctions preventing ‘Laulhati Jutsen (also known as Teddi Jutsen), Tina Aroha Brownlee and David Graeme Scanlon from promoting the alleged pyramid selling scheme‘.
From what I understand the trio were amidst a blitz Australian marketing campaign.
Unfamiliar with the TVI Express compensation plan I decided to have a look into it and see if there was any weight to the ACCC’s claims.
After going over the TVI Express compensation plan I was left with one and only one question: Why the hell hadn’t TVI Express been declared a pyramid scheme earlier?!
The main component of the TVI Express compensation plan revolves around two ‘boards’ (or what TVI Express call a revolving matrix).
Both boards operate in the same manner and are four levels deep. Upon joining a board you start at the bottom and work your way up.
The first board is called the Traveller Board and ‘Level 1’ (the bottom) of this board is where all new TVI Express members start out.
To qualify entry onto this board the only purchase required is a membership fee of $250 (the ACCC press release states the figure is $330 but the TVI Express site states it’s $250). In exchange for the membership fee members are given a travel voucher for 5-7 nights in a 3-5 star hotel in India.
Members are ranked from left to right and level number. To rise up the board anyone on the current board can recruit a new member which fills an empty position on Level 1 of the board.
Once the board is full it ‘splits’. This means that the board splits on Level 2 and becomes two new boards. Both existing Level 2 spots become individual Level 1 spots with the Level 3’s on each side becoming the new Level 2’s and so on and so forth on the separate boards.
To decide where everyone goes after a split, members are first ranked on whether or not they have made any sales or not and ranked left to right and according to level. This is called ‘Jump Over’ and is an incentive to encourage members to make retail sales.
After the members with sales have been ranked then everybody else in the board is ranked left to right and by level, according to how long they have been on the board.
The person on level 4 gets bumped off to another board, the Express Board. Note that to qualify for this bump off members have had to have personally sponsored two new members onto the Traveller Board they are on. Otherwise they remain on Level 4 and the bump off is awarded to someone below them on the board who qualifies.
This requirement to recruit then pays off as once you are bumped off the Traveller Board you are awarded $250 (recouping your initial member investment) and a $250 e-voucher.
The member that leaves the Traveller Board gets bumped off onto the bottom of the second board, the Express board.
The Express board is run in much the same fashion as the Traveller board with the exception that it isn’t filled with new members but rather those who get bumped off Traveller Boards.
In this way it’s easy to see how the facilitation of new member signups is needed to continue to feed into the Express Boards.
With no requirement to actually sell any product (members are rewarded for doing so with the ‘Jump Over’ calculation but it’s not required), there’s the very real possibility that nobody on a Traveller Board has actually sold anything. Instead they’ve just focused on recruiting new members onto their board.
I assume this is the reality of how the TVI Express business opportunity is run and why it finally attracted the attention of the ACCC.
Upon rising to Level 4 of the Express board, members are then awarded $10,000 and again placed at the bottom (Level 4) of a yet to be filled Express Board. This payout is awarded on the condition that two of your personally members make it onto the Express boards.
This process repeats itself infinitely and so long as new members are continuously be recruited into TVI Express eventually guarantees a $10,000 payout for members as they reach the top of an Express Board.
There are three other components of the TVI Express compensation plan (residual income, a shared revenue pool and incentives for members) but all you really need to know is in the Board component.
The TVI Express business opportunity revolves around the constant recruitment of new members. Infact it’s impossible to be paid without recruiting someone to the scheme. Additionally no products are required to be sold for commission payouts or to rise position-wise in the company.
Whack on a weak travel offering and you’ve pretty much summed up TVI Express.
Despite the apparent obviousness of the pyramid scheme nature of TVI Express have responded to the ACCC’s claims stating ‘the ACCC claims will be “strenuously defended’.
Good luck defending this one in court guys.
Currently the entire TVI Express website is down pending a ‘scheduled update’. Whether this means a complete restructure of TVI Express or if it’s just routine website maintenance is unknown at this time.
this is a classic style of pyramid scheme. It has operated in Australia many times over the years and under different names. It tends to cycle about every 8 – 10 years.
It has been known as the “aeroplane game” where those at the top are called “Pilots” followed by “co-pilots”, “cabin crew” and finally passengers”. Once the “plane” is full, the pilots fly away and the co-pilots become pilots and so on. another version was the “Orient Express train” where passengers purchased so-called tickets for a ride on the Orient Express train (not the real one).
Eventually word gets around about these “games” and the number of suckers dries up and only the first few to join get any money.
Sometimes, the smart ones set up a scam within the scam to try and get their money back. Knowing that it is becoming impossible to fill all the first level seats, participants at the top start to recruit family and friends to fill the chairs but not pay any real money. Remember the top level doesn’t get to “fly off” with money until all the chairs are filled. The few suckers who are around do pay money and the ones at the top get a chance recoup their losses.
the only winners, as I said, are those who start the thing off. So these TVI people on tour around the country stand to reap a small fortune and leave a trail of poorer (but hopefully wiser) people in their wake.
Mr. author;
You’re wrong when you said that TVI Express will only survive by way of chewing new recruits.
How about a very good team of few hundred people whom upon cycling out of Express Board are gonna buy their own position on the Travelers Board followed by their two direct referrals and so on? What a beautiful and never ending compensation source of $10,000 you got in there, right?
Hi Ako. I can see one problem with your question.
When I read the TVI Express compensation plan it seemed like only new members to the company went on the traveller board. I didn’t see anything about existing members cycling out of the Express Board being able to ‘buy’ a position on the Traveller Board.
From what I understood once you leave the Express Board you’re funelled back into another Express Board and the process repeats itself. The problem here being that to advance you need an influx of new members to push you along the Express Board.
Even if we go with your example and say that members leaving the Express board are able to buy into the Traveller Boards, there’s still a need for new members to be recruited. Remember that to exit the Traveller Board you need to have recruited 2 new members.
If you join a Traveller Board that board isn’t going to cycle up unless new members join the company and thus the board you’re on. People leaving the Traveller Board are still required to fill spots on the Express Board too, which means that both boards are reliant on a constant influx of new members.
If the boards weren’t split upon completion, you could potentially wind up with a ‘perfect’ situation where one person exits the board and re-enters thus instantly filling it up again. Of course this isn’t feasible as it’d be an instantaneous infinite payout.
The boards however are split and thus each time they split 7 new spots are created (the board splits at the level 2 level). These new empty spots must then be filled. For the traveller boards this means new members and existing members for the Express boards.
Given the direct relationship between new Express board members having had to graduate from Traveller Boards which are reliant on new members to fill, you can see how, even with your ‘buying a spot’ conditions, new members are constantly required.
I was able to meet with Teddi Jutsen and Tina Brownlee in Queensland a couple of months ago after attending a TVI meeting with a friend of mine.
The red flag went up with me straight away but the people who invited me were sold on the idea so I offered to do some research for them. I raised several basic and logical questions that should have been easy for them to answer. But they kept dodging the question and speaking back in riddles.
To me this business was targeted at the uneducated who in most cases could not afford the $330 to join. It makes me mad that people can stand there and lie to your face with no repercussions.
Throw the bloody book at them I say.
All that this does is makes it hard for genuine MLM businesses to be taken seriously. I hope that some of the money seized can be returned to the poor people who have been mislead.
haha- good on you Jaybrook!
The problem is when u are the one in that place of desperation it does sound so appealing. They are so good at pretending to have your best interests at heart and manipulating everything so it seems they are the only ones that can help you.
They are also very clever in the wording they use- so you leave meetings like that with your head spinning and you end up going back to them saying – please tell me more! That absolves them from responsibility or from being able to be seen as predators, they simply offer an opportunity to people who want it! haha- not. easy to see from the outside.
I got myself into so much debt with polaris, when my upline left to go to TVI- i seriously considered it because of the life line they seemed to genuinely be throwing me! So glad i didnt have that money to get started and could start to step back and see the writing on the wall.
Good on you for listening to your gut and being strong enough not to be swayed by their manipulative and cunning ways.
Dodging questions and talking around an answer seems pretty common across the board.
The problem i see – is that the people giving the spiel are so desperate themselves- i honestly think they believe their own lies.
I’ve been tracking TVI Express since someone asked me, in San Francisco Chinatown (US of A, of course) about it, more than six months ago. After 5 minutes on my phone using a WAP browser, I knew it was a scam right away.
Latest entry on my blog: TeamTVIOz strawman defense will fail
http://kschang.blogspot.com/2010/06/tvi-express-and-tviteamoz-plans.html
Graphical dissection of a TVI Express member lie from Indonesia… Rudy Phan of “TVI Express Dollar” tries to explain you only need to recruit 8 to cycle out, I showed that there’s NO WAY that’s enough money to make you $100000
http://kschang.blogspot.com/2010/11/late-critique-tviexpressdollar-author.html