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.