Lyoness lawsuits and investigation in Austria
Lyoness was initially launched in 2003 in Austria by CEO Hubert Freidl. Despite now operating on a global scale and trading as “Lyoness International”, Austria remains the initial country that Lyoness launched out of and is naturally one of its most developed markets.
A decade later however and things don’t seem to be going all that well for Lyoness in their home country. Hundreds of investors have filed lawsuits against the company demanding refunds and Austrian authorities have launched a criminal investigation.
Lyoness operate what appears to be a legitimate shopping merchant network, where affiliates of the company buy products through merchants and earn a cashback.
Attached to this network however is an “Accounting Unit” investment scheme. Lyoness affiliates invest fixed sums of money with the company directly and, after a specific number of new investments have been made by an affiliate’s downline, they are then paid a >100% ROI.
How much of a ROI Lyoness pay them out depends on how much money is initially invested by way of five Account Unit packages (see BehindMLM’s Lyoness (US) review for more information).
Lyoness’ affiliates attempt to legitimise the Account Unit (AU) investment scheme by professing the legitimacy of the merchant network (“why would company X join the merchant network if Lyoness was a scam?” etc.), however with all money invested via the AU scheme and all money paid out to affiliates handled directly by Lyoness and Lyoness alone, it is completely detached from the merchant network.
As such when new investment in AUs eventually slows down, those who invested last are stuck waiting on new investments to be made that will never come. Meanwhile their investments have already been used to pay off those who invested before them.
A decade after launching in Austria, if the actions of hundreds of angry Austrian Lyoness investors is anything to go by, this appears to be the current situation there now.
Eric Brieteneder, an attorney in Austria, broke the news (Austrian news source in German) on March 30th that he had initiated ten class-action lawsuits against Lyoness on behalf of 220 investors.
This isn’t the first time Brieteneder has sued Lyoness on behalf of investors, with the lawyer claiming that Lyoness has settled at least 20 prior cases out of court, with Brieteneder representing investors in three of those cases getting his clients refunds.
Brieteneder claims that Lyoness paid out 48,000 EUR ($61,450 USD) in the settlements, however it is unclear whether or not this amount was paid out to each investor or in total.
Brieteneder states the basis of the lawsuit (apart from Lyoness investors not receiving a ROI) is that
(Money invested) by my clients in Lyoness is not traceable. If consumers deposit (invest) money in such a system, they have the right to reclaim their money.
In past cases Brieteneder has lodged against Lyoness, he claims that those who “invested in advertisement” were paid back 100% of their initial investment and those who invested in “business packages” (Accounting Units?) were refunded 75%.
Lyoness meanwhile claim that any “depositers” (investors) who wish to “get back” their investment are refunded promptly in “good will”.
Brieteneder claims however that this investment refund policy was only introduced in December 2012, hence the filing of seven lawsuits over the past few months and ten additional new ones a few days ago.
Brieteneder states that “more (lawsuits) will follow” and that he expects “more enquiries about Lyoness” from Austrian investors in coming weeks.
When asked about Brieteneder’s lawsuits last Friday, Lyoness spokesperson Mathias Vorbach stated he
had no knowledge of the new complaints and therefore he could not give an opinion.
Meanwhile in mid 2012 a criminal investigation was launched into Lyoness by Austria’s “White Collar Crimes and Corruption” Public Prosecutor’s Office (WKSTA).
WKSTA are investigating Lyoness for being a suspected Ponzi scheme and are focusing their investigation on ‘three people, including founder (Hubert) Freidl‘.
Unfortunately however when recently queried as to the status of the investigation, WKSTA spokesperson Erich Mayer was only able to state
how long the investigation will continue for is still not clear.
One can only wonder that if new investments have started to dry up in Austria, how long it will be before the money starts to dry up elsewhere in Lyoness’ global operations.
Stay tuned.
You mention Austria then Australia several times is that a Typo ?
Sure is. I had to stop myself doing it a few times whilst writing the article but seems a few still got through. Austria is so easy to mistype (and misread when proof-checking lol)!
Thanks for bringing it to my attention.
Thats not the half of it. Lyoness Members are currently being are terminated without notice in the hundreds. These are despicable acts against hard working members by a company that is just now being exposed as a ruthless bunch of turn coats.
Their shameless tactics also include misinformation about any rival company that any lyoness members maybe involved in after Lyoness terminates them.
Now i now why distributor rights are so important and I am glad that the USA is leading the way along with the UK in trying to protect distributors from bad management, through organizations like the DSA.
That was about 20 clients (€2,400 in average refund).
I believe “advertisement” is about “recruitment campaign” (German: Werbekampagne). It’s about Premium Members making down payments during Phase 1 and 2.
The court had to make a preliminary decision about whether they were consumers or business owners, and ended up on “consumers”. “Recruiting members is NOT an entrepreneural activity”, it’s not about “building a business” as some people like to claim (and now it has been decided by a court).
The 75% refund was probably to small business owners, “Business Partners”. They paid for a so called “Business Pack”. I believe it’s about a card reader, cashback cards and some marketing material (I have never focused on that side of the business).
Thanks for the clarification M_Norway.
I have been approached by good friends that have recently joined LYONESS & say that they love & want us to come onboard. I told them that I wanted to do a little research first.
I am very disappointed to hear such bad news about them. Lyoness is now in the U.S. & apparently going strong.
Are there ANY legitimate programs out there?
Thank You, Mike
The cashback part of Lyoness is legitimate, the investment part is highly controversial. I BELIEVE Lyoness will generate a lot of frustration among the investors, more frustration than most average MLM or pyramid schemes.
The only idea that makes any sense (as an income opportunity) is to treat Lyoness as a pyramid scheme = recruit minimum 4 other investors making similar or higher down payments than yourself. And make sure to help them recruit some people.
Some reinvestment ideas will also make some sense, after you have recruited a downline. “Treat it as a Ponzi scheme to generate cash payouts rather than credits” is one of those ideas.
An idea that makes sense is “treat your friend as a friend, and say YES to the cashback solution”. That will generate a 0.5% “friendship bonus” to your friend from your own purchases (e.g. 2% cashback to yourself, 0.5% friendship bonus to your friend).
ANY LEGITIMATE PROGRAM?
We don’t recommend any programs here. “We share information, and we provide a platform for doing it”, “a blog using ideas from other types of internet channels”.
I will sometimes make suggestions like the “treat your friend as a friend” idea. That’s simply about giving people different IDEAS to choose from, and let them make their own decisions about it.
MLM itself has become more recruitment oriented in the last years or decade(s). I will not recommend that as an idea, unless people really KNOW what they’re doing and why they’re doing it.
I would have looked for quite the opposite of that idea, e.g. an opportunity where I clearly can identify a retail market “within my own range of skills”. That’s the opposite of the factors that typically are used to motivate people to join something, the “earn residual income from other people’s work – FOR LIFE” ideas.
There are hundreds of them, according to the information I found on the internet. 🙂
One of them will probably be shut down tomorrow by a Court in Brazil, but Gerald Nehra claims it will be completely legitimate in the U.S. if people are able to follow a plan exactly as it was meant to be followed = people will need to reverse what they have been doing for 6 months, stop treating it as a Ponzi/pyramid hybrid and start treating it as a legitimate business.
That’s the main problem. A program can initially have been intended to be legitimate when it was planned, but will relatively immediately turn into a fraudulent scheme when people are trying to earn money in it, e.g. because it’s much easier to sell as a recruitment program or as an investment.
Trying to find the legitimacy in the program itself is relatively pointless. Lyoness will probably be close to legitimate if people stop making down payments and stop recruiting investors.
HI,
We joined up to Lyoness (albeit I was very reluctant) a year a go as a premium member. We were told the money would always remain ours and could cash it out if we decided we no longer wanted to stay in it. We were told we would receive the down payment back in vouchers,
I contacted the main office in Australia to advise. We were provided our options. Both options involved spending large amounts of money in the Lyoness network to be able to access the funds.
To receive our downpayment back as vouchers we were advised that we would need to spend just under $100,000 to ‘top up’ the downpayment.
We were shocked as you can imagine pre paying $100,000 in the items available through Lyoness isnt necessaily readily available.
Does any body have any advice on what we can do? Surely it is unethical?
It makes us wonder what happens to all the down payments of the people who cannot afford to ‘top up’ the payment?
They ended up as “profit” to the company, of course.
Do you have any proof that you were told that they are easily withdrawn? Maybe you need to complain to the ACCC.
@Aussie
Once you deposit your money with Lyoness they use it to pay out existing investors, so it’s gone. When you signed up the affiliate who recruited you got one step closer to getting their ROI.
The $100,000 is to generate enough new units to mature your initial cash-funded ones. As you can see, the shopping side of Lyoness as an MLM business is not really viable. What they didn’t tell you is that you could also recruit a bunch of suckers to invest in AUs as you did till your own units mature, and then you get your ROI that way.
Not sure what options are available to you, best to check with the local authorities who handle that.
They convince themselves shopping is somehow relevant and then disappear once the realisation they aren’t going to generate $100,000s worth of shopping revenue through the network any time soon.
Can a class action be initiated here in Australia. I am a very dissatisfied premium member.
Your first step should be to report the scam on the Australian Competition and Consumer Commission website here: https://www.scamwatch.gov.au/content/index.phtml/tag/reportascam/
Next, go to the Australian Government Scams – reports and complaints website here: http://australia.gov.au/service/scams-reports-and-complaints
Then make contact with the Consumer Affairs department in your state which will be listed here: http://www.scamwatch.gov.au/content/index.phtml/itemId/854913
The only problem in Lyoness is , that they allow ( partial payment for future purchases ) PREMIUM MEMBERSHIP to everybody. If you do not create a shopping community you should not be an PREMIUM MEMBER. But it is stupid not to be a shopper, it is a free card, and you get money back in 46 counties in more than 200,000 Stores. So why should you not take the money, the money is on the floor for FREE !
Lyoness should not allow PREMIUM to people who are not serious to make Lyoness professional.
But Lyoness is one of the biggest business opportunities on the planet this time !
If you need some more informations or answers you can (Ozedit: recruitment spam removed)
But they do, which begs the question would Lyoness be able to survive without the Accounting Unit investment scheme.
My guess, given there’s no other rational explanation for allowing people to invest in units, is no. The AC investment scheme is the core source of revenue for the business.
Lyoness shouldn’t offer any investment / recruitment opportunity to anyone. “Being serious” doesn’t make any difference to that.
The investment opportunity doesn’t have any legitimate COMMERCIAL functions in itself. It has illegitimate functions, but not legitimate ones.
What it really is: chain referral scheme with partial pyramid / matrix / Ponzi scheme.
Go look them up before you argue Lyoness is not *that*.
The biggest problem with Lyoness is not the company itself, but the lack of understanding among Lyoness members… It is not possible to invest in Lyoness as Lyoness does not represent a Financial institution. The “AC investment scheme” is nothing else than a partial payment on future shopping. Therefore it is possible to get the value of your units back in monetary value, as long as you make the top-up payment.
(Ozedit: There’s nothing “independent” about affiliate spam blogs, URL removed and please don’t try that again.)
You can never loose your money in Lyoness, as long as you commit to future shopping. Why are no one mentioning the ISO-9001 Quality management standard certification on this blog?? We should really investigate in detail before expressing opinions out there…
There are numerous T+C’s that any member has to agree to online, before making these partial payments, also not mentioned here. Once again, I invite everyone to read (Ozedit: spam URL removed).
Be blessed
So I invest money, others invest and then when I invest more money… sorry “top up payment”, get a >100% ROI.
All money is paid to and from Lyoness, with no shopping required.
You’re right, Lyoness members don’t understand the comp plan. They keep coming on here trying to convince everyone it’s not an investment scheme.
Because it has nothing to do with the AU investment scheme, which is the central problem with the opportunity.
We also don’t discuss Friedl’s eye color and any number of irrelevant topics either.
I am a member of lyoness for last 2 years and understand each and every aspect of Lyoness system. I never seen any system more transparent then lyoness because their is no investment option.
Down payments are not investment that is actually a Down payment for future purchases and lyoness being global shopping community does not compel some one to buy the units.
people like me and my team understand the potential of this unique concept and they choose Lyoness as a serious business opportunity rather than an investment. I am working here in Dubai and never seen some one who is complaining as an Investeor or ROI… I am in MLM for last years and understand in-depth the uniqueness of this concept.
Conventional wisdom measure every thing with their conditioned mindset and they see every thing as PONZI scheme and does not accept the reality that this simple concept “Cash back with every purchase” is a win win situation for both the SMEs and Independent Members.
I love Lyoness concept and respect Hubert Friedl and their great services to mankind like Child and Family Foundation and Greenfinity. Lyoness is a unique and ultimate destination for me and my team as well as for million of people on the face of this earth!
^^ Were they holding auditions at the Lyoness PR office recently?
Invest money with Lyoness, wait till enough people do the same, collect your >100% ROI. What purchases?
Yeah, clearly.
Out of curiosity, how many merchants have Lyoness signed up with in Dubai?
How about it’s haram because it’s riba al-nasi’ah (involving deferred payment of a larger amount than would be paid if it were paid immediately)?
Or perhaps you don’t care about the shariah any more? Has infidels corrupted you thus?
What is your definition of an investment, then?
You can define it in many different ways, but it usually involves payment of money to an agent or a third party, with the expectation of earning a positive ROI based on the amount invested, rather than on profit generated by your own work efforts.
Payment of money? Down payment IS actually that.
To an agent or a third party? Lyoness is actually that.
Expectations of a positive ROI? That’s the primary motive for most people. The down payment doesn’t make much sense for a consumer.
Based on the amount invested? It’s based partly on the participants’ OWN investments, partly on investments made by people they have recruited.
rather than on profit generated by your own work efforts? Recruitment of participants into a Ponzi or pyramid scheme isn’t recognized as “work” by courts. It’s recognized as work by tax authorities, but they will only look at tax rules. Lyoness already have a decision from a court in Austria where recruitment isn’t classified as work.
I invested money in Lyoness 3 years ago (2000 euros in business package to become a business partner and 2000 euros in the USA continental system).
Didn’t earn anything, I gave away 4000 euros.
I live in Serbia. Want to sue them, but I don’t know if it is worth of time and money…
I’m not familiar with Business Package? Can you give a short description?
As a Premium Member (€2000 down payment, 7+3+3 AU), the only way to make money is to recruit minimum 4 other Premium Members, and gradually build a downline (of units and people). The down payments don’t make any sense if you don’t recruit the minimum 4 directs.
LYONESS THIS IS FANTASTIC OPPORTUNITY FOR THE PEOPLE WHO WANTED TO BECOME SUCCESSFUL IN THEIR LIFE… WHAT A GREAT THOUGHT, THANKS FOR Mr. HUBERT FRIEDL for this unique idea..
Lyoness is great… but the people promoting in wrong way… its not lyoness problem… now with lyconet it will conquer all over the world…
All negative people just see lyoness is going to rock the world…
How do you promote the accounting unit investment scheme “the wrong way”?
It is what it is.
Eleven years later…
WOW It has been very I teresting reading all the comments from around the world re lyoness…it sounds like everyone with a complaint need to take that to the person who signed you up as they are the ones to be sued as they have given you false information, there are no investments as started above this is not a financial company.
if you came in as a premium YOU would have signed some GTC’s did you even read these?
If you did pre nov 8th 2014 you would have seen and worked out how much it would cost to shop out OR top up…sounds like people jumped onboard from some hype uneducated hype from the person that signed YOU up…
Why wouldn’t you do your due diligence on not on just the company with whom you are joining BUT also the person who is signing YOU up?
The company is not at fault I believe as they are fully compliant with all they have said and implemented in each and every country they are in…DO you really believe they go through no investigations when they apply to do business in a country…I’d seriously be checking out WHOEVER it was who signed you up and WHO signed them up…
Also M Norway what is your knowledge and affiliation with this company?
Aloha n have an AWEsome Day
Why? They aren’t running the AU investment scheme (now shopping points scheme), Lyoness are.
As per the Lyoness/Lyconet compensation plan, yeah it is. You invest directly in AUs (now shopping points) and then are paid a ROI. This ROI is sourced from subsequent investment.
Claiming Lyoness isn’t a Ponzi scheme doesn’t negate their business model.
Whatever pseudo-compliance Lyoness stuffed their GTCs with doesn’t negate their AU/SP investment business model.
What you believe is irrelevant.
Lyoness/Lyconet are running the opportunity, the buck stops with them.
Yup. Regulatory investigations come after. It typically only costs money to register your company name somewhere.
Unless you’re suggesting Lyoness have applied to offer securities to their affiliates? In that case please provide source-material.
Why is everyone just so immersed in the unit or investment side…
Let me put it straight… YOU join free as a shopper.. GET A DISCOUNT…. You recommend to friends and family..( if YOU want) …
You sign up to LYCONET.. FREE…. You accumulate shopping points and 0.5% friendship bonus…
The shopping points accumulated, create a unit… The more shoppers you have the more units build, the quicker they pay out….
THAT SIMPLE….
I am a premium member and chose to do so after 4 days looking into the business idea….
It seems to me that out of 46 countries and over 4 million members later , people still can’t see the sense in it…..
The people who invested/ made downpayments rushed into it … ( due to the GREAT opportunity and their own greed) , but forgot to take a good look…
YOU DONT HAVE TO MAKE ANY PAYMENTS… If you are self motivated you can do the work and make the units and climb the career ladder ( compensation plan ) for FREE…. Just takes hard work…
Cash back with every purchase….. The only mission in lyoness… THOSE WHO WANT TO FILL THEIR OWN POCKETS USUALLY FAIL…
And if investments have dried in your country (who you don’t really need ) … Then Lyoness is in over 46 countries now…
THE WORLD IS YOUR OYSTER…..
Make your business getting others a discount and NOT gathering investers….
Peace out….
SHAF
Because it is the core of the business.
Everything else is just marketing smoke and mirrors.
Of course you are.
Run around the internet professing the wonders of the cashback… but just like everyone else, you invested.
Because it has the potential of making the whole thing ILLEGAL, and because that’s the place where money is “made” supposedly by members.
Tell me, which way builds units faster / costs less… Through shopping, or through paying Lyoness directly, to build up same # of units?
Apparently you never thought about that, hmmmm?
I originally signed up because I was interested in the Coles vouchers.
I then signed up as a premium member and thought I could get my money back if it was not working for me. Dumb I know due diligence yeah.
Now I can’t even get the coles vouchers. the system has changed entirely. I am supposed to click on one of three options none of which are explained.
I have been told by friends who also got sucked in that we have to purchase overpriced goods from a restricted range. I did not click on any option.
I am hoping for a class action. As far as I am concerned they misrepresented the company and it is a pyramid scheme.
Hi,
I heard that Lyoness has won all its court cases in Austria and Australia. Is this true?
The ACCC did a terrible job of presenting the case in Australia so it was dismissed. Instead of initially focusing on the Ponzi aspect of the scheme they only attempted to introduce it after the trial began.
The Ponzi nature of the scheme was not part of the trial (the Judge restricted the trial to the ACCC’s case, which for reasons unknown did not focus on the Ponzi AU scheme).
If a class action is filed in the U.S. I defitnitly would like to be a part. My wife and I are out approximently $26k, after working so hard on the brink of success, the whole system changed and not one person could explain it.
As far as I am concerned it is nothing but a huge fraud!
Start by complaining to the FTC, your state attorney general, Florida attorney general (Lyoness has US office in florida, I think), and so on.
You may want to write them a registered letter first, known as “intent to sue”, telling them that you want some sort of compensation or else you’re going to complain to everybody on the list. You may get something back if they offer you something for your silence.
FYI
Here is a press release from Lyoness regarding the Austrian Germany and Switzerland court issues.
lyoness-corporate.com/en-US/Press/Press-Releases/PressRelease-Items/Lyoness-is-not-running-a-pyramid-scheme/
PF
In the sense of I invest in AUs and get paid when others invest in AUs, Lyoness is and has always been a Ponzi scheme.