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.