lyoness-logoOver the past year or so I’ve had a few requests from readers to review the Lyoness MLM business opportunity.

The first time this happened I added Lyoness to my review list and when the time came went over their site to start my research.

A few hours and a massive headache later, I closed my browser window and gave up. I concluded that Lyoness had put so little thought and effort into the coherency of explaining their business, that it simply wasn’t worth my time to try to understand the business model.

Taking recent strides to beef up their US presence however, Lyoness has finally realised that their business presentations and information desperately needed a massive overhaul.

Armed with some decent and clear information on the company and the business model, I’m now able to present a complete review of the Lyoness US business opportunity.

Foreword: Please note that for the purposes of this Lyoness review I’m solely analysing the US division of the company.

As far as the international Lyoness opportunity goes it’s still painfully impossible to understand and not worth wasting my time trying to dissect it.


The Company

Lyoness is headed up by CEO Hubert Freidl, who founded and launched the company back in 2003.

I’ve seen Freidl referred to as a mathematician but I’m not exactly sure what he was doing prior to 2003 or whether or not he has a history in MLM. There doesn’t appear to be too much information out there.

The Lyoness Product Line

Lyoness itself doesn’t have any products that members can sell. Rather, the company’s members market membership to the company to new members.

Once a member of Lyoness, members are issued a “cashback card” which can then grants the user a cashback on specific purchases from partnered retailers (loyalty partners).

The Lyoness Compensation Plan

Whereas the Lyoness international compensation plan is confusing and presented poorly, Lyoness in the US have stripped out some of the more confusing aspects of the plan and streamlined it down.

Retail Cashback

Not really a commission but still effectively money in a Lyoness member’s pocket, the Lyoness cashback is effective on all purchases (online and offline) and giftcard purchases from selected retail partners.

The cashback amount varies between 1 and 2% and is paid out weekly (minimum cashout balance is $15).

Additionally, a 0.5% cashback is also offered on the purchases made by members you have directly recruited (down 2 levels) into the company.

Accounting Units

Accounting Units are where the Lyoness compensation plan starts to get a little complicated.

Starting with you, every member you recruit is placed below you and forms your downline, along with any members your recruited members recruit and so on and so forth.

For the purposes of accounting units, Lyoness use a binary compensation plan system. which means that directly underneath you are two member positions, underneath those positions are another two member positions and so on and so forth. Starting off with the initial two member positions under you, each of these sides is a seperate team.

For each $75 earnt in commissions generated, paid out in cashback bonuses (both direct cashback and referral cashbacks) or $75 put down by members as a downpayment towards a gift card or payment, the company counts you as having generated one ‘accounting unit’.

For each accounting unit you generate, when 35 of the same units have been generated by your left binary team and 35 by your right team (for a total of 70), your accounting unit is redeemable for a $675 commission.

When four of your personally recruited downline members have each generated at least one accounting unit, you can also claim a loyalty cash bonus which further increases the accounting bonus commission payout by $198 (for a total payout of $873).

The $675 must be spent with a Lyoness retail partner, whereas the $198 loyalty commission is paid out as cash.

In addition to the $75 accounting units above, Lyoness also offer four other tiers that function in the same manner as the $75 AC I accounting unit commissions:

  • AC II – $225 (30 units required to be purchased by both binary teams, payout is $1869 ($594 cash, $1275 credit))
  • AC III – $600 (25 units required to be purchased by both binary teams, payout is $4380 ($1980 cash, $2400 credit))
  • AC IV – $1800 (25 units required to be purchased by both binary teams, payout is $13,140 ($5940 cash, $7200 credit))
  • AC V – $6000 (25 units required to be purchased by both binary teams, payout is $43,800 ($19,800 cash, $24,000 credit))

Membership Ranks

Within the Lyoness compensation plan there are a total of 8 levels of membership. At each level members are awarded a bonus as well as an increase on the amount they earn per accounting unit they receive a bonus on.

Members gain membership ranks based on the number of accounting units they have converted into cash returns.

Joining Lyoness

Membership to Lyoness is free. There are no fees whatsoever to become a member of the company.


On the surface, Lyoness looks like a regular enough cashback member rewards scheme and that part of the business I have absolutely no problem with.

You sign up for free, you shop and you earn a 1-2% cashback and a 0.5% cashback on the purchases of people you refer (and members they refer).

If this was the extent of the Lyoness compensation plan then, apart from it not really being MLM my conclusion would stop short here. The inclusion of “accounting units” however throws the entire Lyoness business model into question and raises some serious questions.

From a rewards viewpoint, the idea that members can earn an additional commissions as members in their downlines accumulate accounting units is solid.

What Lyoness then do however is allow their members to purchase these accounting units themselves.

Jump start your Lyoness benefits with “Down Payments” against a specific gift card order for future purchases.

The down payment is converted into units, which are placed in your Lyoness accounting program.

Being a “down payment”, as I understand it the money stays with Lyoness itself as nothing has been purchased from any retailer. At a later stage you could cash out a gift card but there doesn’t appear to be any onus or requirement to do so (you can’t redeem the money as cash so it makes sense to request a gift card).

Effectively you pay your $75, $225, $600, $1800 or $6,000 to Lyoness and they give you an accounting unit. Then after between 20-35 people in your downline make a similar payment, you are paid a lump sum cash payment as a loyalty commission, as well as a lump sum to be used in their retail network.

With how much you are paid and the amount of people needed to create accounting units above and below you directly tied into the value of your own accounting unit, it’s very hard not to see this as a return on the money paid to Lyoness for an accounting unit.

Lyoness themselves even encourage this:

Become a Business Member

The fastest way to become a Business member is by making a down payment of $3000 on future purchases.

Down payment: $ 3,000
Loyalty Credit: $ 15,750
Loyalty Commission: $ 9,108

Total Benefits: $ 24,858

In the above example, ignoring the loyalty credit, the investing member has generated an effective 303% return on their original $3000 investment. This return is generated and paid out solely on the condition of getting other members to invest in their downline.

Now as far as I can tell, the only difference between a business member and anyone else in Lyoness is the $3000 they’ve pumped into the company.

Given that you can entirely bypass the purchasing of products from retailers and cashback side of Lyoness and just focus on purchasing accounting units with your own money and encouraging others to do the same, it’s hard to not look at it as an investment scheme.

Effectively, the Lyoness compensation plan can be broken down into five investment plans:

  • AC I – invest $75 with Lyoness and once 70 similar investments are made by your downline, Lyoness will pay out $873 (264% cash ROI + 900% credit ROI = 1164% total ROI)
  • AC II – invest $225 with Lyoness and once 60 similar investments have been made by your downline, Lyoness will pay out $1869 (264% cash ROI + 566% credit ROI = 830% total ROI)
  • AC III – invest $600 with Lyoness and once 50 similar investments have been made by your downline, Lyoness will pay out $4380 (330% cash ROI + 400% credit ROI = 730% total ROI)
  • AC IV – invest $1800 with Lyoness and once 50 similar investments have been made by your downline, Lyoness will pay out $13,140 (330% cash ROI + 400% credit ROI = 730% total ROI)
  • AC V – invest $6000 with Lyoness and once 50 similar investments have been made by your downline, Lyoness will pay out $43,800 (330% cash ROI + 400% credit ROI = 730% total ROI)

Note that if downline members make multiple investments individually, less people overall are required to invest to reach the targets of 70, 60 and 50 investments respectively. Also if the initial investor does not meet the cash return requirements (loyalty commissions), these ROIs are still paid out but go to the first available qualifying upline member.

Obviously not all of these counted units are going to be straight cash injections into the company and no doubt a lot of legit cashback accounting units are created, but the fact remains that the above scenarios are readily occurable.

Moreso when you consider that each member is relying on money being pumped into Lyoness by their downline (people they’ve recruited and people their recruits have recruited).

Lyoness do state that

down payments are neither investments nor loyalty credits, they are down payments on a specific gift card order for future purchases.

But given that there’s no requirement to put the money towards an actual purchase pending a ROI payout, I don’t see how members injecting money into Lyoness for a guaranteed return upon certain conditions (people above and below you creating accounting units) isn’t just a straight out investment with a paid return.

Finally there’s the question of revenue. Lyoness charge no membership fees and as far as retailers go, they are charged a once off registration fee of between $392 – $790 USD and then just $26 USD a month thereafter.

Even with thousands of stores participating, when you consider how many members Lyoness claim to have (in the millions)… it’s clear that at $26 USD a month the company would struggle to pay out the accounting unit returns (remember that the 0.5-2% cashbacks are paid out by retailers and not Lyoness itself).

Consider though that at the $75 accounting unit level, $5250 is the revenue generated by the creation of 70 member paid accounting units (enough revenue to pay out six $75 accounting unit ROIs), and it’s easy to see where the money comes from.

Like I said earlier, obviously not all the units are going to be member payments and there will be legit cashback accounting units in there so the numbers aren’t exact, but when you factor in that these cashback accounting units are actually a loss to Lyoness itself when it comes to payouts, it’s clear that the business model relies on a significant portion of the accounting units being directly paid for by members themselves.

As a cashback rewards program, given that Lyoness don’t themselves pay out the cashbacks, as long as they have retail partners that side of the business is sustainable. When it comes to the whole accounting units and MLM side of things though, all I’m seeing is what alarmingly resembles a Ponzi scheme.

Lyoness themselves acknowledge that

money spent on everyday necessities may generate several hundred dollars in Cashback per year

but as a business opportunity, “several hundred dollars a year” isn’t really worth writing home about (it’s only a few thousand in accounting unit payouts). Not withstanding the fact that in order to legitimately generate just one $75 accounting unit, members themselves must spend at least $3750 at Lyoness’ retail partner stores (less if you consider the 0.5% referral payment).

With the legit use of the cashback card no doubt joe average can generate a few cashback accounting units a year but if you want to earn anything considerable, we’re talking either massive retail spend on your behalf or a gargantuan downline, they themselves spending huge amounts on retail.

Much easier to just pay Lyoness $75-$6000 directly yourself and get others to do the same no?

Not a straight out Ponzi granted what with the sprinkling of legit cashback earned accounting units added to the mix and no fixed ROI timeframe, but a largely member funded scheme nonetheless.


Update 16th December 2014 – 2014 saw Lyoness introduce Lyconet. After finally tracking down a copy of the Lyconet US compensation plan, I’ve now published a Lyconet review here.