Lyoness Review: Cashback and investment returns?
Over 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.
Conclusion
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: $ 9,108Total 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.
Why does this reminds me so much of the Grupo DMG Ponzi that was shut down in Colombia back in 2008?
http://en.wikipedia.org/wiki/D.M.G._Grupo_Holding_S.A.
Lyoness doesn’t have a timeframe or recruitment requirement, but you don’t earn a ROI until a certain amount of money has been generated within the company (via cashbacks or direct investment).
So in other words, it’s a normal “rewards card”… until you put money INTO it, that’s when it turns into a prepaid card just like the Grupo DMG card. 🙂 Okay, maybe not exactly, but the general “modus operandi” is quite similar.
I don’t think you can use the card itself to purchase anything, you instead just pay the money to Lyoness.
As far as I know the card itself is just for membership (I vaguely remember reading this on the Lyoness website somewhere).
There seems to be no correlation or requirement to actually purchase a gift card or put the money you pump into Lyoness to purchase accounting units with and the accounting unit commissions they pay out.
So long as the people above and below you have generated the respective required accounting units, you get paid and the accounting unit expires.
So the money goes directly to the merchant instead of go “through” the company. Otherwise, mostly the same?
The problem I see is “purchase” the AU, same as you. Why allow that at all, as that’s what everybody will be narrowing on? If everybody is only using it as a rewards card, then income will be slow and rare.
Only by convincing all the downlines to put in money will you make money. It may be legal as is, but it’s DESIGNED to reward Ponzi-style recruiting (and investing/purchasing).
I am not sure the explanation “pre-pay the card” will hold up in court if it’s really challenged.
This seems to be right on the ragged edge of the boundary between Ponzi and MLM, and seems to be deliberately designed to be so.
For a legit cashback purchase yeah. For an “downpayment on a future purchase” though as far as I understand it, Lyoness themselves hold the payment. I don’t see how they’d let you instantly convert the downpayment into a gift card as that’d leave them with no money to pay out.
Mathematically $26 a month per vendor a month isn’t covering hundreds or thousands of dollars in accounting unit payouts so revenue has to come from elsewhere.
I’m not exactly sure how the downpayment turns into a prepaid gift card later down the track. I suppose when you decide you’ve invested enough money into Lyoness you can request a gift card from them to use in one of their retail partners.
They don’t bother explaining this process on their site, just that if you invest $3000 and others do the same you earn money.
Some more thoughts on the $75 purchase of accounting units. If you redeem them as giftcards they actually become a marketing tool to lure more people in.
If you’re the one handing them out you’re the one signing people up (not sure if you have to be a member to use the cards, don’t think so)…
‘hey how can you give away gift cards??’
‘I’m in lyoness!’
‘omg sign me up!’
As more and more people do this you then exponentially increase the amount of people injecting money directly into Lyoness “for future purchases” to keep paying people out in the interim.
Handing out the gift cards doesn’t matter because you’ve already made a ROI your initial $75 that you can’t get a refund back on anyway (even if you went to a store and purchased something gift cards refund back onto gift cards not cash).
When you consider that you can top up partial existing cashback accounting units with real cash that you’d otherwise continue to slowly top up to $75 (or higher if you’re aiming for one of the other two accounting unit values), this is again another additional member-funded revenue stream.
So it’s more akin to ZeekRewards “buy bids to give away then get paid from other people buying bids” business model?
Buy AU, convert to gift card, give away gift card, sign up customers who also buy AU, get paid from alleged profits.
Eeek! (no pun intended)
I liked this review very much, thank you Oz for this work.
This contains totally inaccurate “facts” PLEASE if you are going to voice an opinion – learn how the company builds BEFORE you post.
I took my “facts” from the company itself.
Feel free to correct anything, hell I might even forward your corrections to to Lyoness themselves as they obviously don’t know their own business model either.
Unfortunately people who do not understand Lyoness & its very unique and life changing ideas, can sadly misinterpret things.
We are all consumers of goods that we need to survive and live our daily lives, food, fuel, clothing, DIY, travel, entertainment and occasionally we want to splurge on ourselves etc. Whatever you have to buy for daily living can be purchased through Lyoness on a global basis.
Lyoness is different because it is the first global company to use Group or Collective shopping in the conventional business world as a bargaining tool for masses of people with Big Business, Major Brands, Multi Nationals etc. By guaranteeing those companies Loyalty – ie that of the Lyoness members, they gain a larger and regular customer base, which means they can reduce advertising etc.
The customer chooses to shop with Lyoness partners, so that they can save money on their purchases.
There is no such thing as purchasing a $75 unit and converting it into a Gift card so that you can give it away.
The “Give away Cards” are Lyoness Membership cards – not cards that you use in any way to pay for goods. They are FREE to the recipient.
The Membership card can only (currently) be swiped for a negotiated discount at the till of small to medium enterprises in fully launched countries (SME’s – some discount as high as 20%) – and there are not yet any SME in Australia as the full launch has not been completed.
This system has been created like this so that SME have a competitive chance of surviving in today’s erratic economies.
The major retailer cannot give out cards, they can only offer a discount and in turn gain loyalty! The SME’s however can give out Free cards to their customers.
The SME benefits because they keep loyal customers, gain or re-gain previous ones and are getting rewarded for giving their customers a further way to save money and they will receive a passive income (no stock or staff required) by receiving a % of what their customers spend with them and especially from other Lyoness stores,locally, online or overseas. Win Win for everyone.
Fact – You purchase a Major Company Gift Card from Lyoness – dollar for dollar exchange.
The major Brand company pay Lyoness customers eg 4% (example) discount IMMEDIATELY on purchase of the Gift Card (which is exactly like a prepaid debit card).
This constitutes the sale at a discounted rate! (when and how long a period you actually spend the funds on the pre-paid gift card is entirely discretionary).
1% is paid as friendship bonus to 2 tiers of introduction.
The discount is immediately put into the customers back office in 2 separate accounts – immediately upon purchase.
2% is immediate cashback (and is paid to the person’s bank account (free of charges) every Tuesday, with $15 being the minimum amount sent.
The other 1% goes into a savings account within Lyoness which accumulates as the person shops on a day to day, week to week, month to month basis….every time they purchase a voucher or gift card from any Lyoness partner Merchant or Service Supplier.
The purchase of the voucher or Gift Card is the sale!
When that savings account reaches $75 it then becomes a Unit as you have stated above. (And yes you can pre-pay units if you choose to get into the system a little faster) however the money is always yours to use to shop with should you ever decide to do that.
Now imagine that hundreds of thousands of people are shopping day, week, month, and therefore 1000’s of units are being created by these people on a constant basis.
The units enter an accounting program (a mathematical system) that is fair and equitable and audited to prove that it works every single time. Everybody’s units progress through the system resulting in a lump sum payout to the owner of the unit.
At the end of it all Lyoness is a Global Shopping Community, and whilst it has no joining fees, annual fees, no autoship, it is specifically designed for shopping and attrition does not occur the same as it does for a monthly MLM autoship company, where people are generally buying goods they do not necessarily need, which are generally over priced and a bit tough on the budget, but because they are required to in order to build & most importantly “maintain” an income.
Lyoness provides a unique way to benefit people just spending what they normally spend on their day to day living, and no matter what happens in the world economies, that will never change. Shopping will never stop!
4 ways to become Lyoness members – FREE – Shopper – Downpay at $225 or up to $3k (potential business builders). Those that join by down payments also have to meet a shopping requirement which is part of their normal daily life spending anyway – after all I don’t think while they are alive, that they are going to stop eating or needing lifestyle, fuel or survival needs.
By the way I am a grandparent in my sixties but I worked out how it works by doing my due diligence completely and making sure I understood it before I shared it with others.
@truthsayer
Which has nothing to do with “downpayments” or investments…
No it can’t. Lyoness themselves don’t sell anything other than memberships.
Then I suggest you go back and have a look at the Lyoness business model, as this was clearly written in the compensation plan information from the company that I cited.
You are talking about something else entirely. I was talking about members using the $75 giftcards to entice new members to join. Members don’t care about the $75 because after 35/35 they are paid a much higher ROI.
So, it’s entirely possible to treat the scheme as an investment opportunity by just buying $75 cards and encouraging others to do so. And I suspected there’s entirely no requirement to even use this invested money to purchase anything once it’s been deposited.
Thankyou for confirming this.
Except that, as above, shopping largely has nothing to do with earning in Lyoness.
Oz, include screenshots off Lyoness website in the future. It’s the only way to shut up those “blanket deniers”, i.e. “everything you say is wrong, shut up” responses.
I honestly wasn’t expecting members of Lyoness to be running around denouncing parts of the compensation plan and pretending it doesn’t exist.
I guess that’s what happens when you launch a company that has a comp plan as confusing as a bowl of spaghetti.
1. Lyoness is a shopping community whereby INVITED members can take part in a GROUP or COLLECTIVE buying discount NEGOTIATED by the company with thousands of Conventional Retailers and Suppliers globally to purchase goods and services from them as day to day consumers.
Therefore Lyoness is the conduit to the discount and you have to be a FREE Lyoness member to receive it. By invitation only.
So Lyoness do not sell memberships, they are given away by Lyoness members to people they choose to invite – not to every Tom Dick or Harry via a sign up link.
And then we explain to them how it works so that they are not misinformed or misled by comments from the inexperienced regarding Lyoness.
2. Shopping has EVERYTHING to do with earning in Lyoness, it is the core basis of all forms of return that its members can receive.
We are a shopping community & most importantly in our own LOCAL environments/current retail shops as well as online and globally should we travel, which works perfectly every single time.
Why wouldn’t any of our members who go and holiday in Europe, UK or USA, not go and spend our holiday money on our partner hotels, travel expenses, restaurants, car hire, food, fuel, shopping for pleasure or fun, overseas and still benefit as if we were shopping at home?
It is simple, we save money and we make money too by getting a share from the discount pool we have collectively created by shopping with our Loyalty Partners.
3. NO ONE can buy a $75 unit as a Gift Card and give it away to others, that is completely wrong and not a fact.
Besides being misleading and pedantic. Unfortunately the “sighted” things you have seen you have misinterpreted or not understood at all.
4. Sure you can buy a Voucher or Gift Card from a Lyoness Loyalty Partner and give that away to someone as a gift. But that is NOT a $75 unit turning into a Gift Card.
5. Again there is NO SUCH THING as a $75 Gift Card that is used to “entice” people…it does not exist!
We give away FREE “membership” cards to open minded people we choose to invite to share in our good fortune. They join because after we show them how it works, they see something in it for them via their day to day shopping savings & benefits – this is the primary reason for the majority of memberships.
6. People join Lyoness to save money everyday on their survival expenses and to make some extra money by sharing in the dividend pool CREATED BY SHOPPING!
Lyoness ONLY exists because it is all about SHOPPING !
It is not, never was or will be an Investment company and its not shared by its ethical members that way.
(OzEdit – spam removed)
Oh please, pull the other one. The internet is littered with referral links. Lyoness members will sign up anyone who they think they have a shot at convincing to buy a $75 accounting unit.
Regarding the sale of membership, the point stands whether it’s free or not. You can’t actually buy anything from Lyoness except an accounting unit and to purchase one of those you need membership.
Lyoness do not themselves sell any tangible goods or services.
No it doesn’t. I can sign up tommorow, start purchasing $75 accounting units, encourage others to do the same and earn large ROIs.
Shopping can be bypassed altogether.
Why not? Gift cards are a virtual currency irrespective of Lyoness as they are valid for use in retail stores. They aren’t tied into Lyoness member names (are they?)
Mate dress it up anyway you want. Members pay Lyoness $75, they don’t pay loyalty partners directly. Nor is there any requirement to use the $75 on gift card purchase or any purchase for that matter.
Except that there is. There’s nothing stopping Lyoness members putting their $75 investments towards a gift card and then giving that gift card away to non-members as a marketing tool to entice them to start pumping their own $75 payments into the scheme.
As they do in any MLM business.
There is no way known Lyoness could exist if they solely hoped to survive of $26 USD a month per retailer who participated in their cashback scheme. Quite obviously there are other sources of revenue (member investments in accounting units).
Sure as hell sounds like it, given that you’ve completely thus far failed to address anything in particular and instead continue to harp on with your ears shut.
I’m not interested in your terminology, I’m interested in analysis of the Lyoness business model and upon analysis of that, every action mentioned in the above article is doable therein.
You’ve yet to prove otherwise other than dismissive ‘you’re wrong!‘ arguments.
Start addressing specifics or I’m going to be left with no choice then to flag you for spam, as that’s what your contribution to this discussion is increasingly resembling. Portraying Lyoness as some sort of charity has nothing to do with analysis of the business model.
Please stick to discussion to issues raised regarding the Lyoness business model and compensation plan. Leave your marketing crap at the door.
Retailers *may* get some increased traffic, but have to put up some discounts. But what does Lyoness get out of it, based on the model you’re claiming?
And what about the $75 accounts units members can buy? How *do* you get income out of Lyoness if they don’t earn anything?
You did not answer the REAL question. What does Lyoness get out of it? What about the $75 account units that members can buy?
Again, where did the dividend pool come from? Retailers? So you didn’t get the whole discount, but it’s split among the other members and you get a share of that?
Then what are accounting units for? Donation?
Except the explanations you gave have huge gaping holes enough to drive a battleship through. AND you just have to throw in that ad hominem attack at the end. *sigh*
(remaining marketing blah-blah snipped)
I thought you so called experts had read the compensation plan ?
If you had you would know what the accounting units are for.
You would also know the true explanation of 35 above and 35 below. Nothing to do with HAVING to come from your upline! Where you created that bit of fairy floss from is just amazing.
YOU state that UNITS are therefore PEOPLE.
And Lyoness is NOT an MLM. They are ILLEGAL in many countries and many of those countries Lyoness is in.
UNITS are UNITS…not PEOPLE !
NO ONE CAN DOWNPAY ONE $75 UNIT AND JOIN LYONESS WITH IT.
You can become a FREE shopper & can earn it by shopping…but not downpay it.
Any member who downpays has 3 UNITS (not people)…so 35 x 35 units = 70 – would be approx 23 PEOPLE in your DOWNLINE – from downpayments (THEY ALSO SHOP & create more FREE single units that come into your team).
And your unit would mature if you were balanced 35/35 and pay you the Loyalty Cash payment it is due and the loyalty commission because you have 4 members.
Loyalty commission is paid retrospectively when you gain your 4th member! You don’t see that happening in an MLM! Those companies get it and keep it!
Some PEOPLE who downpay as a Premium member, well they have 7 UNITS (not people). So if you had 10 PEOPLE at that level you could have 70 UNITS. And if you were balanced 35/35 you would be paid, whether from your efforts or from those members introduced. Just like a binary!
Then along come all the EARNED units that people create one at a time from their shopping! And the units from the members they give Free cards to!
Pray tell, what do you currently get when you go out and spend say $2500 in life survival expenses in a month? Just the goods/fuel etc? And for many people no doubt a hefty credit card bill that adds interest to their purchases making them even more expensive in the long term!
Our members could create a $75 shopping unit that eventually will mature and pay them what equates to an even higher discount on their shopping!
Please do your readers a favour and go back and get the information and READ it again!
Nowhere does it say that a UNIT equates to a PERSON.
(OzEdit – Spam removed).
So are you going to explain it?
You’re contradicting yourself. You claim it’s not a MLM, then you said you have downlines (and uplines).
Clearly, you can’t even keep your story straight.
People above you are your upline. Unless Lyoness are using some other sort of monkey definition that differs from the rest of the MLM industry.
No. You just made that up yourself.
Of course not. You join Lyoness first then start investing in $75 units.
You have to pay even more money to cash out? This wasn’t mentioned anywhere on the compensation plan documentation I saw.
Plenty of companies reward members for recruiting. How new to MLM are you?
Nobody said a person was a unit. I’m starting to think though that Lyoness’ appalling explanation of the comp plan turns a standard binary on its side and refers to the left leg as “the bottom” and the right leg as “the top”.
I might have to rewrite that part of the review, but functionally it’s the same. 70 investments of $75 need to be made before your own investment matures. You don’t need to purchase anything from retailers – just hand the money over to Lyoness.
1. Join Lyoness.
2. Invest in $75 accounting units.
3. recruit people and get them invest in $75 accounting units.
4. Earn a ROI once you “sell” 70 accounting units.
If the above is not an accurate representation of the Lyoness business model I’m all ears.
The real business opportunity in Lyoness seems to be the €2,000 “Business Partner” (BP) option, where you pay €2,000 as “downpay for future buying” and earn money from recruitment of other Business Partners (directly and indirectly recruitment), and you will also earn some minor amounts from customers in your downline when they are using the CashBack card (in the areas of the world where it’s possible to use it).
This might have started as a real business idea in 2003, but currently it looks more similar to a pyramid scheme. The downpay is not refundable, it is more similar to a “pay to play” fee.
I didn’t check the details, I just watched the video presentation for Lyoness Norway:
A normal customer will usually NOT “downpay” €2,000 for unspecified “future buying”, unless there are some other incentives connected to the payment. The “downpay” isn’t refundable, but you can get your investment back through shopping, using the investment to pay 8% or something (it means you’ll have to spend €25,000 on shopping, €2,000 from the invested money and €23,000 from your own pocket).
NOTE:
I didn’t check any details, it was just a quick overview.
The CashBack card seems to have very limited number of businesses connected to it in most countries. I tried to check a few areas (Country, region, area).
California had 4 “Loyalty Merchants” total, so in some areas this opportunity is more about recruitment than shopping. I was too optimistic when I first started to check, specifying country + region + area to “U.S., California, Los Angeles”. 🙂
Eastern Europe had most Loyalty Merchants, but I didn’t check any details.
Based on a quick overview, this looks more like a recruitment scam than a real business or a shopping solution. Real cashback solutions will usually not require the “downpay” of money, and neither will real business opportunities. The downpay isn’t connected to any SPECIFIC product or service, other than the right to recruit others.
Lyoness is not an MLM because:
An MLM company generates its income from the membership fees and auto ships of the members.
ie:
*Products which have “no real world” marketplace.
*Products which are sold at inflated prices.
*Continual Mandatory purchases of company product.
*Plans which result in inventory loading distributors
*Mandatory purchases of peripheral or accessory products or services.
*Plans in which distributors are left with substantial unsold inventory upon cancellation of participation.
*Plans in which distributors purchase products in order to further the marketing plan rather than out of genuine desire and need for the product.
*Plans in which commissions are not based on actual retail product sales.
*Plans in which emphasis is on recruitment rather than sale of product.
*Plans which contain elements of a lottery rewarding participants based on chance rather than on bona fide sales efforts.
*Earnings misrepresentations or inflated earnings representations.
*Plans which make no effort to emphasize retail sales to the ultimate nonparticipant consumer.
*Plans which require no meaningful participation by distributors after becoming a distributor.
*Plans in which fees are paid to distributors for headhunting.
And a whole heap more.
They also operate under specific laws.
I am not bagging MLM, there are like everything (including people) some good and some bad.
Lyoness simply does not fall in the MLM category for all the above reasons and because it operates under other legal requirements.
As for the nit picking:
Upline/downline is common terminology in any business that has word of mouth referrers, its not just specific to MLM.
@truthsayer — you’re sidestepping the issue. You gave a bunch of definitions of MLM and you failed to explain how Lyoness is NOT MLM. You simply said “above reasons” when you failed to explain any of the reasons.
And by the way if you want this site to have any credibility stop being so personally insulting.
I’m not a newbie, in fact been successful in GOOD companies over 25 years, however have found something way better and fairer for all people of all walks of life and right for the economic times the world is in!
If its not appealing to you, that is your business, but do yourselves a favour, do not tout that this information is gauged from the Lyoness site and that you are doing people favours (just because your level of understanding is not up to par), because that is simply totally untrue also and you know it. That is why you can misconstrue it completely.
(Ozedit: removed spam)
YOU are the one that states that UNITS are PEOPLE.
Oz – As you state above in your REVIEW:
And again NO you do NOT HAVE TO INVEST IN $75 units. We do not have investments!
We have downpayments on future shopping – so we can spend out that money if we choose.
That is a choice! IF you do want to do so, its in blocks of 3 for the umpteenth time to start off with.
So you are the one saying PEOPLE…where I state the truth that they are UNITS and a person may have many units!
There is a HUGE difference. And NO you do not sell 70 accounting units. We do not SELL Units.
Again a total misconstruance of what is done!
We have free shoppers, and membership is free, and whatever level of shopping done by either downpayment or earnt through shopping creates units which benefit the member.
You are the one who personally “represents” by the way you have worded your review that UNITS are therefore People (oh and it has edited it on the fly (because it said 35 UPLINE people before and 35 DOWNLINE people) – so I guess some of what I said is being taken note of). Truth and honesty huh.
So the above is NOT an ACCURATE representation of the Lyoness Business model and I guess we will see if you are all ears, by leaving my entire conversation as a whole.
You cannot just hand over money to Lyoness, you do purchase things from retailers….again for the umpteenth time!
Go back to the person who gave you Lyoness BACK OFFICE info and ask them to give you the info again – because you have misinterpreted it and you would like to give your readers the truth.
(AS STATED ABOVE IN THE “OH YOU HAVE TO PAY MORE MONEY OUT – THAT WASN’T IN THE INFO I SAW”) which proves you did not get the information FROM THE LYONESS SITE as you state in your review. Then actually talk to them one on one and have them explain it to you.
Now lets see if you truly value truth and accuracy.
You may not be a newbie, but you’re debating like one. You are supposed explain your own supporting evidence and how they support your point (which was “why Lyoness is not MLM”.) You can’t just throw out a bunch of MLM definitions without explanation.
You can always quote from their site, put it inside “blockquote” tags, and do NOT post the URL. We can always verify the info ourselves.
So far all you did is repeat “you don’t understand us”, then go on long rants about how we are misconstruing everything , yet you did so without proper explanations.
Oz made his point. Prove him wrong with proper evidence instead of repeat UNSUPPORTED STATEMENTS (which are just opinions).
So you concede that Lyoness is multi-level as it has uplines and downlines. You have NOT proven that Lyoness is not marketing.
Your story is changing again. First you say you don’t have to (which is same as admitting exists but it’s not required), then you claim it is not sold.
While Lyoness website says:
So you *pay* Lyoness to generate an accounting unit. That’s buying an accounting unit. Whether it’s applied to “future purchases” is not the issue. The point is they are holding the money and you get some acknowledgement of this accounting unit.
Besides, who the heck “pays for a discount in advance”? Why would anybody PAY FOR DISCOUNT? (And it’s not membership, since Lyoness membership is free, as “truthsayer” kept on repeating)
So you are conceding, instead of explaining because you claim you are being misconstrued. It’s STILL “you don’t understand us” excuse without supporting evidence from you. Except you throw in an EMOTIONAL appeal this time.
@Truthsayer — how about this… tell us, IN YOUR OWN WORDS, how Lyoness is supposed to work (don’t just repeat marketing speech from Lyoness)? Why would any one want to generate an accounting unit by prepaying instead of purely through shopping?
@truthsayer
Lyoness is MLM because they use a MLM style compensation plan. End of story. There is more to MLM compensation plans than membership fees and autoship.
The information was taken from the Lyoness website. To suggest or say otherwise is a lie.
Nobody said you have to, the fact that you can is enough. If you can treat Lyoness like an investment opportunity then it is one. The rest of the compensation plan becomes irrelevant.
You seem to be stuck on the fact that what I’ve written suggests that you need 35 people, so to clarify I’ll clearly state that one person recruited can make multiple investments in accounting units.
Functionally the idea is the same, whether you need to recruit 35 people or less, once 70 new investments have been made after you invested in an accounting unit, you earn a ROI on your original investment.
I’m not sure what you’re talking about, I haven’t edited the review since I published it. I’m going to edit it after I’m done with my daily comment run to further clarify that recruited members can invest in more than one accounting unit so 35 people is the maximum required (if everybody only invests $75).
Yes you can. Lyoness provides accounting units, not retailers so you’re handing the money over directly to Lyoness.
I think TruthSayer is *stuck* in the mindset that because it’s supposedly “prepaid gift card”, the money paid to Lyoness can later be redeemed at a merchant, therefore in Truthsayer’s mind it’s NOT Lyoness’s money (when it is… UNTIL it is redeemed)
Either that, or truthsayer is looking at only the “buyer’s discount club” side and NOT the accounting unit purchase side.
I forgot to mention that I checked Lyoness in EUROPE, not in the U.S., and I was mostly focusing on the Scandinavian countries (Norway, Sweden, Denmark) and UK and Ireland. I was only checking the first few hits in Google.
The sources I used:
* Lyoness’ own website (checking Loyalty Merchants in the U.S. and in a few countries in Europe)
* “Lyoness being sued by former employee for allegedly operating pyramid-style business” (an Irish forum)
* Youtube (“Norway Career Change”)
Some information was picked up from the Irish forum:
The main focus in Lyoness seems to be on recruiting Business Partners (people paying for the right to recruit and earn commissions), and the secondary focus seems to be on recruiting customers. Loyalty Merchants seems to have very little focus, and some of the merchants are probably acting in a double role as partners and merchants.
In the U.S., they claim to have been established in 2009/2010 (in all 50 states), and yet they didn’t have more than 4 Loyalty Merchants in California 2-3 years later:
* “MSI Office Furniture”, SANTA ANA
* “Alicia’s Pet Care Center” and “The Pet Rescue Center”, MISSION VIEJO
* “Image Makers”, SAN CLEMENTE
It’s hard to see any real motives for customers in the 1-2% cashback, so the Loyalty Partners’ main motive seems to be the commissions for recruiting other Loyalty Partners.
Lyoness will probably meet some problems in Norway.
Different stages
They are currently in a stage “P1” where they sell the business opportunity itself, for a “down-payment” of €2,000 per member, with prospected goal of having 300 business partners in Norway.
The business opportunity is basically the right to recruit additional partners with €300 minimum voucher down-payment, as stage “P2”. This stage will also include “Loyalty Merchants”.
Stage “P3” will be end-member registration and campaigns.
Stage “P1” and “P2” is basically a pyramid scheme. They are selling the opportunity itself, the right to sell additional opportunities and earn commissions.
The down-payment is also in conflict with normal business ethical principles, where down-payments normally will be connected to specific areas of business and is regulated by “common business practice” rather than laws.
Down-payment is common for:
* Second hand goods, you can “reserve” the goods from being sold to others for a short period of time, by paying a percentage of the price as a down-payment. This kind of agreement will also give the buyer certain rights.
* Goods in production, usually if you have ordered something specially designed for you. It is uncommon to use down-payments on mass-produced goods in the lower price-range, but it is common to use it on boats and other expensive items with a limited market.
* Goods that are delivered in to the manufacturer (or others) for repair and redesign, where you pay for some of the work and/or the materials needed.
* A few other markets, but some of them have clearly regulated rules. Real estate is one of the examples where they follow very specific rules.
* Other cashback cards used in Norway are free, you don’t have to pay for them. So the down-payment isn’t a common practice for this specific type of business, other than to the pyramid scheme part.
LAWS AND UNWRITTEN RULES
Down-payment in general is not regulated by laws, it’s regulated by “common business practice”. They are regulated by what we consider to be “reasonable terms and conditions” both for the seller and the customer. The down-payment will have a different primary function in each of the examples I mentioned.
If you’re ordering a standard produced couch for delivery 6 weeks later the usual down-payment is 10% (when the order is signed, or sometimes later), but the percentage can be higher if you order a couch specially designed for you. It’s impossible to have fixed rules, but the general business ethics will decide whether or not something is illegal. Legislation will have both written rules and unwritten ones, and the unwritten rules are often more important.
Pyramid schemes are clearly illegal (by written rules), but the down-payment is illegal too. Down-payments will need to be connected to a specific agreement between the seller and the customer, and be related to something specific (products or services). The right to earn commission for recruitment isn’t a specific product or service, so the €2000 and the €300 “down-payments” are more similar to “pay to play” in a pyramid scheme.
Lyoness “main product” in the marketing is “Profit for lifetime”, and this is clearly not a product that will require a down-payment.
Down-payments for future shopping is neither a common business practice for cashback cards nor for any other business.
The main “product” in Lyoness connected to these down-payments is the right to earn commissions, partly by recruiting other business partners and partly from commissions from future purchases in a downline.
“The right to earn commission” is neither a product nor a service, so technically you can’t downpay it either. “Future purchase” isn’t a specific product or service either. Your down-payment is more similar to a “pay to play” fee in a pyramid scheme than to something related to normal business.
And we are mostly analysing business models, not the laws in each and every country. When it comes to “legal vs. illegal” or the definitions used in specific countries, you’ll need it to be decided by the correct authorities there. Since this is considered to be “common knowledge”, we won’t repeat it too often.
I have a ‘friend’ trying to recruit me to the Lyoness “shopping community” and at first I suspected a pyramid scheme, and now that I have done my due diligence it seems there is truth to the saying, “There is a sucker born every minute”.
Good to know I can trust my instincts.
the things that immediately popped out were the buzz words used:
“shopping community”(aka harass your friends),
“down payment”(Aka buy your way up the pyramid),
“Accounting Units”(aka something that sounds important and is so complicated that most non-accounting types will fall for the lingo)
to all: thanks for the informative post and comments
@not-a-sucker : Well, there’s technically nothing wrong with signing up as the free member and see what sort of discounts you get, though I doubt you’ll get many, or at any place you’d REALLY want to shop.
You just won’t make your friend rich as you don’t want to buy gift card / accounting unit to places that you wouldn’t shop. 😀 Nothing against your friend, but that’s the honest truth.
Agreed, nothing wrong with the useless “free member” card.
Let’s assume for the sake of argument that I DO shop at these places that participate, 1% is not enough for me to go to the effort of buying a gift card. If I spent $500 somewhere that would be a whopping $5.00 I am saving, big deal. It would have to be much higher % before I even gave the concept a glance.
As pure conjecture, I would guess that most people wanting to get into Lyoness are not doing it for the discounts their friends will be getting, it’s all about the pyramid scheme(very much like the 1970’s).
The thought of making money quickly, regardless of the methods, makes people do crazy things.
@not a sucker — you are of course, correct. I believe my regular rewards credit card offers me more than 1% cashback already. 🙂
1. It is not only 1% cashback. If you want ist 2% and if you recomend your wife is 2.5%. Rest until >30% go in loyality acount.(What is “loyality account:? This is Lyoness )
2. If I recomand a freind I can recive 0.5 % . If he recomand a friend I recive 0.5%. This is stop here. But all the clients in your upline and downline is important because evrybody bay day by day regular products.
3. I can pay form my Lyoness acount with smartphone( for Android, Iphone, or any smartphone with internet). I dont need to have cash. (With Visa you pay as the same but you dont have this discounts).
4. My lyoness cashback card I can use at 20.000 international company acroos Europe. In USA ist beginin. In USA now its the momemt to make Lyoness “business”. In USA now Lyoness is not for regular cliens.
………………………
sorry for my english!!!
@Smart
1) The Lyoness US the rebate depends on the merchant, could be 1% or 2%. Please don’t mix up Lyoness vs. Lyoness US.
2) Ditto
3) Ditto
4) Ditto
Thanks for the review of the business side of Lyoness USA, Oz.
Two friends – one a very successful entrepreneur – have recommended Lyoness to me. I’d already spent a little time looking at the Lyoness USA compensation plan and decided I’d needed to really study it before I’d consider it as a business.
For me that means even if I decided it was a solid plan I wouldn’t recruit people into it as a business. I’ve found that in most sales (and recruiting is sales) things need to be easily explained and easily understood. Otherwise I spend too much time explaining and I risk damaging important relationships, or my reputation, due to misunderstandings or unintentional misrepresentation.
My take on Lyoness USA is it is good as a shopper-discount program (but needs to grow its participating stores in the USA) and it’s weak as a business opportunity, at least for me. The way only I would feel ethical working this business would be through introducing the card for shoppers’ discounts. (No judgment here against how others would work this business, this is just my business style.)
As your review explains it would take a lot of shopping by me – or the people that I introduce and they introduce, and so on down the line – to earn substantial income through the business working it as a shoppers discount opportunity.
I think realistically most shoppers would not be spending more than a few hundred dollars per month at participating stores so the income just isn’t there without forcing it by buying the AUs, as you explained in your review.
I’ll probably get the free Lyoness membership, mainly to use at Walmart here in Hawaii which is currently the only participating store I where regularly shop. But I won’t try to grow Lyoness as a business. At least the way I would work the business Lyoness USA just doesn’t pay enough for the effort.
Thanks again, Oz, for confirming the weaknesses I suspected from my superficial examination of the Lyoness compensation plan.
The references for this response are:
– [THE GTC](http://www.lyoness.net/us/agb.aspx)
– [The appendix to the (soon-to-be-replaced) member brochure]
http://cdnlarge.lyoness.net/downloads/pdf/us/info/lyo-apendix-us.pdf
Section 4.2 of the GTC states “A Member has no obligation to promote or recommend the LYONESS Loyalty program to others or to recruit additional Members.”
I would write this as: “Lyoness members have 4 ways to shop (1) cashback card (2) cashback gift cards (3) mobile shopping (4) online shopping”
Only the initial payout must be $15.X1
I dont know what international compensation plan you are referring to. Lyoness offers membership to people based on their country of citizen ship in 1 of 5 continental areas – Europe, North America, Asia, IMEA, South America. Lyoness North America members have the same plan as other continents, just different money – Euros in Europe, dollars here, etc. And Lyoness North America members can register members in other continents.
This is the first serious misunderstanding in this article and it led to a completely false description of how loyalty cash and loyalty credit are produced.
For instance, for your convenience you define a term called downline and then later you assume that $75 matures into $675 based on units from people above the member and below the member in terms of sponsorship. But the fact of the matter is described in the appendix is sections 3 and 4 of the appendix: the above and
below described there are equivalent to what you wold think of as right and left legs of a binary tree.
In most MLMs, the matrix has to do with people, in the Lyoness accounting program we are recording units of loyalty.
“Just to be clear this is not about 70 people, it’s about units. 35 above and 35 below.”
And note that the above units were created in the example by what you would term a “downline”.
I’ve already discussed why this is wrong from the standpoint of the source of the units. Now, let’s refine your statement about 35/35. 35/35 deals with AC 1, refer to appendix I.4 for the maturity in the various accounting programs.
The proper term for what you are discussing is “loyalty commission” (income stream 5) not loyalty bonus. “Loyalty partner bonus” is income stream 6.
There are 5 personal accounting programs that fashion this way. Please review the appendix.
Also note that 5 similar programs exist for the nation and the continent.
Also note that there are also 5 passive personal accounting categories, since rebooked units enter the next passive accounting program, not the next “active” one.
So, there are 10 personal accounting programs, 5 active, 5 passive. And 5 national and 5 continental
Those are called career levels and they only relate income streams 9 and 10. And until you are a business team member, they do not apply.
No. Career levels are based on the amount of new units created in the accounting program within the span of a production month. You wont find any mention of accounting units converted into cash returns in the discussion of career levels in the appendix, because that is not how it works.
That is true is “Phase 3” countries and there are 4 of them: Austria, Romania, Czech Republic and Hungary.
In “Phase 2” countries (ie. most of Europe, North America) a qualifying purchase or down payment on future shopping is required within a certain amount of days (the amounts and time frame are soon to change).
In “Phase 1” countries, you are required to down pay on future shopping creating 7/3/3 in your first 3 personal active accounting categories. This is places like South Africa, Asia, etc.
Now, the phases are soon going away and the membership structuring in North America and Europe is going to move away from down payments and encourage more shopping by everyone right from the get-go.
I dont know what objective measure you used to decide what a regular enough cashback rewards program would be, but in my survey of over 40 such programs ( http://j.mp/cbk-report ) only one other came close to Lyoness in terms of compensation program.
No other cashback program in the history of planet earth can document the production of millionaires from their program and we have 15 career level 8 members and will produce 140 more this year.
The friendship bonus is 2-tiered, not one-tiered as you imply here.
When a chase rewards card offers you cash back as well points, do you have serious questions about the use of points to register loyalty?
Again, the false descripton of “above” and “below”.
Section 8.1 of the GTC states “The Down Payment is not refundable in cash.” and then goes on to state that an accounting can see immediate cash usage via top-up or re-cash options.
You can make down payment in any of your give accounting categories, not just the first 3. And, most importantly, you are NEVER paid cash for down-payments on shopping, you can only earn loyalty CREDIT, not
loyalty CASH.
Please read on income streams 3 and 4 in the appendix to confirm this.
I would say there are 3 types of Lyoness members: (1) shoppers who simply shop. (2) business members who make a down-payment on future shopping and (3) loyalty partners: people who are business members who also have product/service to offer.
An investor is someone who uses cash to make more cash by my definition. Now, the founder of Lyoness is very much against the use of the term investment when discussing Lyoness because, in his eyes, investments carry risk and there is no risk in Lyoness.
For instance, a down payment on a house does not mean you will eventually own the house.
But Lyoness membership requirements will soon include a shopping aspect for all membership levels very soon. For instance instead of a $3000 down payment on future shopping, it will be more like $2000 and
$1000 in gift cards.
Your ensuing description misses two important things. First most pyramid scams end up with exhausted funds because they need new money and members. But Lyoness is fueled by cashback at 150,000 points of
acceptance. So units are being formed by shopping as well down-payment.
Next, you missed bonus units. Before a unit matures, it creates 4 bonus units, which will also attract more loyalty commission. In fact, if you track a single $75 unit all the way through all 5 accounting
categories, it will yield about $30,000 and also 20 bonus units (which will earn more money) based on following down-payments and cashback-generated accounting units.
The member benefits as published say nothing about unit earnings going to yoness and two external international certification agencies have certified that Lyoness does what it promises.
This again is a false representation of the accounting program. The youtube video I linked you to earlier shows that units of any member of a lifeline can follow any other member, meaning that all members of
a lifeline can compensate each other.
And about “money being pumped into Lyoness” – it’s cashback on shopping that you were going to do anyway.
Because down-payments do not yield loyalty CASH only loyalty CREDIT, that’s why.
No, this is for online retailers. SMEs that do not offer cashback through their website dont incur any of these fees. And the monthly fee is only for online merchants that have earned a certain amount of
money.
Lyoness takes 1% of every transaction. That’s how it earns money. So if the published member benefit is 3%, Lyoness actually got 4% cashback from the merchant.
Please give a complete example documenting Lyoness operating at a loss on promised and published cashback rewards. I dont know what you are talking about and you certainly didnt provide a worked out example.
Per wikipedia ( http://en.wikipedia.org/wiki/Ponzi_scheme ) A Ponzi scheme is a fraudulent investment operation that pays returns to its investors from their own money or the money paid by subsequent
investors, rather than from profit earned by the individual or organization running the operation.
Lyoness is not a ponzi scheme because they dont make false claims about their business model. But let’s be precise about the possibility of it being a pyramid scheme where payments of subsequent investors
lining the pockets previous investors.
Let’s just using AC 1 for simplicity. I using $575 to down-pay 7 units in AC 1 and then find 10
other people to do the same. So now, my first unit is followed 35/35. Here is what I get for that:
– $675 in loyalty CREDIT which much be spent with lyoness merchants
– $198 in loyalty commission – cash that is paid out to a bank account
– 18.75% of $198 in loyalty partner bonus – more cash. call it $40 more dollars
– 4 bonus units: 2 continental, 1 national and 1 personal
– roughly $140 in volume commission, assuming all units were produced in a single month
So, for a $575 investment, I get about $280 in cash. In a pyramid scheme, with 10 people paying $575, wouldnt you expect me to get more cash than I put in?
My calculations above show differently. No one earns free cash through this in multiples of what theyput in and now that I’ve corrected your confusion about what happens when a down-paid unit is filled versus shopped-unit, I hope you agree.
Nice nitpicking / corrections, though does it really changes anything fundamentally?
You can
1) shop enough to generate an accounting unit, or
2) you can buy an accounting unit outright.
Correct so far?
You MAKE money in Lyoness by referring other people also generating accounting units, correct?
So, please explain, if you buy an accounting unit, and make money off OTHER people also buying accounting units, why is that NOT a Ponzi scheme? (Please do NOT bring up the “other” methods of generating accounting units, as we’re not talking about that, but this one specific scenario)
First and foremost, this review covers Lyoness US. I don’t care about the rest of the world because Lyoness do a woeful job of explaning the different compensation plans they have.
The US comp plan papers I saw were the first I’d cited that remotely made sense and even then were problematic as per the ensuing discussion.
Irrelevant. If you can run around investing in accounting units, recruit others and get them to do the same then it matters.
You can’t earn a ROI on accounting units invested in unless you recruit new members.
Lyoness don’t use the same comp plan globally. You yourself admit this when you start citing different signup options for South Afirca, Europe and the US (call them phases whatever, the point is the comp plans are different based on the geographical location of the member).
Thanks for clarifying this, I’ve been waiting for someone to do so before editing the review. If you’re a member I’d strongly advise you telling them to change the terminology to right and left rather than above and below.
It’s a binary, there is no above and below and there’s absolutely no reason to flip a binary on its side and use above and below to describe the two sides. This is just one example of the confusing manner in which Lyoness present their comp plan. One of the main reasons I held off reviewing it until recently (apart from the headaches it induces).
When writing reviews I often group things differently to how the company does and rename terms as I see fit to better explain the comp plan.
I’m not fussed using “proper terms”, so long as overall the explanation is accurate, makes sense and is easy to follow.
So, taking into consideration the loyalty commission then, a $75 initial investment pays out $675 loyalty cash (to be spent at partner retailers) and $198 actual cash, assuming you meet the recruitment/investment requirements).
That’s still functionally a 264% ROI + $675 store credit. The overall ROI is lower than my original calculation but you still make more then you put in, solely by getting others to invest too.
Sidenote: Why the hell is all of this in some appendix nobody is ever going to read, why isn’t it in the main compensation plan material??
Of course there’s a risk. If you can’t find enough people to invest after you, you don’t get your cash ROI.
As for terminology, I’ll call it what it is an investment. It pays out a ROI after a fixed number of people who join after you invest. The founder of Lyoness can dress it up however he wants, it is what it is.
All I heard there was ‘Lyoness pay you a bigger ROI then $198 on each accounting unit purchased via bonus units…
Sounds about right to me. Everyone invests in accounting units and earns a ROI when they get new members to invest after them.
Yes I would, and as per the Lyoness comp plan material I cited,
The $198 payment is not a once off, it’s per unit so your effective cash ROI (once you got enough new members to invest and met the ROI criteria) would be $198×7 = $1386 cash, equating to an effective 264% ROI paid in cash (7x$75 = $525, not $575).
I’ll go ahead and make some changes to the review regarding the binary explanation, cash payouts and loyalty payouts but fundamentally we’re still talking a 200%+ ROI across the board so my sentiments about signing up, investing, getting other people to invest and earning a ROI stands.
I won’t bother adding the two previously unmentioned top tier account units either as functionally they work the same as the lower three. I will note however that no mention of them was made in any of the marketing material or compensation plan material I cited.
This is not mentioned on the Lyoness US website in the “merchant costs” section, the only costs mentioned are the initial sign up fee and monthly network charge of ‘a flat fee of 26 USD per month’ (http://www.lyoness.net/us/kosten.aspx) at the time of publication.
If Lyoness are taking an additional 1% on top of that, it’s not mentioned there – false advertising to merchants?
So Phase 2 is still free to join, and in phase 1 they actually force you to invest? Wow.
Alright I’ve made some amendments to the review to clarify the whole upline downline / binary thing and explain the difference between loyalty credit and the commission paid (in terms of what is actually paid out in cash).
Also I’ve added the AC IV and AC V units in for a more complete picture of the opportunity itself.
Let me know if there’s any problems (aside from issues with the investment terminology used seeing as it’s accurate as far as I can see).
If we put our banks investment policy to the same scrutiny that you are doing here i think you would find a lot more to be concerned about.
Simply check out the ISO and TUV Rehindland certificates that Lyoness have.
These are independently audited from some of the most credible assessment organisations in Europe/the world. They are awarded only after rigorous research by the auditors, with ALL the correct info and certainly not given to ponzy schemes
Whilst we can play pop detective, it can be easy to miss some of the key points and crucify people trying to make a real difference.
I know Hubert spends 90% of his time working on the charities they have set up. Childrens and eco. They are growing and supporting local business and communities and they spend millions, training and helping these communities in both business and community projects
This is not the actions of a scam!!
@Geoff
Sorry but I seem to have missed the part where you explained how I cannot just join Lyoness, invest in accounting units, get others to do the same and earn a guaranteed ROI once enough people have invested (pure Ponzi scheme).
Couldn’t give a crap about the rest, it’s all irrelevant.
I WOULD SAY SIMPLY APPROACH ANY RETAILER AND ASK FOR A 10% OR 20% DISCOUNT PAY WITH CASH OR CARD AND REALLY SAVE PAYING INTO A PONZI OR PYRAMID SCHEME .
ISO-certification is not a guarantee against Ponzi, pyramid or other scams. 🙂
I didn’t even bother to check the details, since I saw it was an ISO-certificate. And I have already covered the option that they might have started as a real service provider with no investments from the customers:
Since there are no ISO-specifications for how to run Ponzies or pyramids, the certificate provider will only audit the parts it covers, the so called “Phase 3” parts.
I will hope the ISO-certificate isn’t one of their most important arguments, since it will certainly be a red flag if they are using this as an argument.for “Phase 1” or “Phase 2”.
Thanks Oz for our very useful review. I have read all comments after in great detail. I am doing my own research and your review has helped me understand Lyoness more.
I will be becoming a business partner shortly. I am more than happy to share this information with you once I have received it if you were interested in a further analysis.
Current Lyoness members are very tight lipped about everything and seem to not understand it probably themselves. When asked direct questions about certain aspects they simply talk around them. But I’m interested enough to chuck in some money and push it further to see how far this thing can go.
Thanks for the offer Adam but unless something needs further clarifying, I think we’ve pretty much covered everything here.
I understand why some Lyoness members have no idea how the business “works” beyond cashbacks. I put off a review on Lyoness for ages because it made no sense to me and it wasn’t until I saw some US material that I was able to break down the compensation plan.
Although on the other hand when you’re running what amounts to an investment scheme I suppose you’re probably going to want to be as crypticly confusing as possible.
Hello everybody, i am an owner of two companies in Greece and we’ve been registered in this system for about 2 months. I can only say that we are pleased to cooperate with them.
About 10 people have used their card to shop from us and some more called for our services and to verify if we are Loyality Partners. So it’s a great marketing tool for merchants and i personally believe that it will go better in the future as the members (especially in Greece) increase in a great rate. At this point in Greece somebody can go and shop in 900 companies so there’s nothing to loose.
Also somebody said about “overpriced products and services”. Well i will say that in every market there is expensive and cheap things and services, so by having more and more companies registered, you achieve also competitive prices.
So in my opinion it’s a very good Loyality program for serious businesses that also expands your companies clientelle and associasions circle.
By this time there was nothing promissed to us that we didn’t get, so we are satisfied working with them and clients are satisfied having discounts for things that they already did every day.
(Ozedit: contact details removed).
10 customers in 2 months? Wonder how many of them just went ahead and invested in accounting units?
Look nobody is saying the discount side of things doesn’t work, just that it’s largely irrelevant when you can join Lyoness, invest in accounting units with your own money, get others to do the same and if enough people do it, earn a sizeable ROI.
That alone negates any legitimacy the rest of the Lyoness MLM opportunity might have.
Nothing wrong with a cashback loyalty business model.
It’s the idea that you can buy “accounting units” (future down payment? WTF?!) and gain from OTHER PEOPLE ALSO BUYING accounting units, that makes the whole thing shady.
I thought “down payment” on the accounting units are only optional for the business builders, right? For everyone else consumers/customers, they can just reap the cashback/referral benefits for free so that’s good.
So its only a few hundred merchants available only in the U.S for now(company claims 150,000 participating merchants worldwide)…what if it really grows just as much what FHTM (Fortune High Tech Mktg) has in a few years?
But in the end, its up to the affiliates who promote it by focusing mainly on recruiting other affiliates vs the value and benefit of the product/service that could turn it into a ponzi. Now if the comp plan wasn’t too much complicated…
Only 4 merchants in California… boring. I can get better discounts than that with “Deem” and other services.
Didn’t FHTM got sued by a few states as pyramid scheme?
The potential problem is affiliates pushing the card for the INCOME (if they encourage people to buy accounting units), not the shopping benefits.
@vermillion
Optional isn’t good enough, if it’s possible people will do it. Why have accounting units and the whole investment scheme at all?
Actually it’s up to the company to change their business model so that it’s not possible to use it as a Ponzi scheme. Of course I imagine Lyoness’ profit line would sink rather steeply if they just got rid of the dodgy Accounting Unit side of the business.
I’ve read news about FHTM getting into some legal battles in which they’ve won. I’m just saying FHTM had a decent list of participating merchants and if given time, Lyoness will also have the same number of national retailers and local merchants all over the U.S.
Don’t know how long that will take but I hope it happens since I really like the member benefits.
I’ve heard in one of the home biz op meetings in my area that the down paying of the accounting units is temporary because they are in the building phase. They said it won’t be available in the future.
Temporary or not, it’s still a glaring red flag.
You can’t expect to be successful in the long-term by luring in a bunch of members who just want to invest and then bait and switching the business model on them.
There are more than 4 merchants in cali…
You are correct: they just added one, for a total of 5
http://www.lyoness.net/internal/us/Public/DealerSearch?c=US&la=en-US&rg=1556&r=10&ol=3&rp=12&ft=2&wl=False&s=1
5?! Well that changes everything!!$!
WHERE DO I SIGN UP?!?!
The system pays out some cash and some CREDIT. The credit has to be used on purchase at one of the merchants,
–> generating revenue for the merchants
–> generating additional Accounting Units
–> generating new payouts of cash and credits
–> generating revenue for the merchants
–> generating new accounting units
–> generating new payouts
–> generating revenue
–> etc. in an endless stream (in theory)
So the merchants will sell more products (in theory), but the system seems to fail when it comes to real customers, the ones who only are interested in the cashback card.
Or it might be the idea “people will always shop” that fails, because people can’t afford all the shopping needed to generate new accounting units?
The system seems to generate sale for (some of) the merchants mostly in the beginning, when people are investing money in the opportunity. This was the impression I got from the Irish forum I checked.
Lyoness just can’t go ahead and invent store credit though. You can’t redeem it for cash but it does have an inventory value that causes a loss for the shop it’s redeemed at (with Lyoness paying that loss).
The sum total paid out on an investment of an accounting unit (both the credit and cash) exceeds the initial invested. I’m not entirely sure but I think this issued credit might be different to a regular purchase that generates accounting units too (don’t see why Lyoness would create a perpetual cycle).
At the end of the day the AC units require a constant injection of money and the cashing in on the store credit doesn’t really matter because the cash reward exceeds the initial investment.
Theoretically you could just discount the store credit and still have an investment scheme resembling a Ponzi (dependent on a fixed number of investments made after your investment unlocking your cash ROI).
If the AC’s just rewarded credit (apart from the fact that you’d be creating a situation where other members were required to fund your credit purchases and you then needing other members to fund your own credit purchase, which I’m not too sure how I feel about), then there’d be a much less of a concern.
Introduce cash into the equation though and it’s hard not to just look at it as being a Ponzi with store credit tacked on.
If there’s no new investments at the bottom, as you note the lack of genuine retail non-AC purchases couldn’t possibly sustain those payouts.
The short of it is… who the **** “buys a discount”?
Unless there’s some serious discount, like $50 value giftcard for $40 (actually for $25 would be better), the card is pretty worthless. The average “member rewards” credit card already offers up to 3% cashback, and those are your regular credit cards acceptable everywhere.
The ONLY interesting feature about Lyoness is that “accounting unit” thing, and that just smells like a Ponzi scheme no matter how they try to dress it up as “pre-purchase” or “down payment” or whatever. It’s not a trade… it’s a DEPOSIT.
There’s about 70% or more americans that dont own a 2% or 3%cash back credit card.. So it will work for those looking to save and earn money while they shop..
just look at it like a ralphs rewards card. when you go to pay for your grocery you get a discount without the cash back… plus the lyoness customer cards is free. Ill try it to see if it works…
@will
Unfortunately no matter how many Americans sign up for one, that still doesn’t negate the whole AC Ponzi investment scheme component of the Lyoness US comp plan.
The cards work sure, but with AC units being awarded to card members forced participation in the investment side of things is unavoidable. I suppose you could ingore it but you’d still be involunatarily be contributing to other people’s ROI (your generated ACs through purchases would count towards their required generated AC units before they saw their ROIs).
Mr. Chang I found 399 merchants do I win a prize..
I hear what your saying.. but most people are not going to care the just want the cash back and all the goodies..
What people want or care about doesn’t negate the fact that functionally an investment scheme is on offer that closely resembles a Ponzi scheme (invest money and then get your downline to do the same and you earn a ROI once a fixed number of investments have been made after yours).
As far as I’m concerned that in itself negates the legitimacy of the Lyoness MLM buisness opportunity in its current form.
It’s not a perpetual cycle, in the meaning “1 credit –> 1 shopping –> 1 accounting unit –> 1 new payout”. The credit used on shopping will only be a small fraction of the shopping needed to generate the next payout.
The merchants (or some of them) probably have their own giftcards “$100 worth of products” or similar system, or they can be part of a “Lyoness giftcard” system. So when Lyoness pays out 60% of the rewards as giftcards, that part of the reward has to be spent on shopping. Shopping will generate new accounting units (lots of shopping), which will generate new payouts.
So when Mike Mingos have received calls from people checking if he is a loyalty partner, it may be related to credits (people looking for shops where they can spend their reward).
This interpretation is partly from the Irish forum.
In phase 1, people will invest money in order to earn ROI when enough accounting units are generated through shopping (or bought direcly). The investments will kickstart some payouts that partially has to be spent on shopping, making the system more attractive for merchants to join it.
I believe Phase 2 also had some investments? Investments will generate payouts and shopping. And shopping will generate new accounting units, but it will require alot of shopping. 🙂
Phase 3 are ordinary customers using the cashback card. In theory, the shopping generated by ordinary customers should be enough to generate new accounting units and new payouts, but the system seems to fail here (people don’t shop that much).
So effectively, most of the investors in Phase 1 and 2 will have made a non-refundable downpayment (that is partially used to pay rewards to other investors). But it seems like the down-payment is partially refundable in a few cases when people makes enough complaints.
Lyoness have been sued in Austria for being a pyramid scheme, by one of the investors. But I don’t think pyramid rules are the correct rules to use.
@M_Norway
Follow the money though. The cashback is paid by the participating company, fair enough. Lyoness charge merchants $26 a month to participate in the scheme and beyond that there’s no other revenue (that I’m seeing).
$26 a month is in no way shape or form paying off accounting unit ROIs. Not even if members weren’t able to directly invest in them themselves, thus it’s a perpetual cycle where new money is required at the bottom invested directly into ACs (the cashback can’t support itself mathematically when you consider the AC component and subsequent ROI).
Every dollar pumped into the AC scheme from the shopping side of things has to come from somewhere. That is key.
ok so I sign up for the lynoess customer card… I had to creat a username and a password. ok im login in.
this is how it works they have alot of online merchants you can choose from. so its more like online shopping for the moment until you get your lyoness cash back card. So I wanted to put this to the test.
So I login and went to Panasonic and it had 1.00% cash back on the cash back info. so I bought a camera for my brother b-day price $89.99 plus tax and ship $115.45 so im at the check out looking for the cash back because this is a lyoness loyalty partner right… when I click on pay (I paid with my own credit card not lyoness card) it gave me the 1.00% cash back on my purchase.
now let me tell you guys its not a big discount I save a whooping $1 and change.. If you did this for a year on all your purchase it will be cool for some christmas cash.. so does the lyoness card work yes.. is it worth it some might say yes and other no.
But dont for get the card is free and you can share with with a freind or two…
@will
We know how the card works… it’s the accounting units investing scheme that’s the problem.
To Adam_Aus and Oz,
I have a completely different scenario that not one of you have come up with for Australia and it is thus:
I have just joined as a free member so I can do my own due diligence like all of you and I can recruit thousands and thousands as free members. This is no idle boast.
If I am at the free level I receive 2% what we purchase and then 1/2% down 2 levels as I understand it. Therefore if I only have 1,000 free members I have recruited and they spend $100/wk my commission per week is $500 and they only bring on 1 member and they spend $100/wk that is another $500 OK?
A $1000/wk to start is OK I would say so why would I want to try and badger folks to invest $225 or $3,000 until they understood exactly the biz side of it. In fact I can show only 100 how to generate 1,000′s of leads and I know of very few consumers who would not join for free as things are getting tighter here in Oz now.
If some of them want to build a biz and start slow I can help them do that too. I personally think this is an opportunity for people struggling to just start slow as Lyoness is so new to Oz and it is those who get in right at the beginning and as there are only about 5,000 + members to date this is the time to bring in large volumes which I can do.
Anyway, I would like to see some comments on this slow approach of free members starting and then grow their biz’s very quickly with bringing on large volumes. All the best.
Yes you can do that, but you’d make a lot more money and save time just convincing them all to invest in accounting units and get ROIs once they’ve convinced enough people to make new investments after them.
The fact that you can recruit a bunch of free members and earn commissions off their purchases doesn’t negate the fact the whole accounting unit investment scheme option exists and is easier than recruiting thousands of people to earn some weener commissions on their theoretical weekly spend with the discount card.
Let’s say you recruit 1,000 people – what are the chances of them each recruiting 1,000 people and then again? See the problem here? You’re approach is not duplicatable in the long-term.
Hi Oz
You missed the point as I did not say that I would not invest but very few can recruit 100 let alone huge volumes. If 1,000 just brought on 1 person each and they brought on 1 only and the spend was only $100/week I would start off at $1,000/wk is that right or not? As I see it that is right.
So, when I recruit many more than 1,000 for free and it costs me not a cent where is the problem?
After a few weeks or say a month those 1,000 would then get a personal email outlining the chance to make more money and begin to build their business.
It would be then that I would show them how to use the software that I have license to which generates warm leads and as far as I am concerned with free membership all leads are hot or open to a chance to get cash back on their purchases.
I am not averse to putting up money to make more but what I have is something very special that has proven day after day how I have grown my other online businesses. I already have all the base of online marketing in place and this would be just an added passive income which would generate serious income once more.
There is no intention of ever even talking or trying to convince anyone to join. If anybody does not want a freebie, so be it as there are going to be tens of thousands who will want to join either by you or me it does not matter but I am solely working a huge numbers game here.
If anyone wants to upgrade slowly or bang in 3 grand so be it and it is then I will teach them how to use the software.
Many thanks for your input Oz.
The problem is the whole accounting unit investment scheme still exists, whether you’re participating in it or not.
And just to be clear: You are participating, indirectly as purchasing stuff with/through your Lyoness card generates accounting units.
As legitimate as the shopping discounts may be, the account unit investment scheme overshadows it and can’t be ignored.
Also no matter how good your lead system is, mathematically needing 1000 people to earn something still means you’re generating commissions via the recruitment of others. Regardless of whether a membership fee is paid without recruitment you don’t get paid.
Those 1000 people aren’t going to find a thousand people each. And even if they did, those 1,000,000 newly recruited members sure aren’t.
That said, I’d see no MLM compensation red flags if Lyoness got rid of the whole accounting unit investment scheme. The discount card approach is nothing new and is proven.
@Tucky_Aus
Exactly where do you plan to spend YOUR $100 per week?
The one who recruited you has calculated an income from YOUR use of the Lyoness membership, 0.5% of $100 per week.
The system seems to fail in “Phase 3”, where ordinary customers are meant to generate new accounting units. People will usually not change shopping habits if they’re offered 2% cashback.
Here’s the list of Loyalty Merchants in Australia:
WESTERN AUSTRALIA 0
NEW SOUTH WALES 1
VICTORIA 0
TASMANIA 0
SOUTH AUSTRALIA 0
QUEENSLAND 0
NORTHERN TERRITORY 0
AUSTRALIAN CAPITAL TERRITORY 0
As you can see, limiting the search to specific parts of Australia didn’t work very well. So here’s the 28 Loyalty Merchants I found when I used another method:
So, where do you plan to spend the money the next 2 weeks? The $100 per week you consider to be “normal use” of Lyoness membership.
Hi Guys
Many thanks for the feedback. As I am told over and over again all Woolworths and their own subsidiary’s are all over Australia. One loads the Wish Card first off with $300 and then after that $200 minimum. To M Norway…..are you trying to tell me that the 2 x 1/2% due is not paid in cash????? Of course it is according to the gurus.
My whole issue is here and I say it for the 3rd time is to bring on volume for free and whatever they spend down to the 2nd level we receive 1% in total but in all reality 1/2% for the large volume we bring on ourselves. Not all are going to leave are they? Holy hell Buddy, everybody buys groceries, petrol, booze, kids clothing, electronics etc and Woolworths has the lot.
Anyway, I love the dialogue and I will wait to see if Lyoness Australia will let us market solely by email and not virally. If not they can go jam it!!! I have other successful online businesses. This was just a germ of an idea that would go like crazy if we are approved by L>>Aust!
No, I was telling you that your plan only involved OTHER PEOPLE spending money, not yourself spending money. You used imaginary numbers when you was trying to calculate other people’s behaviour.
The first person you should try to calculate is YOURSELF, in “How much money do I spend in those shops each week?”. That is the only person where you have exact data, where you don’t have to use imaginary numbers.
So if you’re spending $100 per week in the shops in the list your imaginary numbers are probably close to correct. You will also have to make corrections if you’re using other cashback solutions there.
You can also ask family and friends about their shopping habits, how much they spend in those shops each week, and if they’re using other cashback solutions there.
I’m a sales-man, and your use of imaginary numbers tells me that someone more experienced than you have used some sales tricks to get you on the hook. And I have the impression that you’re only REPEATING the examples you were told.
You’ll find a similar method in this monologue:
Bryan here has been tricked to use his own imagination instead of checking reality. “You make 100 sales” sounds good in theory. I tried to ask him about how many sales he had made 4 months later, but then he disappeared from the thread.
You are using a relatively similar method, using imaginary numbers in your calculations. So I’ll guess you’re only repeating the arguments they used to get you on the hook.
Hi M-Norway……I started this dialogue for fun and I have nothing to prove to anyone and I have not or never been hooked into anything by anyone. I already have successful online businesses and I was asked by one of my own members in one of my groups about Lyoness, so I did my own due diligence and joined the free membership (I have not even activated this yet).
But, I do sincerely have the power to generate 1,000’s into the free membership category and if I feel like it in a month or two I may look at further investment. If I did decide to promote the biz side and it looks good enough for the effort I do have a huge data base or LIST as you call it to tap in to.
I am repeating nothing may I add as I am still not 100% convinced on these Units or phase 3 for that matter. I would never suggest to any of my current lists to enter into anything unless I was ALL IN on what I would propose to ask anyone of my members to even contemplate an investment as these people trust me.
You do not have to be a sales-man as you say to grow a business as I have already grown and sold more than 10, you have to have respect and trust which has been earned over a long period of time.
Sales-men are a dime a dozen but a business man or women has the above to make a business grow profitably. That is the difference my friend and if I do go ahead to grow Lyoness in Australia you had better believe that my intended group will be a force to be reckoned with here.
When you’re a premium member you also receive commission for other shoppers spending. So my friend who’s a Premium member in the UK system has more than doubled his 1,800GBP deposit/investment/commitment or whatever you want to call it, in exactly 3 months.
As a premium member he is receiving commissions from shoppers in the UK he doesn’t know and these are generating units. Every 45GBP unit fulfilled he is enjoying more money coming his way in hard cash as I’ve seen the deposits into his Australian account.
The same is occurring in Australia. The premium members will enjoy the spend of others in Asia, Australia and New Zealand. How does it work? Simply by the commission generated by people’s spending.
Someone can easily spend $500 a week via the Woolworths gift cards. You have their service/petrol stations – I spend over $100 a week there myself – groceries of at least $200 a week and other costs incurred at their stores. And that’s just the Woolworths group of companies.
I can’t see what is so hard to understand? Of course this system will only work if shoppers sign up but in Australia there appears a consistent number signing up every week. Woolworths gift cards of $250 and $500 were created purely due to the demand generated by Lyoness members buying out vast volumes of cards.
If you’re still sceptical stay on the sidelines and watch others make money purely from the day to day spend of shoppers, not simply spending an amount above their normal spend but receiving commission from their normal spend. If you don’t get it then you don’t get it.
@Mick
This isn’t being refuted, but it doesn’t negate the whole account unit investment opportunity.
Where do you think the money for the eventual ROIs paid out on the units comes from? Lyoness don’t actually sell and products themselves…
The issue isn’t with shoppers, the issue is with people signing up, investing $75 or more, getting 25-35 other people to do the same and earning a 264-330% ROI. Wash, rinse and repeat.
This completely overshadows the ‘buy you can join and just buy stuff’ statement because indirectly joining and buying stuff commits you to the investment scheme via the generation of accounting units.
Yet here we are…
Ask the question:
Which is more lucrative?
a) convince people to sign up and shop with a free card, and maybe receive pennies on every purchase (so sign up hundreds, perhaps thousands of people) to generate the account units ‘passively’.
or
b) convince people to sign up and pay down that “accounting unit” immediately, actively.
Both gets you paid, but the latter is MUCH easier.
So which one do you think people would go for?
Lyoness’s only saving grace is that it’s NOT a pure Pyramid scheme, in that you can remain FREE (and legal forever), or the free folks can convince PAY folks to join (and get paid that way).
Technically, it doesn’t quite fit the Koscot test, but I’m not sure if the regulators would see it that way, as the OPTION of paying is there.
Awesome discussion, thanks Oz, Norway & K.Chang & others. I have a couple of friends trying to sign me up but it confuses the hell out of me. I asked to speak to their upline or whatever name you give it and they were no wiser on it all.
The downside for Lynoness is it is attracting all the ‘get-rich-quick’ folk who succumb to the lure of promises of dollars. These are the same people who have been pestering their friends to sign up to other MLM’s over the years so their creditability is low. This is what turned me off.
I considered the business sign up until I heard about all the UNITs etc, then I realised the loyalty card is just a front to get access to people to get them to ‘buy in’, this is really where Lyoness makes their money, as you guys have been pointing out. If it was just a loyalty program I’d commit my business to it.
As an aside it saddens me all the MLM junkies who have spent years and thousands of dollars ‘investing’ in the next winner. If only they put the same dedication into a real business they’d be doing well now. The path of MLM’s is littered with thousands of poor and desperate people.
Cheers
Hi EddieG….you hit the nail right on the head and no I am not a desperate MLM junkie and again you are right that the whole systems is so damned confusing but here is the KICKER guys.
I sent a professional email to Head Office Sydney over the weekend and expecting a reply. Anyway, I called this morning and gues what? No, I could not speak to anyone who knew anything about the business and No I could not know when I would expect a reply, and NO I could not use my own website to promote Lyoness and yes, I should go attend a seminar!!!!
Holy hell I would not walk across the road to one with all the hype and BS coming out of the mouth of someone who has never made it online but is an employee of Lyoness. I told her I had lists of 70,000+ who trust and respect my judgement on perhaps looking at the business!
No she did not know if I could email these people to at least show them the opportunity. And, I said that this smells of Amway and Herbalife and all those other get rich quick schemes…whoa….no joy there!!!
Now here is the BIG KICKER for the DOWNSIDE …every free member who joins the sponsor has to front up with $1.50 for the free member!!!! Nobody tells you that and I found out by accident and not from MY sponsor!!!! It has cost him a $1.50 for nothing.
Yes Eddie G both of us are not desperate to make a buck and I have enjoyed this banter and know what I DON’T want and that is to speak to family and friends about another AMWAY look alike or worse.
The other thing I did not like and my wife especially and that was to front up with $300 to activate your free card!!!!! No way Jose’ so here I rest my case and just go back to my online businesses that are thriving to say the least and play golf 4/5 days /wk!!!
I hope Lyoness Australia reads these blogs and get’s their A into G and be upfront and honest as their $3,000 members are not!!!!!
The $300 is to buy a gift card to activate the membership. So you will spend it like you do every week anyway its not that they are asking a fee of $300. It’s to ensure you understand how it works.
Are you saying you don’t spend $300 a week or month? It’s not a fee but a commitment to ensure you start using the system. It’s your money but what you do afterwards is your business.
Yes $300 dollars to activate the card but you spend it the way you choose. No one is asking you to spend above your normal monthly spend. Please understand this basic fact.
@Rod, there are only 12 merchants in the US that takes Lyoness Gift Cards. The idea that you can just use it like cash is completely bogus.
Go ahead, prove me wrong. Go to Lyoness website and do a search with the filter “gift cards” turned on. Only 12 results, in the entire f-ing USA.
Way too much hype, no substance.
(and there’s only ONE company in Australia that takes Lyoness gift cards, look it up)
A gift card for WHAT? A gift card to buy accounting units, or a $300 gift card to use in Woolworths or any other place? And I’m not asking about what people *CAN* do, but what they’re actually doing. So if the $300 gift card partially acts as a down-payment then it’s very close to being a fee.
BUT, the $300 down-payment belongs to Phase 2, and that was the part I didn’t manage to check other than indirectly, when I checked Lyoness in Europe.
The word “commitment” makes it sound very similar to a fee? Customers don’t make “commitments”, but participants in an income opportunity do.
You know perfectly well that most of us are spending far more than $300 per week or month on shopping, if we include groceries and other daily/weekly/monthly shopping. But that doesn’t mean we’re using one particular cashback card when we are shopping.
Phase 3 seemed to fail on that theory in Europe, the “people will always shop” theory. The places where they normally would use the Lyoness card already had other loyalty cards in place. A typical example was gas stations. They are very often connected to several different loyalty card agreements. And the free users continued to use their old loyalty cards, they didn’t switch to Lyoness.
And if it fails in Phase 3, then the two other phases will be very similar to a pyramid scheme. The system seems to fail in that phase, or it never reaches it if we’re talking about volume / number of regular free users who actually are using the card.
@K.Chang
They have 28 merchant-chains connected to the Lyoness card. They won’t show up in the list if you’re searching in one specific region.
But the merchant-chains already seemed to have several other solutions in place. I tried to google a few of them, using keywords like “Amart AllSports cashback”, “Woolworths cashback” and similar keywords.
BTW Guys…..has anybody told you or are you aware that Harvey Norman was a merchant but have pulled out because unscrupulous affiliates badgered customers going in or coming out of stores, so Harvey told Lyoness to shove it if we want it blunt.
I am out of here now and many thanks for the dialogue and any self respecting business owner online would never stoop to these childish and immature tactics. Amway and the like scenario again.
Now you can see why I wanted to use my LISTS as never ever speak to anyone to promote my business unless it is to speak directly on certain parts of my business ot a colleague who wants in! I am not pushing as those who want in always do well.
Cheers and God Bless
@K.Chang
The “28 merchant-chains” statement was related to Australia, not to the US.
@EddieG_Aus
That is something that turns me off, too. We will usually have different interpretations of the words “successful” and “business”. They will usually use a temporarily success in some sort of “scheme” as measurements, and ignore the negative factors connected to it.
We have a few comments from “successful” people in MLM here, AFTER they have quit a program. They tell quite different stories when they have left a program than when they were part of it. The stories will usually be told months or years after they have quit.
We all know that Ponzi and pyramid schemes will PAY, until they run out of new participants feeding the scheme with fresh money. But I have never considered any of them to be successful, neither the schemes nor the participants.
What do you mean with “other shoppers spending”?
Do you mean other Premium members making a down-payment, or do you mean end users using their Lyoness card buying stuff at some of the connected merchants?
In Europe, the Lyoness “Phase 3” seemed to fail. And Europe includes the UK, but I didn’t check UK other than via the Irish forum “boards.ie”.
So the typical story in Europe is people who have invested some money in Lyoness 2-3 years ago, still waiting for enough accounting units to be generated through the idea “people will always shop”. It was easier to find stories from Premium members than from free users.
Ok, I will try and simplify it further. In Australian scheme I pay $300.00 to buy a gift, that is not shopping directly at a loyalty merchant as its not live yet in that regard but you can by a gift card.
Now at the moment you can buy a gift card from Woolworths through Lyoness. Now the gift card is like cash. You can use it at Woolworths group of companies. Just look at the group. You can buy petrol, groceries, alcohol, clothes or just about most things.
Example I bought a $500 Woolworths gift through lyoness. I immediately received $15.00 into my Lyoness account for my troubles. Note, I still have the $500 gift card. I visit Big W – one of the stores under the Woolworths banner – and so I buy an iPad! The remaining balance of my gift card I used to buy petrol at Woolworths service station.
Now. Needed an iPad and didn’t overfill my car. My point is I had to fill my car as it needed petrol. I didn’t more money than I usually do. I spent and bought goods that I had planned.
Further, the chap that introduced me received 0.5% of $500 I used at a lyoness loyalty partner. And he is receiving plenty of those. So you see, I didn’t spend more than I usually do but just the normal spend I would as other times before Lyoness. Is this not simple enough to understand?
Also, some Aussies that registered under the UK scheme have made a tidy sum. Well above their $3,000 deposit. And yes, I know of individuals that entered the UK scheme as well and have received zero! You know why? They were not trained correctively and the members that signed up have not done the right thing by them.
Not educating them how to place their units number 1, not providing all the facts, and ignorance on their part.
They need to understand how their ‘back office works’ within Lyoness so they ensure their account is earning money. If they don’t you will hear these stories and believe its the Lyoness scheme at fault but it’s the end user. Hence why you might hear the shrill but not the success stories.
Other members spend is referring to one of the ten income streams available to premium members. You see your questioning reveals the total lack of knowledge on this site. A premium member that has his /her 10 streams of income open.
One of these is receiving a small commission on the spend of users in the UK system. In Australia premium members with 10 income streams open, will receive commission of all Lyoness shoppers in Asia, Australia and New Zealand.
So maybe in 1-2 years these Aussie premium members will be potentially earning a tidy some every month. I know the UK members are. Interesting concept isn’t it.
@Rod
Nobody is disputing that. What happens next though is people start pumping $75 or more into Lyoness under the pretense of accounting units, convince 25+ people to do the same and walk away with a sizeable ROI.
Your cashback is paid to you by Woolworths. Ever stopped to think who is bankrolling the accounting unit ROIs?
Hint: It’s not the merchant partners.
Here’s a further hint:
Ie. They failed to convince 25+ more people in their downline to invest $3000 or more.
Jesus Christ, do you know how your backoffice works – or do you just not care? There are no long-term success stories in a Ponzi scheme. Only those who run away with late investor’s money and those left holding the bag at the end.
See this is the misinformation that goes around. Who says 25+ people?? Where did you get that from? You need only 4 premium members underneath you to open up the 10 income streams.
And do you really know what a Ponzi scheme is? I challenge you to contact ASIC or your local government authority and the country you reside, mention to them about Lyoness and how you believe their scheme is.
Ponzi scheme – they have complaint lines – and then have the courage to publish their response. Don’t take it from me. Let’s see if you will do that on this forum for all to read.
The idea of having members deposit 3k into this as its a pseudo form of raising capital. I.e. rather than raise capital through the stock exchange and paying high costs an attempting to satisfy regulatory requirements they ask members to deposit 3k.
This allows them to approach prospective loyalty partners and basically say, look we have 20,000 members with 60M ready to spend. Want to join us and what discount will you offer our members. It’s about purchasing power.
And so for the few people that became premium members Lyoness rewards them with additional income streams not available to regular shoppers.
As for unit creations these are created by the commission paid from shopping. When $75 dollars of commission has been accumulated this then creates a further unit. When the accounting program fills with the appropriate units then this is aid out.
Some members have created a $75 unit with their own money to complete a suite in the accounting program to enable them to receive the total funds in that program. But they are receiving their own money back if they do that.
Anyway, I’ve said what I wanted to say. Contact ASIC and publish their response on Lyoness for all to read.
That’s some strong undiluted kool-aid right there.
You’re still going on about the shopping? Educate yourself on the investment scheme side of Lyoness. You invest your $3,000+ you get 25+ more people to invest and you earn a sizeable ROI.
Forget about the shopping cashback crap, it’s optional and far less lucrative than the ROI scheme going on.
Don’t need to son. I’m all about analysing the business model. At the end of the day that’s all you need to look at to make the call either way. Follow the money.
If the authorities wish to investigate and pursue Lyoness that’s their business and doesn’t in the slightest change their business model – which is what’s being discussed and analysed here.
Seriously…? Mate the only reason members invest $3,000 is so that previous investments can pay out a ROI.
Yeah, invest $3,000 earn a ROI from other member’s investments – got it.
Shopping cashbacks are paid by the merchants, not Lyoness. Lyoness sure as hell aren’t paying 200%+ ROIs charging each merchant $26 USD a month.
No they aren’t. Lyoness pay out >200% ROIs after you get enough people after you to invest. They are receiving the money new investors have invested after them.
I have hundreds of premium members on my team. My units only paid out once as promised and that is it. I have 1000 units n above and 800 units below. You do not get paid for anything after 35/35 on the 75 dollar level. This is why it is in the legal boundaries.
Units pay out once and it doesn’t matter how many units keep coming below, I as the upline do not get paid. If I want more positions or units I choose to shop at merchants and once I save 75 I get another one.
This is a very unique business model that not everyone understands because the compensation plan takes time to learn but the foundation of the business is simple.
Big merchants that participate have obviously researched and made sure it is a Legal business before they participate. Lyoness is heavily regulated by both canadian and American authorities and I am convinced it was derived from a sustainable business model that has been around for almost 10 years with huge success in almost 40 countries.
The company would not invest in infrastructure, employees, and education to something that would be at risk of shutting down or not with law or regulations.
@Rod – I understand the Woolworths $300 gift card – very simple and easy, no problem there. This is the ‘front end’ of Lyoness, the loyalty part, that’s all ok. It is the ‘backend’ with all the ‘units’ and promises of $200 000 a month (I’m told some people are earning $200 000 a week in Europe) that turn s me off.
It really shows the ‘loyalty’ aspect is just the ‘product’ used as the vehicle for the MLM e.g., could be cosmetics, juice, chemicals, with Lyoness it is loyalty.
If it was just the loyalty scheme, I’d sign my business up tomorrow but like all MLM’s, if I take it on properly and decide to make serious money out of it then it will distract me from my business and leave be disappointed and disillusioned.
Having said that I know 2 guys in different MLM’s who make a tremendous amount of money. One earned over $900 000 last year. They both got in very early on so are at the pointy end of the shape we must not mention.
If they started today they would not have anywhere near the income they have now. MLM’s just don’t suit me.
I have mentioned “the Irish forum” 3 or 4 times, and here’s the link:
http://www.boards.ie/vbulletin/showthread.php?t=2056384591
I browsed through the thread when I first started to check Lyoness, just to get some superficial insight. A few of the posts were of interest, but the thread was eventually closed when the discussion began to go in circles (discussing the same things over and over again).
Today I found “Swiss newspaper crushes Lyoness” on businessforhome.org.
http://www.businessforhome.org/2012/02/swiss-newspaper-crushes-lyoness/
The article is worth reading, but this time I focused on one of the comments there. Copied from a very long comment:
So the $3,000 down-payment is only 10% of the actual “investment”. You’ll have to spend the $27,000 too in order to get your money back.
A quote from the newspaper article:
This company is probably something you should stay away from. They are too misleading and have made too much efforts to avoid being sued.
I have also seen the situation in Norway, where people started to set up internet marketing and stopped it almost immediately. Internet marketing isn’t allowed in Phase 1 and 2. You can’t send out “normal” marketing e-mails either, if I have interpreted it correctly. This is my interpretation, because internet has been absolutely dead in that market for the Lyoness topic.
The 3K you pay is a 10% down-payment, so you have effectively signed up for spending $30,000 in Lyoness. You have probably signed the agreement with the Swiss headquarter, I believe? This will make it very difficult to sue them, in case you become dissatisfied with your agreement.
I have posted some of the related info in a comment that currently awaits moderation (because of a couple of links).
There are several red flags for Lyoness. One of the red flags is that nobody seems to understand what they are signing, and how things work. All seems to be blinded by the idea of making money on other people’s purchases, an idea that already has failed in Europe.
@JVCan
All succesful members in Lyoness do. Convincing other people to invest large sums of money in AC’s is key to earning money in Lyoness.
Getting paid out once doesn’t change the fact that your ROI is being paid out of other member’s investment money. It’s where your ROIs are coming from that’s the issue, not how many ROIs you earn on each investment sum.
What percentage of your take home commission is shopping (non-AC investments) vs. account unit ROIs each week?
Oh and as a sidenote, when members like dshrum crap on about the shopping side of the business, I hope they realise their AC money is being funded by members like JVCan with huge downlines who have invested seemingly thousands into Lyoness’ account units all waiting for their own ROIs.
I gave myself headaches understanding it but in the end it boils down to a relatively simply investment scheme. You invest $x, get 25+ (depending on which investment level you come in at) other people to invest and make money.
Wash, rinse and repeat.
Assumption. As far as they’re concerned, they only participate in the cashback side of things. All the account unit investment stuff is handled by Lyoness so there’s no liability on the merchant’s part for participating as a merchant.
Lyoness Europe was and is a nightmare to try and understand due to the woefully poor way the opportunity is explained and presented.
Meanwhile in the US things have only started to pick up in the last 6 months or so (when the review requests started to come in), ditto Australia and I haven’t heard anything about Canada.
Irrelevant and does not address the problems with Lyoness’ compensation plan.
Did you sign your agreement with Lyoness in Switzerland (or Austria), or with an entity registered in your own country?
The statement “Lyoness is heavily regulated” is bullshit. Authorities are REACTIVE rather than proactive. And Lyoness’ headquarter is located outside the jurisdictions of both Canada and the US, so your argument doesn’t hold water.
Thanks to all who did the research and posted your findings. God bless you all for exposing the fraudulent side of Lyoness.
If anything sounds too good to be true, IT IS! Greed is what drives people to do unethical things.
If Lyoness is so great, why don’t they just issue me the card. I get 1% and they get 1%. Anyone else I refer Lyoness to, they pay that person 1% and split the other 1% with me 50/50.
All these AU’s and their schemes just confuse the hell out of ordinary people. If it is such a great “opportunity,” then why is it so confusing?
Membership is free, but paying $3000 upfront gets you making $ much faster? It smells ripe for rip off to me. Be wary of any “opportunity” that requires a substantial “down payment.”
If this guy is taking in $100K a week, why doesn’t he just hire me for $3k/month to sign people up for the card?
Remember those lawyers who collected $10,000 to “negotiate” your mortgage with the bank? Turned out they had no more leverage than you do.
Put your money in the stock market, buy your family a nice vacation, do something useful with it. I am hanging on to my $3k!
God bless honest people out there!
BTW, I am going to attend an actual meeting just to give Lyoness a fair shot at presenting their “opportunity.”
Yeah I’m sick of these idiots making a tonne of money off others. This lyoness program stinks.
Thanks for raising awareness so we honest guys can sit on the side lines and watch. I’m sick of others making money.
@Kenny
Your sarcasm attempt fails because it assumes honest people can’t make money. A rather poor reflection on yourself.
I thought it was quite good actually.
Actually been reading the posts pros and cons. A reliable source has advised that Woolworths has sold 34M in gift cards in two months via lyoness…..
@Oz, don’t mean to be rude but I think you’ve backed the wrong horse on this one.
However many they sell is irrelevant when you consider the whole accounting unit investment scheme via Lyoness.
And it’s not a matter of backing a horse and hoping for the best. The business model son, it’s all in the business model.
Just don’t let the carnival atmosphere and the shills jumping up at first opportunity to buy entice you into something you may regret later.
Given that the ENTIRE gift card industry in 2009/2010 fiscal year in Australia is 1.5 billion, if you add in filter for Woolworths (one of the largest retailer in Australia, but sells gift cards through bazillion outlets), and Lyoness, the number is actually not that …believable.
Let’s say Woolworths sold 1/3 of all gift cards in Australia. (1/3 for Woolworths, 1/3 for Coles, 1/3 for everybody else) That’s 500 mil for the entire year, right?
You really want me to believe that Lyoness sold 7% of that 500 mil in merely TWO MONTHS?
Thank you for the information. I was contacted, from a job board, about representing the purchasing card to merchants.
I thought it was a great idea on the surface. Talking to merchants about getting their customers to sign up for a card that paid the customer and the merchant money back for purchases sounds like a sound idea.
I was excited and thought it would be a great opportunity to get going on until I viewed the video. It started talking about all this downline payment stuff. It all started sounding like a pyramid or Ponzi scheme.
Is there a company out there that does offer a program for small and medium size businesses similar to this without the scheme component? If not do you think it would be a good business opportunity?
I think the absense of any notable one in the market might be a reflection of viability in itself.
Trouble with catering to medium to small sized business is you tend to also cater to a local market. It sounds like a lot of work for little return as opposed to catering to national and international businesses and a far broader shopper base.
Most large cities or towns tend to have an “annual coupon book” published by a local charity, IIRC, that offers pretty significant discounts, but is an actual BOOK to be sold.
As nobody nowadays use yellow pages, that’s deadend. 😀
I heard that Lyoness wants to give the small bus/moms & pops first shots at the “opportunity” b4 letting big guys like WMart in.
But WMart and other guys already have their 4% discount if you buy their gift cards in bulk. ANYONE can do this as an AFFILIATE of WMart if they can buy in bulk.
So Lyoness is actually an affiliate of WMart, NOT business partner. When you buy their Lyoness gift card, they pay you 1% and KEEP the other 3%.
So big retailers like WMart do not need any “partnerships” with Lyoness, despite their misleading presentation to claim WMart as their partner. WMart and the other big guys ALREADY have their own “loyalty” program and do not need Lyoness’ help to promote their brand.
So Lyoness goes after the gullible small business owner and other greedy suckers as individuals.
From what I see, the individual cashback card can work w/out any huge “down payment.” Just do not succumb to your greed and plunk down $3,000 that can be put to better uses.
I appreciate the review. After a few years of being a diamond level leader in another company, I’m not so fond of any business that promotes the opportunity ahead of the actual product.
My referrals have chosen to sign up with accounts that are either free based on my recommendation, or at the lowest level of gift card down payment ($225) for positioning.
The only difference I’ve seen so far on the members that come in free are that they have to earn their first Accounting Unit before they own a position in the shopping matrix.
Someone who shops more, even if they come in later, may get placed ahead of them in the matrix.
My financial focus is long term passive residual income based on actual product consumption – shopping for gas and groceries.
I run my other businesses and household budgets through the Lyoness system to build volume quickly. The system takes a bit of effort at first to execute and learn but once you have the system down it works.
I haven’t received every level of payout to date, since I’m earning my way through the comp plan by using the membership instead of “buying in.”
I recommend this strategy for anyone who wants to try Lyoness but is hesitant to get involved with a “pyramid” or doesn’t have the money to put in.
The fact that you have the option to earn through Lyoness without any buy-in is a valuable opportunity for a lot of people.
How many people don’t have the money needed to invest in a business or traditional investment so they can earn returns?
But with Lyoness you can redirect money that you’re using for your gas and shopping budget and earn money back on it.
Not an investment, but compounding returns just the same. Spend it AND earn from it? Sweet.
The free level membership makes this opportunity zero risk. (although of course your time to learn how to maximize it is valuable)
If everyone focused on the free membership benefits, there wouldn’t even be a controversy about Lyoness. I don’t bother too much with the gift card down payments.
The actual membership is good enough as is. Takes more patience and time, that’s all.
Earning your way through the comp plan is slower than buying in, but less risky. The more people that are shopping the quicker the Accounting Units can be stacked and payouts earned.
If you’re not going to shop with it for at least a year, preferably three, I would say find another program.
(one correction to the review: The accounting units are representative of shopping volume, accounting units earned not “members themselves” – so you may own units of shopping volume both above AND BELOW units from members who have come in after you or that you have referred.
We build units as a team and my team can benefit from my shopping volume too. So… make sure you get referred by a volume shopper and refer it to other volume shoppers – business owners and families. The more shopping, the more potential payouts.)
If you really get the impact of a compounding benefit from group shopping volume, look deeper into Lyoness.
Shoppers get together and earn some money back!
So is there too much risk to join in the U.S. based on your analysis, and based on the relatively early adoption?
@Lisa
That might be your focus, but others will just join, invest, get others to invest and treat it as an investment scheme – a Ponzi by definition if other member’s money is what’s being used to pay out returns.
The shopping side in the grand scheme of things doesn’t matter if people are able to bypass it altogether.
Oh and you can’t exactly wash your hands of it either by not directly investing. Getting others to invest $225 is direct participation and when you do generate units via shopping you’re still then indirectly participating in the Ponzi side of things (albeit you entered differently to those who just invested themselves upfront).
The members quoted are the maximum required on the assumption of one member, one investment. More investments per member = less members required but thanks for the clarification.
I think risk is the wrong word. You can see the breakdown of the business model, what’s possible and exactly how it works. Short summary? It’s not sustainable. The AC returns have to come from somewhere and the merchant monthly fee isn’t nowhere near enough to cover it. That leaves member money.
Just here sharing my own experience with Lyoness. I’m not an authority on it. Nor do I read their financials.
@Oz I didn’t catch that. I was looking at the original review says: “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.”
My correction was only that these “members” are not “members” they are accounting units (shopping volume) owned by members.
Noting that these units may not be ‘investments’ at all, but may be earned by free membership shopping.
And also that these units may be owned by someone who came in before OR after you. The units are mixed together based on when they are earned.
100% agreed. Greed and fear of missing out are no way to make a good decision.
I understand where you’re coming from. I’ve talked people away from $225 because I’d rather see them put that money toward usable gift cards. But, I’ve had other well informed business owners opt for the $225 anyway.
Since I’ve filled out the Lyoness form myself to successfully get out of down payments, and the contract says you can request it back in gift cards, it doesn’t bother me. I simply am sure to let them know if they want out, they’ll have to use their $225 at Lowe’s or Walmart or Safeway or wherever. Full disclosure is what matters to me.
Either the membership works and has benefits or it doesn’t. From my experience it does. Until it either shows itself clearly unsustainable or is in question by legal enforcement agencies based on actual formal audits, I will keep using and recommending the cash back card without any need of handwashing that I can see.
With any purchase or business: know what you are spending, know what you are getting, know what you are risking, and know your potential returns. Read the contract, know your escape clauses.
Anyone who fails to obtain such information should probably just say no and go home.
But for what its worth, I still like Lyoness and I like the Cashback card.
If it turns out that its unsustainable, that’s a bummer. I can rest easy knowing my referrals knew what they were getting into and that they most likely came out ahead.
But if it turns out that there’s a market for businesses and people who might want to earn cash back on their gas and groceries and use the membership for SHOPPING and not opportunity, like I do, then great.
27 million small business owners in the US might want to earn extra cash back. There are 47 million Sams Club shoppers. Walmart currently operates 629 stores across the nation. Safeway is operating 1,725 stores and Lowe’s another 1,749 locations. BP has 22,400 service stations and Exxon Mobil has 10,000 service stations in the US.
Money is being spent and their customers are all potential Lyoness members. There are % points to go around on money that’s already being spent (no need to create the marketplace – its already there!) Sounds like an opportunity to me..
peace out all! I like that everyone here cares so much about the average Joe and what happens to them. I do too – keep doing what you’re doing.
I don’t really visit forums all that much in case I miss your replies.
Respectfully, LM
@Lisa
That’s in reference to how Lyoness define a downline, that in turn generate accounting units. It’s not talking about the accounting unit structure itself, which can come from anywhere in your downline.
Cashback is paid out by the companies purchases are made from, and not Lyoness itself. With membership offered for free, the only recorded revenue source are downpayments made by members towards the accounting unit investment scheme.
Clearly without the investment scheme there’s not much in it for Lyoness ($27 USD a month from each merchant signed up).
You might want to start familiarizing yourself with the financials of the company you’re actively recruiting people into.
@Lisa M.
I haven’t studied Lyoness, but why on earth will normal customers make a downpayment on “future purchases”?
The down-payment is 10% of what you actually will have to pay, or recruit others to pay.
So for the $6,000 pyramid, if you don’t recruit anyone and pay it in full yourself to get the reward, you will pay IN $60,000 and get $43,800 back, partly as giftcards.
I don’t consider that to be “normal behaviour” for people with a relatively sound mind, unless they are misled into believing something.
The other pyramids are similar, you will have to pay more than you will get in return in all of them, if you cash them in yourself to advance faster upwards in the system without recruiting.
The other option is of course heavily recruiting. That will also make you advance faster upwards in the system, and give you higher payouts when people in your downline makes their own down-payments. And they can repeat the same process, recruit until the system eventually runs out of people willing to make down-payments. So I’ll guess you can understand my viewpoint here?
As far as I can see, Lyoness is a pyramid scheme disguised behind a cashback solution. The cashback solution will prevent the scheme from collapsing, but people who joins this scheme late will have to wait for years to get anything in return.
New accounting units will be created at a very slow speed for people near the bottom of the pyramid.
I have one question for you:
When you signed the contract, did you sign it with a local business entity in your own country or with a business entity located overseas (Switzerland, Austria, Luxembourgh, something similar)?
I just can’t understand why people would even consider labelling this as a business opportunity. The only people who can consider the Lyoness-scheme as such are the people that created this concept.
If participating in an apperently ponzi-like scheme by enticing people to sign up by promising them astronomic returns can be called a “business opportunity” than everything is (indeed the returns are only sustainable from LYoness point of view by maintaining a constant flow of direct investments, this cannot be denied and therefore qualifies the whole thing as an investment “game” which WILL end one day).
This has nothing to do with doing business, let alone with a business opportunity for people down the line. This does not mean it is impossible to make money out of it, don’t get me wrong, the same goes however for selling crack to kids (meaning that this don’t make it a legit business opp.)
I have to admit, they’ve dressed it up nicely by creating a partly legit cashback program which will always be referred to as the core activity due to its legitimate structure. Sadly, the real “business opportunity” (ahum) is completely seperated from this. With complicated explanations and “business”-like language people are tricked into actually believing this is their chance to make it big.
Often these people are not familiar with business or finance and therefore are very easily brainwashed by big words and talks, meetings with speakers who are extremely manipulative and video-clips solely promoting the financial gains without actually rationalizing the business structure.
I personally have been approached by 2 different MLM initiatives (including this one), both times I was shocked about how the people approaching me dealt with the critique that I was able to voice immidiately regarding the sustainability and nature of the business.
It seemed like these people were brainwashed and completely immune for my well funded critique, blinded by promises of big income. If it were that easy, everybody would be rich.
Better have a bright idea, be street smart or attend a serious business school when you want to discover REAL business opportunities.
Hey, I can buy a great discount with Groupon, Dealfind, livingsocial and save waaaayyyy more. Talk about loyalty! %50 off an up! On things I actually buy.
No down payments, no itsy bitsy %1-2 just great deals everyday! And I get those deals emailed to me so I don’t have to go looking for them!!! great for merchants and great for consumers, that’s win win!
Now, you want to talk about a real opportunity? Look for a business that has products that 9 out 10 people crave and 1 out of 2 say they can’t live without. Find that and you’re well on your way!
Here is some more facts about lyoness from the merchant point of view.
– Merchant pays 2% cash back on purchase to the customer who is rewarded on Tuesday when it hits $15.00.
– Merchant also pays 4% (cash) to customer which goes into loyalty account to create units.
– Merchant also pays .05% to the direct and indirect member of the customer, and lastly
– Merchant pays Lyoness 1% fee , so in total the merchant pays 8% to lyoness to bring them customers.
Merchants negotiate there own percentages..can vary from 3% (min) to as much as 18%..(Dating Site)……Based on these numbers to get your first payout of 675+198 this is what happens…
The example I will use is based on merchant who gave the minimum 3% back to Lyoness…..$5250.00 is paid to Lyoness…..$10500 to customer, direct and indirects, the merchant paid out $17500.00 to receive 525,000 in sales…the merchant loves it, that best form of advertising for the merchant….
Any questions..
Lyoness makes all there money from the merchant..
DAVID
Sorry what? You invested $5250 to a Lyoness, you didn’t pay a merchant anything. Why would a merchant give Lyoness 3% back on what you invested with Lyoness as a “downpayment”?
All I have to do is invest money with Lyoness, convince other people to invest money and I earn a significant ROI after enough people have invested after me. It has nothing to do with merchants as nothing was ever purchased from one.
Sorry Oz for the confusion. Follow the money, this has nothing to do with down payments, this is the core of Lyoness business and how it survives.
Assume you are a brand new Lyoness member that has just received his loyalty card. He goes to buy gasoline at lyoness merchant that offers 3% in saving. When he goes to pay for the transaction he pays the full amount and get his card swiped. The customer gets an instant message on his phone telling him purchase is confirmed.
The gasoline merchant than send a cheque to lyoness for 4%, 3% is the agreed upon agreement discount between the merchant and lyoness and the 1% is a fee lyoness charges the merchant to bring that customer to the merchant.
The 3% gets dividend up like this. 1% is customer cash back which is put into the customer online cash account, 1% goes into the customer loyalty account, .5% goes to the direct about him and another .5% goes to the indirect above him.
Over time repeating this process at some point your loyalty account will add to $75.00. and at this point you can purchase 1 unit….repeating this process you can create 70 units in your online accounting program and than $675.00 is paid to your cash account.
During the whole process the customer has been buying 1000’s of gallons of gas at the merchant.
i wanted to know how much was purchased and how much money was sent to lyoness for this all to happen. I extrapolated how much money must be spent to achieve this, and how much money the merchant must pay lyoness.
The merchant will sell $525,000 worth of gas over time and the merchant will send lyoness a cheque for $21000. This is not one cheque but over the course of time the merchant must send payments to lyoness as the gas gets purchases…Lyoness will distribute the money this way.
$5250.00 will be the fee Lyoness charges the merchant and $5250.00 the customer gets cash back and $5250.00 goes to loyalty account and $5250.00 goes to the direct and indirect.
I agree its a little complicated but it can be learned, by doing it.
David
Interesting explanation, unfortunately it doesn’t gibe with official Lyoness explanations.
According to http://www.lyoness.net/us/kosten.aspx there is NO cost other than 1 time setup fee, and monthly “maintenance” fee for the merchant for $26 USD.
Thus, your explanation seems to be of your own invention.
@David
Bugger that.
Join Lyoness, invest money with Lyoness as a “downpayment”, convince a fixed number of others to do the same (how many depends on how much you invested), and then receive a ROI from Lyoness. Nothing is bought and nothing is sold.
Merchants schmerchants. You can stick a lemonade stand outside a Ponzi factory but that doesn’t change what goes on inside the factory.
@ Kchang I believe the fee you are talking about is for online merchants. They have more costs associated with it.
If you are small business such as a cafe or small independent clothing store than its only 1% to lyoness and actually they give you 3 free years and than it’s 120.00 per year for membership.
Unless I’m missing something, there is no mention of offline merchants or associated fees anywhere on the Lyoness US website.
In anycase, the existance of offline merchants still doesn’t negate the whole downpayment investment scheme, which bypasses merchants altogether.
Hi Oz!
You have no obligations to purchase units. They can be created slowly buy shopping. If you choose to buy units than it’s your choice. There are many good reasons to buy units, and the main one to get into career level 1, and becoming a premium member.
It really just jump starts the residual income.
Many of the premium members in lyoness have been just shoppers and benefited with cash back every week and after doing this for a year have made an educated decision to get more involved in Lyoness. Some people see the potential of it right away and join as premium members right away.
Another way to become a premium member is to become a super shopper, its rare, and example of this would be if there was a lyoness merchant that would build a gazebo in your back yard or renovate your home, replace a your windows and doors and you spent $30,000.00 with that merchant you would become a instant premium member as well….and you receive cash back and loyalty income from lyoness.
Irrelevant. The mere fact that I can invest in units from Lyoness negates the legitimacy of the merchant shopping scheme.
Hi Oz,
The down payment towards gift cards is towards future purchase.
I admit it’s hard to get the money out unless you make a large purchase. The lyoness merchants at the moment seem to be few as well.
You need to have big ticket items like furniture stores and car dealers. Electronic stores. Contractors for renovations, or a merchant where you spend enough to get to use the gift cards. This where they could improve on perhaps try to bring in more variety of merchants. Lyoness is still young USA and merchants will join eventually.
If I was a premium member I would sign anyone up. Of course signing up a premium member would be the best, but shoppers are good as well. Some people see the potential in it and some don’t.
Just like any business…and are far as business go we all now the failure rate of them like 80% fail in the first year.
Let’s put it this way then…
WHY, as a shopper, would I “down payment” into a unit? Do I get additional discounts? Or do I merely buy into this “income opportunity” when I convince MORE people to buy units?
What it’s “towards” is irrelevant. All that’s relevant is you invest this money with Lyoness, get a fixed number of other people to invest and then Lyoness pay you out a sizeable ROI.
Given that all this happens internally inside Lyoness, it’s obvious where the ROIs are coming from.
This mechanically is identical to that of a Ponzi scheme:
1. Invest $x
2. convince other members in your downline to invest
3. earn a fixed ROI >$x once a specified number of new investments have been after your own investment
Hi Oz,
K lets focus on the down payments than.
Large and small department accept down payments for merchandise. Let’s use an example of electronic store. I want to purchase a nice flat screen TV and than I put a downpayment towards it $75.00.
The flat screen cost $750.00 I make another payment of $75.00 now I am very committed to buying the flat screen at this point, and at some point I will buy the the flat screen TV.
Now if you are Lyoness member and I have made a down payment on gift cards. I would make a top up payment to Lyoness $675.00 and then the $75.00 that I previously put down as a down payment is released, I get the $750.00 in gift cards sent to me and I go buy my flat screen with the gift cards.
This is how the gift card down payment works.
Regarding online merchants and small brick and mortar business is different and exists. There are all kinds of lyoness members, the gas station is example would not be an online merchant and his only cost would be 1% to lyoness.
The merchant sign a three contract and on the fourth year there is a yearly fee of $120.00
Lyoness sell no merchandise, irrelevant.
You either buy a gift card from the merchant, or are investing money in Lyoness and earning a ROI once a fixed number of people have also invested after you.
Given the former is false, in that no cards are purchased and the money is paid to Lyoness rather than the merchants, the latter is therefore true.
Hi K,
When you put a down payment it creates a unit. and once you have 70 units you get your 675.00 cash into your cashback account.
Example I will put down $75.00 and buy myself a unit and is a down payment to a future purchase. I put a top up payment into my cash account of 675.00 and now I order online gift cards for $750.00 for a electronic store and buy the flat screen TV for $750.00. The unit still stays there.
Hi Oz,
lets back up here a little regarding gift cards. Gift cards are very relevant here.
Lyoness negotiates with the merchant a discount that will be given to Lyoness member. Walmart is a current member of Lyoness. I would deposit $500.00 into my lyoness account through a bank. I can purchase $500.00 worth walmart gift cards. Lyoness at this point will give out the % accordingly to its members, and you now have in your hand $500.00 in gift cards…now its up to you to go to walmart and spend it.
Now where is there mention about Rate of return (ROI) on investment…you can not invest in Lyoness..its impossible anyone telling you this is inaccurate.
you can make down payment for walmart if you want…you can make a top up payment if you want. If I am going to buy something at walmart i might as well benefit from it.
I Ponzi scheme relies on members recruiting member to survive. Bruce Maddock ran a Ponzi scheme. He did nothing had no products all he had was his reputation, which allowed him to recruit and syphon money out of people.
Lyoness survives because you must shop and and the merchants are paying for it. If Lyoness today stop allowing premium to join it would easily survive because everyone shops. You shop at the grocery store, you need gas, you need medicine….People shop every day 24/hrs a day.
This is inaccurate. They do not buy the gift cards from the merchant.
Lyoness every month would go to big merchants and purchase $100,000.00 of thousands in Gift Cards they would store them at the headquarters and people order gift cards through lyoness and they receive there benefits.
@David
Gift cards aren’t purchased at a discount, so irrelevant again. Furthermore the money is paid (invested) to Lyoness, not a merchant.
I can invest $x with Lyoness, not purchase anything through any merchant, convince a specified number of people to invest after me and earn a ROI. This has nothing to do with giftcards or merchants and entirely negates the legitimacy of the rest of the Lyoness compensation plan.
Read the review your commenting on, it’s all explained there. That information was taken directly from the Lyoness compensation plan material.
False. A Ponzi scheme relies on new investment to survive from new or existing members.
Again, I can entirely invest money with Lyoness, convince other people to invest after me and after I’ve convinced a specified amount of people, earn a ROI from Lyoness. Merchants don’t touch the money (it’s entirely optional).
Apart from no confirmation whatsoever of the above and you just making it up, if a gift card totalling the amount deposited by a member with Lyoness is not provided to the customer at the time the member deposits the money, it’s an investment with the epectation of a ROI after enough people make similar investments.
Everyone most certainly does not shop, another assumption on your part. And furthermore, why even have the investide side of the business then? Why take money in the form of investments with the guarantee of 500%+ ROIs from members if shopping alone will pay commissions?
Lyoness will only pay out a ROI once units are created, typically by members investing in them. Qualification has nothing to do with shopping in the slightest.
Hi Oz,
Well it seems you disagree with me on many little issues. You obviously think I am lying or something. Your idea of how lyoness works is incorrect and you do not know the inner workings at all. You are assuming many things.
I would suggest you have a lyoness member recommend you into lyoness as a shopper and see how the inner workings actually work. You are very mis informed on it. I was assuming you actually did know a few of the simple things about lyoness, before I made my first comment. But after several comments by you, you are the one assuming a lot of things, and some of it your are not accurate at all.
So please join its free and you can see some of the ways to save money by shopping. The lyoness web office is very user friendly and easy to navigate around.
Your last comment about not everyone shopping is actually true. I assume anyone under the age of 6 will not shop. But for the most part everyone shops! walmart is open 24 hours a day why is that, don’t be silly.
If you like tell me the city your in and can suggest someone to talk to. I live in Canada by the way. I would love the chance to sit you down and go through it with you, but its impracticable.
And ROI is rate of return..I understand this….Lyoness pays out commission without any money down can you understand this part at the very least. ROI would be used when you investing your money and expecting a return on it. With lyoness you are doing what you normaly do everyday you shop so there is no ROI….get it..
As long as I can join Lyoness, invest $x, convince other people to invest $x and earn a ROI based on a specific number of investments being made after mine, the little issues are irrelevant.
Like I said before, you can stick a lemonade stall out the front of a Ponzi factory but that doesn’t make it legit.
Unless you’ve got proof showing every single member of Lyoness shops at Walmar, this is a stupid conversation to have. Furthermore it’s irrelevant when discussing the ponzi nature of the business.
You keep banging on about an entirely optional side of the business and I keep telling you that as long as I can join Lyoness, invest money and earn a ROI based on the amount of people I get to invest the same amount after me whether or not you can shop does not matter.
Hi Oz,
One other little detail you might not know about is that, the units created there are 2 different kinds when you create a unit by shopping this unit can generate a cash reward of 675.00 when you create units you by recommending these units are called loyalty cash which is $675.00 as well but are used to purchase giftcards or use moblie cash.
Irrelevant because I can just invest money in Lyoness without shopping.
Hi Oz,
Your funny,
Lyoness USA has 402 online and brick and morter shops to shop at. I was using walmart as example only. go to the lyoness website USA and you can see all the merchants.
Recruiting premium members is important in any mlm you need to have core people to grown the business…but if thats all you did,you would be missing out, and someone u signed up actually used all 10 methods to making money the person you signed up in the end would be more successful, which means more money.
Irrelevant because I can just invest money in Lyoness without shopping.
This is the last time I’ll state this, what you can do with shopping is irrelevant in the face of you being able to invest in account units, convince others to do the same and earn a ROI once a specified number of people have invested.
Lyoness’ accounting units function like a Ponzi scheme, in that nothing is bought or sold and the only criteria to earn a ROI is to get a specific number of investments made after yours. If you’ve got nothing new to add to counter this, then I think we’re done here.
Only 5 in California. BORING!
@Carson — dude, you keep mumbling about the shopping side, don’t you see that there’s nothing wrong with the shopping side? It’s the “buying a unit” thing that’s the problem.
Tell me, WHY WOULD ANY ONE buy a unit? What does it gain them?
What other people “could” or “couldn’t” do is irrelevant.
IF it is possible for someone to pay money to join and make money solely on signing up others, THEN the business falls into the category of being a pyramid scheme or endless chain recruiting scam.
The core of Lyoness’ business model is Phase 1 and Phase 2, all the investments made by participants as “down-payments”. That is the “main engine” that drives the business forward at a reasonable speed. The cashback solutions are only a weak engine that makes it move slowly forward with no real momentum, but they prevent it from collapse completely.
So it will mostly be the people high up in the chain that gets lots of money to spend, while the people lower down in the chain will have to spend alot of money if they want their money back, resulting in the solution getting a very bad reputation within a few years.
For a merchant, this should be meaningless to participate in. The system only redistributes money among the members from the bottom towards the top, but using the merchants giftcards as a significant part of the payouts.
The merchants are not doing anything illegal, but they will probably have to take some part of the blame within a few years time.
So a merchant will earn something in the short term, but lose more in the long term, when the main engine have been turned off.
In EU, Lyoness will probably fail the Unfair Commercial Practice Directive, if some of the Consumer Protection Agencies there are able to understand the system. The down-payments in Phase 1 and 2 is clearly not a fair commercial practice.
If you check the payouts from the different matrices, they are lower than what people have to pay in. So people are effectively paying an overprice for the giftcards used in the payouts.
If the downpayment is 10%, it means people also can choose to pay the full $60,000 price to get paid 33% cash, and 40% in giftcards. It means they pay 67.5% overprice for the giftcards (27% overprice if we count the cash payout as “giftcards”).
The math goes like this:
$60,000 full payment
$19,800 cash payout
$24,000 gift cards
$16,200 overprice for the giftcards (we don’t pay “overprice” for cash, I assume?).
$24,000 + 67.5% = $40,200
“You’re not supposed to calculate it like that!”. I am, since that is the only way to calculate the down-payment for what it pretends to be, a 10% down-payment rather than a “pay to play”.
This means the merchants can be FORCED to terminate their relationship with Lyoness pretty quickly. All it takes is to send in some critical questions to the merchants, asking them about the overprice on their giftcards — with a crystal clear description of what you’re asking them about.
Allowing 67.5% overprice on giftcards isn’t exactly “good ethical standard” for a merchant, so this can easily be their main ethical problem for years to come — replacing most other ethical problems they might have completely.
David Carson, I have ONE important question to you. When you signed your agreement with Lyoness, did you sign it with an entity in your own country or with an entity in another country, e.g. Switzerland, Austria, Luxembourg? Other Lyoness members can of course answer it.
I think you should just try the cash back only part with NO “down payment” and stay there.
ANY MLM scheme that requires a substantial cash outlay SCREAMS Ponzi/pyramid to me! Scams abound in this world, and a sucker is born every second.
Remember the old saying: if something sounds too good to be true, IT IS TOO GOOD TO BE TRUE!
@james
Typically we don’t just ignore large parts of a compensation plan when conducting analysis of a business model. It makes little sense.
Hi Oz,
When your intention is to become a premium member in lyoness and all you do is recruit, you will not get any cash from the new members. you will only get credit. the credit you can purchase at any of the 402 USA merchants. so at this point you are forced to shop.
Lyoness has put mechanisms in there compensation plan to prevent this kind of behaviour or thinking.
Your team or lifeline will die very quickly and have unhappy members.
But really its up to you how you want to run your team or lifeline. It is your 3000.00 u invested so you choose the way you want to grow the business.
all can say is being a lyoness member is your path is doomed …lol..
good luck
Hi norway,
Merchants sign up in there own country.
Your analysis of the compensation plan is not correct. to get paid out at Accounting level 5 you have get paid out out at the AC level 1-4.
To be eligible for all 10 ways of the compensation you have satisfy certain conditions and rules. And as you level you get paid out gradually.
And why would you give more down payment than you need to!!
At some point logic must kick and say why would I spend 6000.00 when i only have to spend 3000.00.
The gift cards are not overpriced at all. Exxon 50.00 gift card cost 50.00…no extra fees involved.
PF
Lyoness as a whole brings shoppers to a business. you miss the fact it rewards regular customers of the merchant. It acts like loyalty card. repeat business.
Many merchants have frequent buyer programs set up allready and are giving discounts away. Lyoness can bring new customers to a restaurant for example. Many advantages for a merchant to be a lyoness member.
I think the merchant should be come a member as well and benefits that way as well.
@Peter
Nobody said anything about earning from recruiting. The problem is the investment side of things.
Yes you need a downline in order to get them to invest but you’re able to work it as an investment scheme, which is where the ROIs come from, not just the fact that you recruited people.
To invest in more AC’s and earn a greater ROI.
Not missed, ignored because it’s irrelevant considering the whole accounting unit investment scheme going on.
Hi Oz,
Now I see the confusion between you and Lyoness members. Your compensation plan (CP)is incorrect and incomplete.
If you want to get a more updated CP please join lyoness for free to find out….lol
Based on what you show for a CP, I can see why you think the way you do.
My analysis was taken directly from the Lyoness compensation plan. Please explicitly clarify what is incorrect and incomplete about it.
I or anyone else does not need to join an opportunity to analyse their business model.
“But you can generate accounting units via shopping and don’t have to invest!” does not negate the fact that money can be invested in Lyoness bypassing the merchants altogether, with a ROI paid out (by Lyoness) after a specified number of new investments have been made after the original investment.
Hi Oz,
Yes I agree you do that with lyoness go for it.
Yes you can bypass the merchant and just recruit premium members.
You have that choice.
Although you will be generating Loyalty credit. Each member you bring into lyoness will be buying units, each unit is a down payment and will be identified as a gift card down payment and will not generate any cashback for yourself.
It will generate Loyalty credits.
when you create a unit from shopping that to will be identified as cash purchase and you will be credited cash into you purchase account.
So what is the point of generating Loyalty credits if you are not shopping???????
Does this make any sense.
Hi Oz,
One part that you are missing in the compensation plan is that there are several different kinds of units created, there units created form shopping, units created by down payments, there is also bonus units credit.
Cheers, so we can agree it’s a Ponzi scheme then, given that the ROI paid out is both cash + loyalty credit once the specified number of new investments are made (as per the Lyoness compensation plan).
The cash paid out is more than the initial investment across all 5 account units available, so it’s a >100% cash ROI + bonus credit.
When I reviewed Lyoness back in May 2012, this was not specified anywhere and accounting units were presented as follows (using the $225 AC2 unit as an example):
If this is not the case, please cite proof from the compensation plan (not text, cited proof from the comp plan itself as this is where my information was sourced in May 2012), and provide how the ROI is paid out under all three scenarios you’ve stated (shopping/downpayment/bonus units).
I’m not particularly interested in “premium members”, as any Lyoness member can invest in account units after joining.
I dont agree its a ponzi scheme first of all.
I repeat if you choose to run it like that its your choice.
Of course not, it costs $5250.00 to generate 675.00
Whether you choose to or not is irrelevant. If it can be done it will be done and a lemonade stand out front of a Ponzi factory doesn’t negate the fact it’s still a Ponzi factory.
It doesn’t cost you that much if you play the Ponzi route and convince other people to invest after you.
What’s easier, pay $5250 or convince x amount of people to invest their own money after you?
Hi Oz,
I doubt you can find that many people to do it, but if you do go for it. Good luck using the loyalty credits.
I prefer cash myself.
Again, whether you can find people to do it or not is irrelevant.
Mechanically you put in $x and receive a >$x ROI + credits after a specific number of people have invested $x after you.
As long as the above is possible Lyoness functions as a Ponzi scheme.
Hi Oz,
One other little amendment to the compensation package is that when you join lyoness and purchase your $3000.00 worth of units you must make a personal purchase of $600.00 in gift cards to be SPENT. So you must come up with 3600.00.
Like I said, I’m not particularly interested in Premium members because any Lyoness members can invest in accounting units.
In the article I did quote Lyoness advertising a $3,000 “Business Member” option, but that was only to illustrate how the company itself is encouraging the Ponzi ROI aspect of the business.
Hi Oz,
If your going to purchase units you might as well join and be a premium member, Lyoness puts you at level 1 when you plop down 3600.00….because to get to level 1 you need 100 units.
I am sure lyoness will take any necessary actions or changes to compensation plan to avoid any ponzi scheme threats…
Hi Oz,
I appreciated all of your comments. KEEP up the good work
What happened to @truthsayer? He was entertaining (and pretty close-minded).
If anyone can sell and recruit “members” to join anything and do it well enough to build a “downline” they should just get a sales job and wake up early every day and go to work.
They will make more money than any MLM can offer them over the next 10 years and they can keep their friends, neighbors and family members from hating them.
I hate it when someone i know well and respect (used to respect) trys to get me into an MLM. I ended up at this forum because I need to find enough intellegent reasons to explain to my friend why I am not interested in teh worlds greates opportunity that he beleives in so much.
It’s sad to me when I see somebody fall into this spell.
He told me that I have to attend a 30 minute webinar tonight. When I told him I was not interested he acted like I said no to a free million dollars.
He was obviously so brainwashed when he attended the “webinar” that he just can’t comprehend that I am not interested. Either that or he is not my friend and is praying on my ignorance just to get a little slice of my money.
I actually told one friend one time to add up how much he would make from my participation and I would just give him the money.
I can remember at least 5 – 6 very close friends who drank the koolaid for an MLM over the past 10 years selling everything from magnets and air purifiers to juice drinks and weight loss powders who are all out of the business and never made a dime.
This latest one Lyoness however takes the cake. It is the most complex and deceptive scheme I have heard yet.
I can’t understand why it is has not been shut down yet by the feds. Maybe they have campaign money going out, because it is definately possible to use the Lyoness system for a paraymid scheme.
Nobody can argue that you can use Lyoness 100% in that manner. Of course you are not “required to” – yeah yeah we know, BUT YOU CAN!!!!
Thanks. The reason why I asked about signup country was because it was mentioned in the article found on Ted Nuyten’s website.
http://www.businessforhome.org/2012/02/swiss-newspaper-crushes-lyoness/
My question should of course have included something about “the lines with fine print, about jurisdiction” or something similar.
I did NOT analyse the compensation plan in my example, I used one of the AC-levels as a standalone example for “What if I choose to pay in full instead of making a down-payment?”.
If the down-payments should have any meaning, you must also have the option to pay in full, don’t you agree? So a full payment for AC-V would be $60,000 if the $6,000 is a 10% down-payment.
In that scenario where you pay in full, your payback will be less than what you pay in, and effectively you will pay a 67.5% over-price for the giftcards (assuming we can’t pay overprice for money, so the over-price has to be related to the giftcards).
All in all, neither the down-payment nor a full payment makes any sense from a consumer viewpoint. It only makes sense as a “pay to play” in a pyramid scheme.
I’m not seeing it from the viewpoint as a pyramid scheme participant, but from the viewpoint of a consumer. So I haven’t even looked at the 10 ways of compensation. If they pretend to be a consumer oriented solution, I’ll guess they should accept it when people look at it from a consumer viewpoint, don’t you agree?
Consumers are NOT interested in recruiting a downline, they are far more interested in making their payments and get their rewards as soon as possible. But here the rewards will be less than what they have to pay for it.
Lyoness is clearly NOT designed for consumers. They have a consumer solution attached to the pyramid scheme, but that isn’t the main part of the business. The main part is the “make a down-payment, and recruit others who also makes their down-payments, and first then you will get a reward”.
By definition, consumers don’t recruit other consumers into a downline, they BUY goods or services. So the main motive for making a down-payment in Lyoness is NOT in the role as a consumer, but in the role as a participant in a pyramid scheme.
One person asking critical questions directly to the merchants can force them to terminate their agreements with Lyoness at an early stage, making the consumer part of the program becoming meaningless. The consumer part is meaningless if they don’t have any merchants connected to it. And then the whole idea will fail.
M_Norway,
Very good analysis. Lyoness uses the bait of cash back cards to lure gullible people, then they start hitting the pyramid scheme hard. They stressed that the AC part of the business is the $ maker.
If a “business” or “residual income” opportunity is so good, why does it have to be so complicated? Clearly, the cash back model is just a clever disguise for the AC. The scheme eventually collapses.
I’ll just keep my 5% gas card from a credit union, 3% Costco card, and others and stay away from these get-rich-quick schemes. I just feel bad for nice but gullible people who succumb to greed.
Make your $ the old-fashioned way: work hard, spend thriftily, and save. Invest your savings in stocks or mutual funds, not in scams.
I am new to this discussion and this forum and this is my first post here. I have some information on my experience with Lyoness that I thought I would like to share.
Some relatives (whom I trust completely) are making a significant revenue through Lyoness (in excess of $3k weekly). They talked up Lyoness big time to my wife and convinced her to join at the $225 level. She has now recruited me and three others, but we are just at the shopper level with no cash investment.
Once you are a member of Lyoness you can see the member portions of the website and see a lot more information about “Accounting Units” and how they work.
When my wife bought in at the $225 level she was given 7 accounting units. It is important to note that every accounting unit has exactly one parent and 2 children, it is a binary tree. An accounting unit cannot exist without a parent and it can have 0, 1 or 2 children but no more.
Since she has 7 units, her unit 1 has two children, which are her units 2 and 3. Her unit 2 (the child of 1) has 2 children, her units 4 and 5. Her Unit 3 has 2 children (her units 6 and 7). So this means that her unit 1 already has “3 units above and 3 units below”.
That is the two binary stems coming off of her unit 1 each have 3 decendents.
There seems to me to be two almost independent systems taking place here. The shopping part is simple. Buy gift cards and then you get 1-2% back, and the people 2 layers above you each also get 1/2%. This part is pretty obvious and doesn’t seem to be in question.
But how does my wife make money with the 7 “accounting units” she has. Since the first 3 already have all of their children, they can’t have any more. But the 4 accounting units at the right of the tree (Lyoness shows their trees going from left to right (parent to cild) each have no children.
To make money with these any of these units, the empty slots to the right of the tree (all 8 of them) need to obtain children. There are four ways to obtain these child accounting units.
Number 1 is to buy LOTS of gift cards. For every $3000-$7000 of gift cards you buy you get another accounting unit. So she could buy a lot of gift cards to start “filling in her tree”.
Number 2 is to convince other people to buy lots of gift cards. If someone you recruit buys $3-7K in gift cards, they get a unit. That unit then is a child of one of your units.
Number 3 is to just buy more units at $75 each.
Number 4 is to convince other people to buy units. As her units start gaining enough decendents, she gets the paybacks.
Realisticly, the only way to make significant income is to convince others to buy “units”. To get enough units to get any cashback via giftcard purchases would require a massive investment in gift cards (tens of thousands).
My relatives that are making a lot of money with this are really good at this. They have convinced many people to invest at the $3600 level. The people they recruited are themselves really good recruiters. That is the key, you need to be able and willing to recruit recruiters.
The down payment business is kind of a joke. Frankly I think it is just there to avoid prosecution as a Ponzi. Yes, when you “buy” units you are technically making a down payment on future gift cards you might buy. But it is a tiny down payment, 1-2% depending on which cards you buy. So to “redeem” her $225 as gift cards she must pay another $22000 or so to buy $22000 worth of gift cards.
So if all you want to do is buy gift cards, this is a fairly reasonable program. If you are good at recruiting recruiters you can make a lot of money on the “unit” side of the business.
I would like to add one note on the gift card side of the business though. You can’t just go to their website, enter your credit card number and order gift cards. You must write out a check and then fax or email them an image of the check.
I placed an order for $300 worth of gift cards. I received an email from lyoness saying that they were unable to read the image of the check that I sent in and would I please rescan it and send it again. However, the $300 has been taken from my account.
My wife purchased $500 worth of gift cards. Lyoness sent her an email saying they had been shipped and even gave her a FedEx tracking number for them. But when you look up that tracking number, it still says “waiting for shipper”.
In otherwords, Lyoness has informed FedEx that it intends to ship the cards several days ago, but so far they haven’t actually done it.
So right now we are out $800 and haven’t seen the gift cards. I think we will in the next week or two, but it is a hassle actually getting the cards.
I am sure I haven’t gotten every detail right, but I have spent a lot of time studying this and talking to my relatives who are making a lot of money with this. But this is the story as far as I can determine.
Viking.
The idea is to sucker people in with the whole shopping thing, and then hit them with the investment side of the business once they’ve joined.
That’s why you’ve got so many Lyoness affiliates running around singing the praises of the irrelevant shopping side of the company. If a prospect does their own due diligence, the affiliate can just turn around and point them to the Lyoness website. I don’t believe they even mention account units on it.
Sourcing the information for this review was a nightmare and it wasn’t until a Lyoness prospect who had been given access to the full compensation plan reached out to me that it was possible to do a writeup.
There’s nowhere near enough information about Lyoness as a business opportunity on their website for anyone considering joining to do their due diligence even remotely thoroughly enough.
That’s why it’s a scam because the details are murky and confusing. If it is a genuine “opportunity” it should be simple/straightforward.
Good point Oz.
@Vikinged
Thanks for the description. You clarified alot of factual stuff there, the primary function of this blog.
And there’s no wonder why the “people will always shop” seems to fail for people who don’t recruit recruiters, the experience some people in eastern Europe had.
The binary system there is what I consider to be “Cheating unexperienced people”. It won’t pay out anything before you have filled both binary legs, so if you only recruit 2 people (one recruiter, 1 non-recruiter), you can wait for years before the other leg is filled.
I consider it to be a pyramid scheme, not a Ponzi. Pyramide schemes are recruitment driven and have a fixed “pay to play” fee to participate, while Ponzi schemes don’t depend on recruitment and accepts individual investment sizes in most cases.
Accounting units are neither a product nor a service, and the down-payment idea seems to be meaningless if each accounting unit is a down-payment (on individual purchases). Making additional down-payments (on the same purchases) doesn’t make any sense either, from a consumer viewpoint.
MY VIEWPOINT
From my viewpoint, Lyoness is the one income opportunity people should stay away from, unless they know exactly what they’re doing (know they can recruit recruiters, and that they are participating in a pyramid scheme). The system is too complicated and also too vulnerable.
In Norway, it seems to have flopped completely or been delayed.
* It was marketed around 10th of May on MoneyMakerGroup forum.
* One website popped up some days later, but didn’t get any content.
* two posts on a local (but rather dead) pyramide forum 1 week later, attached to a general thread rather than getting its own thread (and that’s a bad sign there)
* the video from Lyoness was available on Youtube
* and that was all (no activity, no merchants)
And seriously, I really don’t like Hubert Freidl, either (the founder of Lyoness). He’s eager to present himself as a charitable guy, but what he really does is to cheat consumers in order to be able to act in that role.
Nelson Mandela, please read my comment here, and make a decision for how important it is for you to accept that kind of charity. You appear on the front page of Lyoness’ website — “Lyoness starts school project with Nelson Mandela”. Make a decision before we add the line “financed by cheating consumers in other countries”?
@Viking — thanks for the confirmation. It *is* two independent systems: shopping discount, or buy units/gift cards and make make others buy units/gift cards. In other words, recruiting.
It *is* a pyramid scheme of sorts that hovers on the edge of being illegal. It is recruitment driven, and since there’s little benefit to the actual participant other than the income (you don’t *work* for a living, you convince OTHER people to put in money, i.e. recruit) it is not sustainable.
Its not that hard to get. I would have gladly sent it to you. There is no secrets.
Lyoness offers a 30 day free test period to look around see if you like it or not….no commitment nobody is trying to fool anybody. People can make an informed choice. It has all the information right online.
and Norm please read the current plan if your going to comment on it…I am not even to bother correcting all your misinformation.
Just like any business you have risks and just like any business the harder you work the more likely you can be successful.
I think you should be more concerned about not losing your savings when banks and mortgage lenders go under with your money..
Or when credit card companies charge you 30% interest that is a crime in itself.
Sorry for getting off topic….
There is a hell of alot of problems other than Lyoness trying to be the best mlm. In there young expansion they have flaws in the system but they change or redo the compensation plan so not to put up any red flags.
and chang there is 3 parts to lyoness actually the third part is the merchant benefits as well, with new sales and creating a loyal repeat customer.
In my city I have 5 new customers that come to my business and shop on regular bases.
K. Chang,
Don’t you have these in your auto response generator? How many times have people said “every business has risk” or “no business is perfect” or “growing pains” or the redirection by referring to banks, stock market, your job, etc. as the true evil in our lives.
@ Peter Fehr,
“Risk” in itself is not THE problem. Rather, it’s the murky and vague way the scheme presents itself. If the “risk” is presented cleanly, it’s ok. Instead, they construct this
Hi James,
Have you ever been to franchise meeting for example like subway, or papa john…
Talk about murky, there is nothing more murky. and here you have people with projections and how much money you are going to make. Or how about the hype in they put in the stockmarket for an IPO…facebook for example. The brokers knew it was worth only 28.00 but they sold to he general public for $40.00.
I have been to Lyoness meeting and there is nor murky water. It has a compensation plane, that you must read and ask questions. I know it I have 7 people in my life line who know the plan, because I taught them.
Unfortunately some people go in blind, and when they sign the documents it even asks there do you understand the compensation plan. And on top of that they have 30 day free trial as well.
Just like any business franchise its hard to understand unless you put in the time and effort to know it.
HI Chang,
Do you the risk in investing into Facebook was presented cleanly? NOT!
The risk in Lyoness is presented cleanly, If you were in my life line Chang I would make sure you did not fail.
I know how to grow a business from brick and mortar, I make $15k a month from my business. I still own it as well.
Why would I waste my time on Lyoness? becasue I see the potential in it and what kind of effort goes into it, and than I see the reward….as far as I am concerned its worth the risk. I understand the compensation plan I am honest with every person I sign up into lyoness.
I sign up small business into lyoness as well. I get no compensation for doing it, but I see how important it is to shop in LYoness. I am growing the business by having merchants in lyoness and have my lifeline shop at these places.
@Peter
Your a member. Lyoness are very secretive about putting the whole account units side of the compensation plan on their page.
Anytime a company does not fully disclose their business model openly on their website I see it as an instant red flag.
@Peter
The risk argument is one of the first to be used as a defence of Ponzi schemes, and standard procedure is to compare the risk to “other businesses”.
Of course the risk in a Ponzi scheme is not even remotely similar to that of legit businesses.
The risk in a Ponzi scheme is that nobody will invest after you. No legit business shares this risk. If you open up a Subway or Papa John your risk is entirely different.
Again, the stock market and shares etc. is also a completely different ballgame risk wise. All risk is not the same, as much as Ponzi participants would want you to believe.
Read ALL the posts here CAREFULLY and any objective and sane observer will see that Lyoness is a SCAM! They and the blind followers try to disguise it but people like Oz and K Chang have done an excellent job to expose it.
I disagree, I myself do not know the reason they don’t post it. But I speculate it’s because it gives the person searching a reason to inquire further into it.
But the compensation plan is not a secret in fact they made recent changes to it and emailed it out to all the members.
@james
Hey James,
I am not a blind follower, I am premium member and I know what I got myself into. I read and I asked questions, I have a great upline and all my questions and concerns get answered quickly.
I think Oz brought up some good points but Lyoness has seemed to address them with a change to the compensation plan for the premium member which is to make a gift card purchase of 600.00. Which encourages new members to shop. Its not perfect, but really what is perfect.
Visiting the website is enquiry enough. All Lyoness do by not disclosing the whole investment side of the business is facitilitate the ‘it’s all about the shopping’ garbage.
Right.
As someone who reviews MLM compensation plans, I’ve observed that the only time a company hides its compensation plan from the general public is when they’re trying to hide something.
In this case it’s the whole AC investment scheme, which quite clearly undermines the whole shopping side of the business they try to present to the public (and any watching regulators).
Why does everyone that backs an illegal pyramid or ponzi scheme always end their excuses with a “nothing is perfect” as if to obviate any further inspection of the business model itself?
Either it is legal.
Or it is not.
I have already made comments about Phase 3, where the cashback solutions are meant to prevent the pyramid from collapsing completely, SLOWLY generating new accounting units.
All the momentum is in Phase 1 and Phase 2, the pyramid scheme part of the business. After that (in Phase 3), most of the momentum will be completely lost, because people no longer have any motives for buying giftcards, and the system will generate fewer payouts (with giftcards included in the payout).
I don’t see any merchant benefits in generating dissatisfied consumers, other than the short term benefits through increased sale to some of them (and reduced sale to others). That’s what a pyramid scheme does, it distributes money among members from bottom to top. In this case with giftcards as 60% of the payout.
I don’t see any real benefits for Nelson Mandela in accepting donations from Lyoness, either. Well, the donations are acceptable, but I don’t see any real benefits in appearing on Lyoness’ frontpage with “Lyoness starts school project with Nelson Mandela, financed by cheating consumers in other countries”.
People would probably throw money after the school project if he had appeared in a different role, something like “Nelson Mandela terminates his relationship with Lyoness, and makes Hubert Freidl become Persona non grata in South Africa”. That would really have sent a message to the world. 🙂
And he CAN be used in a role like that, voluntarily and by his own decision, feeling he is doing the right thing. That’s why I identified him in the first place.
Some “charitable” donations are simply not worth it.
@Norway
Lyoness is in phase three in my country and we are signing up 35 members a day. Its not slowing down at all. When I first joined it was only 1 or 2 people a day,now its up to 35/day. It is not slowing down, but the opposite it’s has momentum.
In Canada, when I signed up in December/11 which was phase 3. I was 1861 and now Lyoness hass close to 4800 members.
The child and family foundation has down many projects to date with orphanages and schools in poorer countries. Not to many mlm organizations spend time and effort into these things but Lyoness does.
If you watched the video with nelson mandela the town he is from is very poor, and Nelson Mandela lives a very humble life as well, but he knows the importance of education.
@jimmy
Of course it’s legal otherwise they could not operate?!?!?!?
They sponsor major golf tournaments Austrian open PGA tournament. Not very secretive here…lol….Its all there for anyone to read and question or dispute.
@Oz
I don’t doubt your an expert in compensation plans. More than I am for sure, but even experts mess up sometimes. There shopping is not garbage.
My upline is level 4 and the month of July his lifeline did #150,000.00 in purchases. That is not garbage, so please at the very least I ask you do is do is do more research into it before assuming something. Unless you can get some numbers you have no clue to what drives lyoness.
@Oz,
In case I have misunderstood something, I believed phase 3 was about the cashback solutions and NOT about down-payments?
Lyoness seems to loose all its momentum when the idea “people will always shop” is meant to be the main engine, when the pyramid engine doesn’t work anymore. And I guessed that was “Phase 3”?
Phase 1 and 2 is clearly a pyramid scheme, even if you CAN earn the accounting units through shopping instead of buying them directly (or recruit others to buy them).
When it comes to Nelson Mandela, I used him only to point out some vulnerabilities in the program. Some people believe charity is about money, and they are focusing solely on that part, counting how “charitable” they are in the amounts of money. Most others will realize it’s about something else, like “doing the right things” or “the person’s ‘core values’ rather than his money”.
So if the charity donations derives from cheating consumers in other countries, then I don’t believe this method will be within his “core values”.
Some people believe education is about schools, but it isn’t. People can be considered educated in some areas without any formal education. The schools are only one of the tools that can be used, and in the lack of schools people will usually find other methods to educate themselves, in more proactive ways.
@Peter
There’s a reason I wrote this review specifically on Lyoness US, that’s because Lyoness appears to be a mess worldwide and it’s impossible to get accurate information on all the different countries.
As for your shopping numbers. Unless your going to provide how much money was spent on account units (please don’t tell me you’re counting this as “shopping”), then the statistics you’ve quoted are meaningless.
In any case we’re discussing Lyoness US here, so worldwide statistics are irrelvant. Moreso when they are using different comp plans in different countries.
@Oz,
The plan is the same for every country.
I will get you the numbers for units created as well. But the numbers I gave is for strictly people spending money on gift cards world wide.
For the USA I will try to get some more specific information.
Sure it is…
Peter Fehr,
I think you should just give up your participation in the scam. If not, stay in it but quit trying to defend the scam. By this post (#207 overall), it is obvious Lyoness is a SCAM.
Your logic and presentation does NOTHING to dispel the others’ (Oz & K Chang) arguments – you should just quit arguing.
Hi James,
Of course it’s not a scam, otherwise they could not operate. The have iso and tuv certifications. One is management cert…and the other other is accounting cert…
This adds creditability to who and how they operate!
They made certain assumptions that are incorrect and I am just correcting them more so than defending Lyoness.
I am not presenting anything other than what I know I am not trying to sell it to anyone.
When I do present Lyoness to anyone I tell them the truth and I don’t tell them there are going to be rich in 1 year. I explain the whole compensation package to them and at the very least they sign up to shop and save a few bucks every month, and if they are entrepreneur they might to be a premium member.
Affirming the consequent fallacy: assuming that that scams cannot operate, therefore X is not scam.
Neither of which says anything about the business model. That’s like saying CPAs can’t work for the mob because they’re certified.
Are your corrections making sense?
Hi K chang
Usually a ponzi scheme cant survive because you need people to investment more money than the person who just invested. The Accounting Cert. means the model works and everything the accounting model represents is accurate. The benefits are paid out and fees collected and the shoppers are shopping.
Iso is a management Cert. which means nobody is getting murdered in management..lol..jk..but it means the services and the managment team is well organized and deals with customer problems in professional manner.
I guess I assume ISO and TUV cert and there auditors mean something. So I am Guilty.
ISO certifies business PROCESS, not the business itself.
As for TUV… They are the ones who GAVE the ISO certification.
http://en.wikipedia.org/wiki/Technischer_%C3%9Cberwachungsverein
Swiss consumer magazine, that lists “enterprises” they recommend keep out from made it’s Ponzi warning list. First position on the “direct sales + pyramid-like systems” part of the list is occupied by Lyoness.
http://www.beobachter.ch/konsum/konsumfallen/artikel/konsum_vorsicht-falle/#c289943
in France Lyoness didn’t deliver its yearly financial report to authorities, despite being obliged by law to do that. Might be, their last year turnover did not reach ca.75k francs limit for SARL/EURL if so?
ISO? TUV? Management team is well organized and deals with customer problems in professional manner? No kidding…
PS: Look here:
http://www.parlament.gv.at/PAKT/VHG/XXIV/J/J_11785
or here:
http://derstandard.at/1338558799730/Einkaufsgemeinschaft-Lyoness-ist-Fall-fuer-Korruptions-Anklaeger
and finally here:
http://www.lyoness.net/medien/ma_1/PA_Richtigstellung_Berichterstattung.pdf
45k CHF for pointing out the “system” critics?
1 million CHF claim for damages made by “defamation campaign”, in means of expressing disappointment by customer / Business partner?
Yes, it’s Lyoness, together we’re strong.
http://www.beobachter.ch/konsum/konsumfallen/artikel/lyoness_drohen-mit-millionenforderung/
What exactly do you mean with “Accounting Cert.”? Lyoness has a limited ISO-certification from some “Quality Austria” or similar business name, an ISO-certification company. I didn’t look at any details there.
The rule here is “If you want to claim they have certifications, be prepared to show the details, too”. It prevents people from adding misleading information, something that sounds impressive but can’t be verified. So I am asking about the details here, please give us more information about the “Accounting Cert.”?
Focus on the factual info, please? We’re not THAT kind of audience who really needs expressions like “This adds creditability to who and how they operate!”. What you FEEL about something is surely interesting for someone, I’ll guess, but here is not the right place. You can try to CALL someone? 🙂
“ISO is a management standard” is fair enough, but an ISO-certification is limited to specific business areas. So an ISO-certification for a service provider will mean something different than a certification for a manufacturer. They can even certify specific parts of a business.
ISO is mostly about control routines and other routines, to make sure the business is able to deliver a specific quality (to the right time etc.). I can’t really see how the down-payments fits within an ISO-certification?
And that’s precisely the easiest way to earn a ROI on your own initial AC investment, get other people to invest after you (or get your existing downline to invest).
By doing this you set off a chain reaction of them finding people to invest (to get their own ROI) which again is calculated as AC’s being generated under you so the idea is that you personally then go and invest in even more AC’s (which encourages your upline to do the same) etc. etc.
The shopping is all irrlevant to this in that it’s entirely an optional approach.
Hi K Change,
Yes, they did the inspection for the management (ISO) and they also did there own TUV certification for the accounting (Received Benefits to the members)
Hi Cashy
http://www.beobachter.ch/konsum/konsumfallen/artikel/konsum_vorsicht-falle/#c289943
That consumer magazine article is over 2 years old and mentions in no detail about Lyoness. The worst article I have ever read. The article mentioned that it had 30 merchants and I just went to the Swiss website they have almost 900 merchants now.
PS: Look here:
http://www.parlament.gv.at/PAKT/VHG/XXIV/J/J_11785
I read the information its all german, I translated it using Google translator. I did not understand all of it, but it just seems like they are describing lyoness and the way the benefits are paid out and the units how they work.
There is nothing there…If your going to post something this at least know what it says, why waste my time..the other two links are relevant.
It’s in the courts right now, I will be watching for the results. I am sure Lyoness will be cleared.
HI Oz,
http://www.sec.gov/answers/ponzi.htm
The reason Lyonss does not fall into this, it generates its capital from merchants. Your rewards from attracting GCD ( Gift card Downpayment) is more giftcards that you must spend.
There is cash reward…recruiting members does have advantages but there is no money reward. Unless they reword it I believe Lyoness does not fall into this.
Granted they use parts, but I repeat to really benefit, you must take advantage of the other 10 ways of revenue to be successful.
Peter, what you believe is irrelevant.
From the link you published:
I can join Lyoness, invest money in ACs and I earn a ROI when a certain number of people invest the same amount after me. This has nothing to do with merchants and all the money is paid and received from Lyoness itself.
The other 10 ways of revenue are irrelevant given the above. This has been stated to you many times before yet you continue to bring up gift cards, merchants and shopping.
This is the last time I’ll state this. Whatever else is in the Lyoness compensation plan is irrelevant when you consider the Ponzi mechanics of the Account Units members are able to invest in, and then earn a return once a fixed number of new investments have been made after their initial investments.
Hi Oz,
WHy did you take only a part my quote when the definition is the whole quote…It seems your are trying to make your argument fit buy eliminating parts of my quote.
(Ozedit: removed the spam, This is the last time I’ll state this. Whatever else is in the Lyoness compensation plan is irrelevant when you consider the Ponzi mechanics of the Account Units members are able to invest in, and then earn a return once a fixed number of new investments have been made after their initial investments.)
Because that is the only part that is relevant and clearly defines in a legal sense what a Ponzi scheme is. In any case you’re trying to use legal definitions when we’re discussing Ponzi schemes from a practical viewpoint, in how they operate – rather than any legal liabilities as a result of doing so.
The next step is you asking for a court or legal body proving Lyoness is a Ponzi scheme, which is obviously not going to happen in the context of the discussion. Then you assert this as lack of proof Lyoness is a Ponzi and start crapping on about how until the authorities shut it down it’s not a Ponzi.
None of which of course changes the fact that mechanically, Lyoness is functioning in part as as a Ponzi scheme, which is ultimately (following analysis of their business model and compensation plan) what is being discussed here.
Neither of which proves or disproves it’s a Ponzi (or not). Both are irrelevant red herrings.
Not true. The gift cards you buy yourself or encourage others to buy are also capital. The fact that the gift cards can be later spent (i.e. withdrawn) is irrelevant. Capital is still capital.
@Peter Fehr
2 years old Beobechter article, you say?
The link posted by me is “Aktualisiert am 10. Apr 2012”. Not removed from Ponzi list since 2010? Must be Lyoness.
After reading through a lot of these comments I am still confused as to what happens when someone ‘purchases gift cards’. Can they request a gift card right away or is there a certain amount that must be paid before they can get their card.
IE: Someone ‘invests’ $75, $225 or $3000 – can they get their gift cards right away or do they have to pay more, or is that just the ‘down payment’ & they don’t get anything (except points) till the full amount is paid?
Once, they do buy their gift cards do they have to spend 3750 to earn a unit? And if they don’t buy a gift card does $75 = 1 unit?
I am just trying to understand how this whole thing works because a friend of mine is looking into getting involved and I would really like to be able to help her with making a decision.
@Curious
From memory you don’t get your cards or whatever till the qualifications are met. Given that Lyoness don’t publicly share their compensation plan, it’s a bit ambigious.
More so when you consider some countries have seemingly different active comp plans to others.
No, you can recruit people in your downline, and let them make the down-payments and fill out the matrix with the additional units.
One problem is that you have to recruit 2 recruiters, one in the “upper” binary tree and one in the “lower”. If only one of them is a recruiter, only that part will be filled.
Lyoness seems to have been designed to cheat consumers, and normally it won’t be fun to be a part of a system like that after awhile. But I don’t know anything about WHEN it will become “less fun”. I don’t know anything about WHAT the “less fun” will be, either.
Lyoness has several “weaknesses”, and here is one of them:
What Lyoness feels adds to their own credibility, like the charity and the ISO/TÜV certificates, are probably something that can be used against them as a much more powerful weapon than people can imagine.
It means I have probably already identified a potential cause of their failure, more accessible than going through a court system or regulatory system.
@Curious
From Lyoness’ website:
Charity isn’t charity when the money derives from questionable activities. So if Lyoness is cheating consumers, their own “charity work” may hit them much harder than they have imagined was possible.
“Cheating consumers”?
That’s about the pyramid scheme part of Lyoness, where down-payments acts like a “pay to play”, where you can buy accounting units directly, but where accounting units also can be generated from shopping — a slower and more theoretical method.
As long as Lyoness has that system where consumers can make down-payments and buy accounting units directly, they are directly or indirectly cheating the people who makes those down-payments.
It can be compared to any normal pyramid scheme, where the lower levels in the pyramid is being cheated.
@Peter Fehr
Accounting certificate seems to be related to accounting software, like bank apps and similar software?
I googled “TÜV accounting certificate”, and it clearly point in that direction.
And you presented it to be a certification of the accounting unit system?
Who the hell told you that?
Your upline or Lyoness itself? I know Lyoness has actively used ISO/TÜV certificates in parts of its marketing, but much more vague than claiming any direct certification of the pyramid scheme parts.
So what do you expect will happen if anyone sends a request to TÜV Süd, and ask them to clarify what the accounting certificate is all about, and points to this thread where we are discussing Lyoness as a pyramid scheme, cheating consumers with misleading info, where the accounting certificate is used to add false credibility to the system?
Lyoness’ biggest weakness seems to be its own founder, in what seems to be a total lack of social intelligence (a major part of it seems to be missing). He seems to be very familiar with the stuff that can be used to mislead people, but he doesn’t seem to understand how people really “works” in their minds, the combination of different parts of the brain.
I wonder why we would even bother discussing IF Lyoness is a scam. We KNOW it IS a SCAM! Anyone with a normal IQ, reading ALL the POSTS, should realize that by now.
I think we should discuss how we may help STOP the SCAM from recruiting more VICTIMS.
First of all, sorry for my english, and greetings from Serbia..:)
@james
If we discuss, we spread awareness, talking about it, linking to this discussion, people will search the net and form their opinion, like You did, thus there are less victims in the world.
To all..
Is this scenario possible:
If I have a big bunch of people, in my group, that I have recruited, and I “buy” (or whatever) one AU, soon eventually (because of numbers) there will be 70 AU savings by the people who shop normally.
I got the bonuses some in goods, some in cash, and from that cash I pay again for another AU (some cash is left), another 70 AU, another bonus and so on..
I don’t do anything, I still get the money, while others save via shopping and cashback, and are absolutely clueless how I’m getting the money.
Wouldn’t that scenario be longlasting, and the system sustainable, because there are no disappointed peoples. Bunch of peoples save by shopping and they still get their savings; I’m making money thanks to them, and lastly the company get their money too.
Is this scenario sanctioned in any other way by the company? If not… isn’t it pretty parasitic…is there a law against it?
@Vinduril
1. You assume nobody will due their due diligence on Lyoness when signing up as a customer and
2. Ignorance does not legitimise what is functionally a Ponzi scheme.
I wasn’t talking about legitimising it or something similar. I was just pointing out the scenario where the Ponzi scheme will work for a long period of time (because everybody is saying “how could they last for so long, if it is a scam”).
I’m involved in discussion on domestic forum with someone who is, I presume, a member of Lyoness. He mentioned one time that there is a software with all shopping transactions, bills, who, when, where & how payed for goods, and “other significant statistical parameters”.
He also said that those data are transparent to “people who wants to get involved seriously in Lyoness”. He didn’t specified who and who else, company, other members, members that recruit people etc.
Is there a possibility for making a lists of consumer habits? Maybe valuable to other companies on which would they based their consumer and marketing politics?
I’m trying to find solutions that might work. I’m not onesided focused on “Stop the scam”, I’m focused on solutions.
There’s lots of facts I haven’t checked yet, I have only identified in which areas they can be found. I have identified a few “weapons” that can be used, but I need to find out HOW to use them and IF they should be used. So technically speaking, everything is under control here from my part.
The next step here is to ask someone else to check something with the ISO certifier, to establish some of the facts from their viewpoint. Using someone else will prevent me from being too occupied with that part, if it requires additional work.
I’ll need to specify something, to separate the “normal consumer” parts from the pyramid/Ponzi parts, and the source I have used was found in a previous post:
The areas I consider to be pyramid/Ponzi are first of all:
* the down-payments, the transferring of funds from members to Lyoness, placed into members’ purchasing accounts (or used to buy giftcards or whatever).
* the option to buy accounting units directly
* the need for recruitment. Effectively, you won’t get paid if you don’t recruit. You can of course make purchases, and get your money back indirectly that way, but that option is rather theoretical.
* the other different parts connected to the accounting unit system, whether it is a bonus system, career level system or whatever it is.
I have additional concerns about this from a consumer viewpoint, where I don’t consider the “down-payments for future purchases” or “buying giftcards” to be normal consumer behaviour. The one and only motive for that behaviour is the income opportunity connected to it.
I don’t have any concerns about a plain cashback solution, cashback cards and similar solutions — or payouts derived from systems like that.
MARKETED AS AN INCOME OPPORTUNITY
As it is and as it has been presented, Lyoness has first of all been marketed as an income opportunity, while the cashback solutions are secondary parts of the business model.
This has been reflected in descriptions from other countries, where the generating of new accounting units will slow down when people stops making investments.
So the income opportunity is very similar to a pyramid scheme, where people on the top with huge downlines will continue to get paid for a while from normal shopping, while members on lower levels won’t get paid at all (other than in theory, within a normal timeframe).
The idea “People will always shop” seems to fail in most countries, if we’re talking about shopping generated in normal ways, e.g. from cashback cards rather than from down-payments or from buying giftcards.
The shopping seems mostly to be generated from the income opportunity itself, i.e. the payouts in credits and giftcards, and the investment in giftcards or accounting units.
QUALITY AUSTRIA, TÜV SÜD
The ISO certification bureau involved here, Quality Austria, will need to clarify what they actually have certified.
Members of Lyoness have independently of each other made different claims about the quality of the system, where Quality Austria has been used to add credibility, both to Lyoness itself as a business and to the “accounting system” they use. I’m not talking about normal book keeping here.
CHARITY WORK AND NELSON MANDELA
I won’t start to mess with that, since people who are accepting money from charities are not experts in the areas they are accepting money from.
My concerns here is not about the money they receive, but about their willingness to front something as a “thanks for the money”, where a few red flags should have been clearly visible already from the start.
In Nelson Mandela’s case, the video was clearly meant to be used in some kind of marketing. He failed to set some restrictions for WHAT they could use that video to. Normally he should have said “I can allow it to be used for the charity foundation, but NOT for other purposes”. But now he’s fronting Lyoness as a charitable business.
The first red flag in that case was that the Lyoness team was far too eager to shoot that video, much more than the normal “Charitable actions will seldom go unpublished”, the habit some people have to really SHOW THE WORLD how “good” they are. People like that are not really doing any charity, they are buying credibility or something.
The second red flag is that Lyoness’ founder seems to have poorly developed social intelligence, in that he believes charity is about money. I’m pretty sure that the red flag was clearly visible all the time. It has even been reflected by other people making comments here, being too eager to focus on “credibility”.
The third red flag is why did they need HIM (Nelson Mandela) to front their donations? The money is clearly related to a school project, not to him personally. The school project itself should have had the most central role, not one of the people involved in it. Lyoness was too eager to focus on the people rather than the project.
And then again, charity isn’t about money, it’s about doing the right things and having the right intentions. Accepting money from a business is OK, but fronting that business isn’t. Being tricked into it can be acceptable, but an extended willingness to front that business isn’t.
And please feel free to post comments if anyone disagrees in my viewpoints. They are clearly viewpoints and opinions, not facts.
THE MERCHANTS
The merchants connected to this system should probably clarify something, too. I will consider Lyoness to be a “consumer cheating project”, but the merchants connected to it can have different viewpoints. Cheating consumers can probably feel quite OK if you’re only indirectly involved in it, and you clearly can see it increases your revenue.
Neither charity nor business is about money alone, it’s about the balance between money and some other factors. So making money with the wrong methods will probably harm most businesses.
Why do you need the ‘units’?? If it is a ‘legit’ MLM it would be Lyoness gets a certain % of the Purchase, the purchaser would get a % cash back from the retailer and level 1 and level 1 each get a %.
The ‘Future purchase’ doesn’t make Lyoness any money because the Purchase is from a Vendor NOT Lyoness and it just starts the cycle all over!!
Eg Buy furniture for $500 the discount is 8% or $40 and cash back is 2% ($10) and 1/2% to level 1 and two 1/2% or $2.50 each so $15 out in ‘cash back’ and $25 towards these units that we eventually needed to purchase from Vendors again!!
Where does Lyoness make money in this transaction?? They don’t they are just cycling the money!! They make it ONLY by investors BUYING units!!
I was with Zeek and this is the exact same set up!!!! These units = Zeek sample bids!! Don’t drink the Koolaid!!
I do want to point out one thing , sounds like a few of you are really hitting MLM hard as an illegal proposition… actually MLM – Multi-level Marketing is NOT illegal and there are some successful companines doing business with this marketing method – Amway , Xango, Avon, etc….
Basically, it is marketing by word-of-mouth.
All businesses are pyramid shaped:
1. somebody makes a product
2. sells to a few wholesalers
3. these few wholesalers sell to millions of retailers
4. customers buy from retailers
I have read a lot about the Lyoness opportunity and have talked to many of the people in it currently and of what i understand a lot of these bad accusations of how things work are not really true …
it is tough to understand as an outsider writing this article and this guy k. chang shouldn’t be arguing, he really doesn’t know anything at all about this …
I am sorry but you guys have this all wrong … Lyoness is trying to point out that it is free to join, you earn cashback from purchases and you will be creating these accounting units through purchases – although it takes a lot of purchases to create a unit , you don’t have to “buy” units , it’s only an option.
At this point, the average wal-mart shopper can get a 1-2% back on purchases that they normally make with cashback – the accounting units are just bonus if they have a large downline…. and shop a lot.
just wanted to toss this out from what i have seen.
Might want to go and see an ear doctor then. Or get your eyes checked seeing as that was never mentioned.
Investing in accounting units is not MLM.
And let me guess, your conversations never extended past the wonderful cashback commissions. Trying bring up the investable elephant-in-the-room accounting units with Lyoness members and see what happens.
Or you can just choose to ignore the inconvenient parts of the Lyoness compensation plan, y’know… the ones that clearly show parts of the the opportunity to be nothing more than an investment scheme paying out returns funded by new member investments.
Whether you have to or not is irrelevant, if the option is there mechanically it’s a Ponzi scheme.
A Ponzi scheme is a business model, members choosing or not choosing to participate in it doesn’t define one.
Not disputed but completely irrelevant to the mechanics of the accounting unit investment scheme they have going.
Please educate yourself on the specifics of the Lyoness compensation plan if you’re going to run around the internet claiming people “just don’t get it” and have no idea.
You’re making the most basic of mistakes when you compare a pyramid SHAPE with a pyramid SCHEME
Change the phrase pyramid scheme to an alternate description “endless chain recruiting scheme”and it brings you closer to understanding why Lyoness is under the microscope.
Any scam/scheme/program/MLM in which it’s possible to profit simply from the recruitment of new members, or, indeed, it’s possible to gain the bulk of ones’ income from recruitment, is, by definition, a pyramid scheme / endless chain recruitment scheme.
Are you sure? I’ve commented plenty above.
So was Zeek: free to join (as free affiliate level),
And the cashback is no different than most debit card “rewards program” already offer.
The ONLY real difference Lyoness offer is profit through asking people to buy accounting units. If it’s straight sales commission, no problem. But it’s not. The verbiage is confusing and open to interpretation.
Did they say that they are PAYING YOU from sales of that information? No. Thus, it is NOT RELEVANT.
The only thing you really need to know is:
1) What do I have to do to get paid?
2) How much do I have to pay?
3) How hard do I have to work?
4) How much do I really get paid?
(list significant combinations of above)
Ideally, you pay little, work hard on sales of products or services, and earn great income.
The potential scams are the ones that don’t work on sales, but instead, primarily to recruit people (either to join, or to buy into the company, not the products or services)
Lyoness is an odd mix of a regular buyers reward program, and “prepay a giftcard” verbiage that sounds very fishy, as you are basically rewarded for other people buying accounting units. As accounting units are not really products, it’s on the borderline of being a Ponzi.
@ Observer: you sound like an IDIOT for making idiotic comments (specifically about K Chang knowing nothing).
READ THROUGH all the posts b4 making such an ignorant comment!
Not saying you ARE an idiot – you just SOUND like one.
Mr Chang, you were one of the first to highlight that Zeek was a ponzi scheme months ago and were being crucified by ZR affiliates for your comments.
I understand that ZR has been temporarily closed and is under investigation, and a legal battle is being launched by affliates against the SEC. Lyoness has just launched in the USA and other countries around the world with pretty impressive offices, staff etc.
Should the SEC investigate this company before any future expansion could leave potential investors in the lurch? Is your role to bring this to officials attention to protect the people or to blog.
@OpenMinded
I can answer some of it …
People themselves are the first and most important line of defence against scams. Government agencies can’t replace that line of defence, they can only add something to it (e.g. factual information about scams, general warnings, specific warnings, prosecuting a few cases).
If they do more than that, they will send misleading signals about how proactive they are, pretending to be more proactive than they realisticly can be able to live up to.
They can’t replace the people themselves (as the most important line of defence), so they shouldn’t try to do it either. If they want to do something extra, it should probably be related to supporting the defence line with factual information.
“Official roles”?
None of us here has any official role in protecting other people, and I don’t think K. Chang has that role, either. We have the role of “sharing information” and “providing a platform for it”, and that’s all that is.
And those descriptions works fine. It will usually create different or opposite viewpoints about the same issues, so it works opposite of “propaganda” (onesided information designed to lead people into making specific decisions).
And that’s all. The critical viewpoint is related to that we’re trying to discover problems people should be aware of (rather than promoting something). Most other review sites are focused on promoting.
“Contacting government agencies”?
It’s certainly NOT a part of the official roles here, other than if there’s a need to clarify something — ask them for information about something specific. That happened in Zeek’s OFAC case, where OFAC rules was used as an excuse for banning 6 countries. The motive for asking was to clarify some details.
The individual reader may have different motives. People may find reasons to contact government agencies in their own personal motives. In cases like that, it will be up to other individual readers whether they want to support it or not (it’s not a part of any official role here).
“Main audience”
The main audience here can be defined to be “normal people, without any specific profession”. And they are usually assumed to be in a role where they’re researching a company, or have information to share — something of relatively general interest, rather than mostly of personal interest.
So the idea here is rather uncomplicated. A few simple ideas put together, designed for functionality rather than for being perfect. The ideas will fail when people have too specific needs, e.g. if they need specialised information from a lawyer or something. We can’t cover all possible needs, but we can cover some of them.
(Ozedit: cut spam)
Now speaking about the 3 phases of development, they no longer exists as of April this year after the Lyoness Leader convension in Makao. In some contries the new rules applied right away in some countries like in US it took few months, but the desire goal was achieved – the whole world is on the same page, same promotional video, same rules, same compensation plan.
You are right about one more thing, until April was possible to do a down payment, convince others to do so and make money with out actually shop and there were people doing it, so Lyoness changed that: If you wish to do a down payment – you must buy gift cards for the same amount at the same time (let’s say you wanna do a down payment for 3 units $75 each – you have to buy gift cards for the same amount)
The only exception is when you are signing up – you can do a down payment for up to $2900 and buy gift cards for $300, or if you wish to start with a business package of $3000 you must buy gift cards for $750. After that every single unit placed by down payment has to be backed up with the same amount spend on gift cards.
(Ozedit: cut spam)
@Danny
So my main criticism still stands, in that it’s still an investment scheme.
Please don’t waste our time going on about the merchants and all the other marketing spin.
As long as I can invest thousands of dollars, buy a few token gift cards, throw them out, convince others to invest thousands of dollars and have Lyoness pay me a ROI, it’s mechanically Ponzi scheme and the merchant side of things is irrelevant.
I wonder how the ZeekRewards case will affect Lyoness in the U.S., since some of the logics used to shut down Zeek also can be applied to Lyoness.
In Zeek, two parts of the business model were considered to be “unregistered securities” or “investment contracts”, i.e. the purchase of bids was connected to a profit sharing agreement. And a profit sharing agreement is a type of security.
Lyoness has another type of agreement that promises ROI, and where it clearly is possible to make investments. This is only theoretical thinking, just to see how some of the logics from one case can be applied to another.
My experience with Lyoness so far.
I’ve been shopping through Lyoness for 3 months. I bought car parts for my mercedes and bmw, I’ve bought magazine subscriptions, I booked my hotels for disney and bought printer ink cartridges. I also buy $500 in Walmart gift cards and $300 in Arco/BP cards monthly. And I’m about to purchase flight for my parents.
I talked with one of the merchants when i was ordering a product and I was surprised by how happy she was with the program. She went on to tell me how adding her store to Lyoness saved her business.
I can understand why because I would never have bought ink from her store before, but as a customer of Lyoness I wanted to earn the Loyalty Benefit from her since it was 20%. The cash back was 2% for a total of 22% off her printer ink. And the original price wasn’t a mark up. It hasn’t been at any of the sites I purchased from.
The Loyalty benefit from all the purchases interest me more than the cash back because when I accumulate $75 in LB from the merchants, I get an accounting unit. And it’s been posted already that accounting units can earn quite a bit as I and others continue to shop.
So we, the customers migrate toward the merchants with the biggest Loyalty Benefit to acquire units faster.
I look forward to when there are a lot of Lyoness merchants I can walk into and use my Lyoness CashBack card. There were only 12 when I signed up and yesterday there were 40. Today it is now 42 Cashback card merchants.
Not quite the 150,000 merchants in Europe, but the merchant sign up rate is increasing now that so many members are bringing in merchants. I’m guessing the new changes from April, May, July have helped this since they have new guidelines for the 17,000 US members to sign up merchants.
In regards to the merchant I spoke with, she was earning money on her customer base she signed up into lyoness when they shopped at other stores.
So the merchants have a big incentive to sign up their own customers before some other merchant does. So it’s a win-win for the merchant. They get more business through the Lyoness system and earn from their own customers when they shop elsewhere.
Now regarding the Elephant in the room. I wanted to know if Lyoness needed the down payments on gift cards to sustain business. What would happen if they stopped the Down payment program today. Here’s what I got.
1. Would Lyoness still generate revenue?
Yes, because most of the customers and members will continue to shop through the system, especially to earn the Loyalty benefit along with the cash back. Revenue would shrink, then most likely continue to grow.
2. Would the customer base still grow?
Yes, because the merchants see the value in being the first to sign up the customers since it pays them when their customers shop elsewhere.
3. Would merchants stay in the program?
Yes, why leave when you already paid to be a merchant in the system, business has increased, you earn off your customers shopping elsewhere and you don’t have to pay the $26/mo if you don’t get 10 transactions per month from the system.
4. Would more merchants join the program?
Yes, if customers join, merchants have an incentive to be apart of the program to increase business revenue just like they do now. Then they sign up more customers in the system to earn from their own customers.
5. Would units still be produced?
Absolutely, they are produced from the Loyalty Benefit we get from the merchant. Even if 2 million people produced 2 units a year, that would be 4 million units falling into the bottom of the matrix below the people’s units who came in last.
6. Most importantly, would the people who came in last lose money?
No, because the affiliates who came in before them would continue to shop and create more units that fall below theirs and the people who down paid units last would see their units earn from all of the units falling below theirs.
If there were people in the matrix instead of units, the people on the bottom might be in trouble. But since Units created from shopping fill the matrix and fall to the bottom the people on the bottom who down paid units will always earn.
And of course all the revenue would come from the 4-22% the merchants give up to be in the system.
Which is basically how groupon sustains by getting money from the merchants to pay their affiliates and run their business while getting the merchant to give up 40-75% of their profit to generate new customers.
I know some of you on the behindmlm team will say, because they take down payments on gift cards that’s a problem and nothing I said matters. Your opinion is noted.
But not addressed, so fail.
Again, the merchant side of things is irrelevant when I can just plop money down with Lyoness (not the merchants), convince a fixed number of people to do the same and earn a ROI.
@ Oz,
Amen to your post #249!
As long as this fishy “down payment” issue is unresolved, it is a pyramid/ponzi scam!
Then they probably should stop the down-payments immediately, and all over the world — just to remove any doubts about the legitimacy of the concept.
The merchants are also facing a huge risk here, and the risk is much more serious than any extra revenue they can make. The down-payments pyramid scheme IS the risk here. So the merchants have a much bigger incentive for avoiding participation than to join.
If you compare it to ZeekRewards, the “winners” there are now facing clawbacks for all they have earned more than their initial investments. In Lyoness, the risk is more vague and unknown. It can be worse than Zeek.
Pyramids and Ponzi schemes leaves a trail of devastation behind them, even for the short term “winners”. And that risk should be unacceptable for most merchants.
ANY merchant with ANY knowledge of risk calculation will probably know what I mean, or they will realise it indirectly when they try to add “unknown risks” into a model.
RED FLAGS
There’s several red flags here, so merchants or other participants trying to play the “in good faith” card will probably be considered stupid rather than gullible.
First of all, the down-payments isn’t a normal behaviour for consumers, and neither is the buying of giftcards. It makes absolutely no sense for a consumer, it only makes sense if they’re participating in a scheme.
We have all the red flags in the misleading marketing, like the certifications and how they are used in marketing, e.g. “the accounting certification”. A skilled business man should be able to recognise that as misleading marketing.
If you google “Accounting cerification” you will probably find it to be about companies using a specific accounting software, verified by the ISO-certifier. In this thread, it has been presented as a certification of Lyoness’ pyramid scheme system (the “Accounting Unit system”).
Then we have the general lack of social intelligence, e.g. when people believe charity is about money. Charity that derives from cheating consumers in other countries will usually become a burden rather than a solution for the receiver.
Seriously, is this your normal shopping behaviour or are you telling us a story? If you’re only repeating some sales stories then it’s pretty meaningless.
The problem isn’t that your story is unbelievable in itself, but I have heard thousands of “stories” before from other business opportunities, following appr. the same formula for the story. Very few of them tells the real story.
The idea “people will always shop” seems to have failed in all other countries, like the ones I was able to check in Eastern Europe through the Irish forum.
The main engine in Lyoness is the down-payments, while the cashback solutions doesn’t generate much sale when the main engine is turned off.
People will return to their normal shopping behaviour after a while. And buying giftcards isn’t a normal shopping behaviour for the normal day to day shopping. The behaviour is only normal when there’s an income opportunity connected to it, and for the normal use of giftcards (as gifts).
@D
Oops, I forgot to mention one red flag, the similarites between Zeek’s “unregistered securities” and Lyoness’ system.
In ZeekRewards, the purchase of sample bids was connected to a similar amount of VIP points, which again was connected to a profit sharing agreement (the daily profit pool) — a system that made the purchase become an investment rather than a purchase.
In Lyoness, the purchase of Accounting Units (and giftcards) are connected to a system with accounting units, which in turn is connected to a payout larger than the initial purchase.
The similarity is that they both have/had something that can be considered to be an “investment contract”, a type of “unregistered security”. It means it can fail on much simpler rules than pyramid scheme rules.
So all it takes to shut it down is probably for ONE person to do an extended due diligence, checking with the correct authority (SEC) about unregistered securities and Lyoness’ system. They don’t NEED to understand the AU-system in detail, all they need to verify is whether or not the system is an unregistered security.
PYRAMID OR PONZI?
From my viewpoint, Lyoness does NOT qualify as a Ponzi scheme, it doesn’t have the characteristics common for Ponzi schemes other than the investment part.
* Ponzi schemes will need to generate fake statements about profit and ROI, while Lyoness pays out LESS than it takes in from its’ members.
* Ponzi schemes can have centralised recruitment of new investors, in Lyoness the recruitment is via the members themselves, building a downline or a “chain”.
* Ponzi schemes can have ANY amount (up to a limit) as investment, while Lyoness has fixed amounts for each of the 5 matrices (fixed amounts for the down-payments).
So Lyoness is much closer to be a chain recruitment investment (pyramid scheme) than to be a Ponzi scheme.
Hi Norway,
I am merchant and a premium member of Lyoness. So far I have generated $2300.00 in sales from Lyoness members and I paid Lyoness $184.00.
From a business point of view I love great return on my money.
I normally do a flyer drop to 8000 homes in my area, printing, and distribution I am lucky to get 50 coupons, and of course the coupon gives a discount as well usually 20-30% off.
This drop would cost me at least $2000.00. I have done radio commercials as well and they cost anywhere for $25-$100 a spot and I have no idea if they brought me customers or not.
I love lyoness for bringing me customers.
That’s the problem right there. $184 in and $2300 out, it’s not mathematically sustainable.
How many other members did you convince to invest in Lyoness?
Hi Oz,
Let me clarify my post because it seems you misunderstood what I said.
My restaurant joined Lyoness in June/12.
Lyoness members would come to my restaurant and order drinks and have dinner. They would show me there card and I would scan it into the system. The customer would receive 2% cash back into there account and 4% loyalty credit into there account. I the merchant must pay pay Lyoness 1%.
I have Lyoness customers come into my restaurant over the span of 3 months they spend $2300.00. My restaurant received all that money not Lyoness. For this I must pay Lyoness a 1% fee. The fees I paid lyoness was $184.00.
FYI
I have 26 member in my lifeline. It is broken down like this. I have signed up 1 premium member, and have 25 shoppers.
Ah, so you need to differentiate what you’re saying then. On one hand you’re talking about being a merchant partner, and on the other an affiliate (premium member).
As an affiliate, how much money have you invested and how much money have you convinced others to invest? And what have they paid you back as a ROI?
By investment I mean non-merchant purchases, ie. buying accounting units.
Lyoness for MERCHANTS makes sense, but then it’s no different than any “rewards” program.
It’s Lyoness as “income opportunity” that has huge red flags.
Hi,
Yea my bad..
I have spent $3000.00 in down-payments and this has created units in my AC(accounting program).
I have signed up 1 premium member and I received $70.00 for this.
Because he is a direct member as well I have received also loyalty credit units. Here I need to get 70 units and I receive a one time payment of $675.00 in gift cards.
So as an income opportunity, $3000 invested with $70 earnt in referral commissions.
70 units (35/35) remaining before you get your big ROI. You might want to get cracking there, you haven’t convinced one person to invest in ACs yet.
It is very different actually. Because no other reward programs has recommendations in it. I can sign up members and I would get .5% of there purchases, as well as save money when I shop.
Last time we conversed chang California had 5 merchants and USA had 240, now California has 21 merchants and 420 USA wide.
Better jump on board before its to late. I remind you its free to join and you have nothing to lose. You can actually see how it works and you can give it a proper review.
I remind you there is 10 ways to make money in Lyoness, it seems this board is focused on 1 part of it the ponzi scheme part. Which is okay if Lyoness was running it that way but they are not. They make an effort to keep it legal and they know this.
pf
if they really want to keep it legal they should dump the one part that is potentially Ponzi. After all, they have 9 more ways, right? 🙂
California is a very big state. 21 merchants, mostly in SoCal is still worthless.
Rewards program very different? Don’t you just mean you’re double dipping, that you are both a merchant AND an affiliate/member?
Hello K. Chang,
I think that the company is in a pretty mature position, after so many years, to judge what is good or not.
Sometimes i like their decisions and sometimes i don’t. But nor the Merchants (Loyality Partners) or the Premium Members decide what the company should do.
Regarding the worthless merchants you say… i guess time will come. When it all started in our country and had 50 merchants, nobody would imagine that within 2 years it would be 1200! Of course it depents on the decisions of the company in each country.
I can’t understand the “double dipping” term, but i am shareholder of two Merchant companies (Loyality Partners) and also i am myself a Premium member.
Merchants are Small or Medium Enterprises in Greece. In the beginning i only liked the chance for our companies to be included in the merchants list and get new clients.
In the process i also liked the netwoking stuff because it created connections for me and my companies outside the borders of my country.
I have already covered that part, how the merchants will benefit from it. They will temporarily feel it’s a great solution.
The main engine in Lyoness is the income opportunity, not the cashback cards. The system works as long as people makes down-payments and buy giftcards motivated by the income opportunity, but it fails on the idea “people will always shop”. It has failed in other countries, so you can’t expect it suddenly will start to work in your country.
When people no longer are motivated by the income opportunity and buying AU directly / buying giftcards, they will return to their normal shopping behaviours. And normal customer behaviour is NOT to make down-payments or buying giftcards (other than as gifts).
The system that makes it work is the supposedly illegal part, the investment part of it. You’ll need to see it from that viewpoint, you can’t solely look at whether it works or not and ignore WHY it works.
As a merchant, you should normally be expected to calculate risk/reward connected to your business. So please explain how you have calculated the risks involved here?
Here’s my risk calculation:
1. There is a possibility that Lyoness CAN be declared illegal, either as a pyramid scheme or as an illegal investment opportunity.
Please don’t come up with “There’s absolutely no risk for that to happen”? Risk management is about identifying risks, not denying them.
2. There is a risk for clawbacks and/or fines connected to point 1. We know very little about WHAT and WHOM that may affect. This point should be very important for merchants to have under control.
3. We have a long term risk involved here. We don’t know anything about how this will affect your long term market. Lyoness’ solution will temporarily lead to more money being spent in a specific market, but without any logical reasons for spending other than the opportunity itself.
“Logical reasons” in point 3 means e.g. consumers have got more disposable income, consumers have changed their long term shopping habits (e.g. it has become more popular to visit your restaurant for other reasons than the giftcards), or any other factors.
*****
I have mostly been focusing on other aspects of the Lyoness case, and I have NOT checked the risks involved for any of the merchants. Merchants are expected to fill in some of their OWN risk calculation here, e.g. “My role in this as a merchant involves the following risks” analysing.
You have NOT done any risk analysing?
It’s better to jump OFF board if you haven’t identified the risks involved, don’t you agree?
I have NOT identified any risk management analysing from your side, one of the most important parts of running a business. You have focused solely on the benefits, and ignored more important parts.
Risk analysing goes like this (only examples):
* Identifying risks connected to the service itself, product or whatever it is you’re analysing. For a restaurant, it can be compared to buying illegally imported meat, and all the risks involved with that (salmonella, risk of fines, tax risks).
Lyoness HAS a risk of being declared illegal.
* Risk connecteed to your own involvment in it. You can break it down into different parts, e.g.:
– “I’m participating in it as an INVESTOR”
– “I’m recruiting other investors”
– “I’m recruiting consumers to the cashback solution”
– fill in other points yourself.
Some of the points have HIGH risks, while others seems to be completely legal.
* If possible, try to identify short term and long term effects.
* Use any other method you know about and are familiar with, which involves both risks and rewards. It’s better when people do NOT follow any recipe blindly.
* Use “best case / worst case” scenarios, to identify some of the outer limits for the risks and rewards involved. The real risks and rewards can be difficult to identify, so it’s usually better to identify a range rather than being too specific.
ACTUAL RISK ANALYSING
1. Lyoness itself, as a product or service.
* Is there any potential legal risks connected to it?
– If YES, you’ll need to identify them.
I have pointed out the possibilities for being declared illegal as a pyramid scheme, as an illegal investment, unfair commercial practice and misleading marketing.
* Is there any financial risks connected to it?
– If YES, you’ll have to identify them.
I have pointed out some risks connected to pyramid schemes and illegal investments, e.g. clawbacks and fines.
* Is there any commercial risks connected to it?
– If YES, you’ll need to identify them.
I have pointed out that down-payments and buying giftcards are NOT parts of normal behaviour for consumers, other than buying giftcards as gifts. I have also pointed out that systems like this only “distributes” money among the consumers, so the long term effect will probably be negative.
[..] I’ll cut it off here, because doing risk analysing will only become meaningful if people are a part of it themselves.
THE POINT?
The point in doing some kind of risk analysing is to try to identify the risks involved “as best as you can”, and prioritize an overview rather than the details. The PURPOSE of doing it is to balance your own viewpoint, so you’re not acting blindly with a onesided focus on the rewards.
Onesided focus on the rewards is the most typical mistake connected to different opportunities. People will usually fail miserably in the risk management parts, mostly because they’re NOT doing it.
In ZeekRewards, the onesided focus means participants are now facing clawbacks, assets freeze and other “minor inconveniencies” in the aftermath of the income opportunity, a negative effect that heavily outweights any positive effects they may have had. I didn’t expect many of those negative effects, but I was prepared for others (e.g. tax issues).
Is Lyoness being touted on the usual suspect HYIP ponzi forums like Talkgold, MMG and Golden Talk as a “passive investment”?
Yep, most certainly is.
Would any serious business owner allow him/herself to be associated with HYIP ponzi forums ??
No-bloody-way
More particularly, would any serious business owner allow him/herself to be associated with HYIP ponzi forums in the aftermath of the Zeek prosecution ??
Hi Norway,
Regarding failing in other countries, what countries are they?
As far as the merchant goes, they have zero risk. If no Lyoness members come into my restaurant than I pay nothing to Lyoness, If they come in 1% fee. I think it is pretty simple to understand.
There is no possible fines for me as a merchant.
As a premium member though I am encouraging people to join lyoness as a free member and to just shop at my restaurant. So there is zero risk here as well.
So your risk is zero. I am not telling people to pay for anything other than to shop at my place.
That part of Lyoness is only good for visionaries. It is very hard to recruit premium members because nobody wants to pay $3000.00 for gift cards, unless you really take the time to study it. It’s very unique in how Lyoness works. I tell all my members about it and they choose not to become premium members. I will not trick them or mislead them in anyway. If they see the usefulness of it or not…it is there choice.
So this talk about recruiting hundreds of premium members with oodles of money and buying units is wrong and not realistic. It is much more of a grinde to recruit premium members than you think.
rf
The countries in question were some in Eastern Europe, something I checked through the Irish forum and similar sources. The idea “people will always shop” doesn’t work very well if it’s not connected to the income opportunity itself.
People will NOT shop in that way normally. So the idea doesn’t work very well for the lower levels of the pyramid.
I will normally NOT dig too deep into details at an early stage, I will focus more on an overview than on the details. And that’s exactly what I have done here, too.
Risk analysing:
Was that all you was able to detect? You have not analysed any risks for clawbacks or fines at all?
You’re doing the mistake that you’re looking at what’s in front of your own eyes, how it looks from your own viewpoint. And you haven’t extended that viewpoint very much, either.
If Lyoness is being declared a pyramid scheme or illegal investment, how will that affect your business? Will you face the risk of having to pay something back to someone, or some risk of other clawbacks or fines?
You’re using your own business to recruit people into something that can be declared illegal, if you’re recruiting people into the opportunity. Will your business survive a $22,000 or $110,000 fine, an example from Australia in 2009?
Risk analysing and risk management is NOT the same as DENYING existing risks. “I’m only recruiting them as free members” can possibly work, but have you CHECKED it? Has the argument “I only recruited them as free members” been used with success in any court cases?
As far as I can see, you fail in exactly the same place as participants in ZeekRewards did. They were only checking what they saw in front of their own eyes and from a onesided perspective, but suddenly it popped up lots of unexpected trouble none of them had been able to detect. You have a similar way of seeing things.
Affirmations about “There’s no risk involved in it for me” will only make you blind, but it will also make you feel comfortable for a while. Denial works in that way, it makes you feel comfortable for a period of time, and that’s why people are using it, too.
In fact, most pyramid or Ponzi schemes have some kind of “Free membership” as a part of their recruitment process. I don’t think that is important at all when it comes to clawbacks or fines. So one of your main defence systems seems to be flawed and useless. It will make you feel comfortable and relaxed as long as you believe it will work, but it will probably NOT work in reality.
So good luck in trying to explain your defence system in case of trouble. “I only recruited them into the free membership, and they had to do the rest of it themselves (upgrading and investments), so I’m clearly not guilty in recruiting someone into a pyramid scheme”. If that defence system fails you’re probably in deep shit.
In ZeekRewards, most affiliates were recruited as free affiiliates — as an entry point in the recruitment process. So far it hasn’t been important at all, whether people were recruited as free members or paying members have NOT been an issue so far.
If it’s not good for “anything” except visionaries, then it’s probably better to drop it?
The questionable parts of Lyoness are:
A: The down-payments “for future purchases”.
B: The system where you can buy accounting units directly, and recruit others to do exactly the same thing.
C: Some parts about misleading marketing.
When something is presented in a market, it will normally be up to the company itself to clarify something. But so far the information from Lyoness (or its’ representatives) haven’t added much “clarity”. A few points have become clearer.
At this stage, people mostly seems to join Lyoness as an income opportunity rather than as a consumer solution. Neither down-payments nor buying giftcards are parts of normal behaviour for consumers, other than for some specific purposes.
Some parts of the marketing have been misleading, and will need to be clarified. We can probably focus on those parts for a while?
You have made several comments about the certicates and how they add “credibility” to the project:
I googled “Accounting certificate”, and it seems to be about normal accounting / book-keeping software rather than about the accounting unit system. Can you clarify this point?
You’ll need to at least clarify your own presentation of it, by either backing it up by reliable sources or by backing out of the situation yourself. Two types of answers can work:
1. “Here’s the info/links to verify my information”.
2. “I have absolutely no idea about the accounting certificate, it was only something my upline told me. I will NOT use that argument again in any way before I have verified it. I know nothing about whether it adds credibility or not to Lyoness business model.”
Misleading information will only make a company lose credibility, and so far the information about the certifications are only meaningless marketing rants. It does clearly not add any credibility to Lyoness (and neither does the charity efforts).
You’ll need to choose one of the solutions, or find a solution on your own — to make it become clearer, what it is and whether it adds credibility or not. Both of my solutions will work, but the first one is the best of them.
I am glad you put your time into it and explained everything. Just looking at the Zeek Ponzi aftermath shows that it is EASY to recruit people who put in $10000 buying empty promises if those empty promises involves “easy money”.
When Laggos, the guy who consulted for Zeek, pushed Lyoness as a plan B (and got fired for it), you can pretty much guess Lyoness seem to attract the same… crowd.
But Greece is a small country, yes? I think population 11 million. Los Angeles bigger than that…
You gain TWO ways when you sign up a member: they shop at your store, AND they serve as your downline. Yes?
http://en.wiktionary.org/wiki/double-dip#Verb
I will clarify this units thing.
You can not buy units anymore. If I want to have a unit in my account program we can use the AC1 $75.00 unit. If you want buy unit you must first make a purchase first. If you want to buy units $75-1500.00 you must purchase $300.00 in gift cards.
$1575-3000.00 you must purchase $600.00 first. It is nothing like Zeek. You must shop in the system you have no choice.
I will remind you in Austria they do not purchase gift cards in the mail. They lyoness card is all that is needed, all the merchants have the ability to swipe the card.
It will like this the USA at some point shop at a merchant and swipe your card. receive discounts.
I checked out the eastern countries
Places like poland, Czech Rep, Hungary, Turkey, Romania, Crotia and more are all doing very well, there are a few places that are slow but they just opened up there so it’s to be expected. Ireland is rather new as well only 1.5 years old.
I have gone to the actual Lyoness and checked how many merchants they have in that country. The USA are growing a and doing very well also….In a matter of a few months they have added 180 merchants
Do you consider that to be normal behaviour for a consumer? An intelligent answer is probably something like “I consider that to be completely normal. Me and my family have always done our shopping that way”. 🙂
For me, it isn’t very important whether you’ll have to buy a giftcard or not before buying accounting units. It doesn’t make it more attractive if you’ll have to buy a giftcard too.
The buying of Accounting Units and giftcards is simply NOT a normal consumer behaviour. It’s 100% related to the income opportunity, or what we can call the pyramid scheme or the investment.
Lyoness can be compared to ZeekRewards in several different ways.
* Both had ways to avoid certain rules for investments. Zeek had “We purchase bids”, and Lyoness have “We purchase accounting units and giftcards”.
* Both of them pays/paid a ROI on your purchase, but in Lyoness you’ll need to recruit people in your downline to earn that ROI (technically speaking, but the accounting units can be created in other ways, too).
* Both of them have/had behaviour that doesn’t reflect the real motive. In Zeek, people would never have bought sample bids if it hadn’t been any profit sharing connected to the purchase. In Lyoness, people will NOT buy giftcards or accounting units if you remove the income opportunity.
I can almost certainly guarantee you that Lyoness will meet lots of trouble with its’ current system, and it will probably leave a trail of devastation behind it (clawbacks, fines, lawsuits).
If Lyoness works fine WITHOUT the purchase of accounting units, they should probably disable that option ASAP to avoid trouble. It will also reduce most of the negative attention Lyoness has received.
BTW, did you make any decisions about strategy for the “Accounting certification”? You can either back it up or back out of it, as two possible solutions. YOU are the one that currently seems to have delivered misleading information, claiming a false credibility.
The third strategy that can be used is to buy some more time, “I will need a couple of days to get the correct information from my upline.” The worst strategy you can use is to ignore it, hoping people will forget it.
Regarding Certification it has iso and tuv.
http://www.tuvdotcom.com/what_is_a_certified_organisation?locale=
Here is what I gathered regarding certifcation.
You purchase Gift Cards for gas. this alone can create units you do not need to purchase units. You can purchase units for strategy purposes but it depends what level your at.
You can create all 70 units by shopping so your reward is $675.00 in cash. If you signed up 10 premium members this would create 70 units but you would get $675.00 in shopping gift cards and not cash.
So what is your ROI at this point..let me see I have put 3000 into lyoness and I get 675.00..not very good is it….where it works out well all the 10 premium members will have to spend and shop $600.00 each is where u can benefit.
I really wish you would join and shop don’t be a premium member…and you actually see how the units are create, from shopping…recruiting offers some rewards of course but the main thing is these new members will be shopping in the long run and this is where you can make money.
@Peter
Sounds to me like you can still buy them. Also buying giftcards is not shopping, as nothing has been purchased.
This review is about Lyoness US and what might or might happen later on is irrelevant to analysis of the current business model.
@Peter
Or you purchase gift cards to buy AC units and buy into the scheme.
…or you can convince other people to make an investment and buy AC units which is much faster and pretty much a Ponzi scheme.
Again we keep going over what’s possible, as if it somehow negates the Ponzi nature of the business model. If I can join, buy a giftcard (which is not a product purchase), start investing, and then earn a sizeable ROI by getting others to invest, the ROI is still being paid out of other’s invested money.
That still functions as a Ponzi scheme.
Yeah, as above convince other people to invest!
The idea is not to join and shop, it’s to join, invest and then get others to invest in ACs so you get your ROI as soon as possible. Wash, rinse and repeat.
That’s the Lyoness elephant in the room when people go on about shopping and merchants.
You seem confused. So can you buy units or not?
As of July 1/12
You must make a $300.00 purchase in gift cards before you can buy any units.
ROI is not cash it is a credit you must spend
@Peter
Yeah, so at the end of the day you can still buy ACs.
And the purchase of giftcards is a red flag in itself. Giftcards aren’t a product in and of themselves (at least not MLM wise, because it’s just credit), and what the intent behind money being used to “purchase” them? To participate in the income opportunity buy investing in ACs.
That’s yet another red flag business model wise.
Once the AC targets have been met (by getting others to invest in them), some of the ROI Lyoness pay out is credit some of it is cash.
It will eventually turn into cash because people are shopping in his lifeline, and the shopping is what creates the cash units. When I signed up my Premium member it created 7 units in AC1 and when the unit hits 35/35 you will get paid 675.00 credit.
The person in turn will spend 600.00 up front because to become a Premium member you must make a purchase of $600.00 in gift cards and from the this I will get an additional $3.00.
This is the direct .5% i get…going into a cash account that when $75.00 is collected you can purchase a cash unit at this point..and when this cash unit has 35/35 then you can collect $675.00 cash that gets deposited into your bank account.
Once you have 4 direct member with units and are at AC1 you get small commission from new premium members that you sign up which will be deposited into your bank account…I am not at this stage yet…so I can comment to much more about it.
I know though once your life line does over certain amount of purchases you get volume commissions and this will cash as well.
rf
…or because downlines are being convinced to invest in ACs, with “cash” being part of the ROI.
And cash.
That alone sounds pretty much like a pyramid scheme. Recruit 4 members, generate a ROI at the lowest level and earn commissions on each new member recruited but only if they invest (premium member).
Oz please dont put words in my mouth. I made a very clear statement, that you will not get cash but a credit.
It is your review, I am here just to clarify things I am still a novice in Lyoness, So I comment on what I know for sure.
….if the was a race and one person was just recruiting and not purchasing and you have another fellow whose life line was shopping the person who life was shopping would make more cash.
because the first person would be only getting credits.
My up-line who just got his AC4 has only 5 Premium members direct members in his life line and he has 1300 shoppers, he has been doing it for 4 years now, and he built his lifeline with shoppers.
@Peter
And as per the Lyoness US compensation plan, along with that credit you also get a cash payout as part of the ROI.
I can only go by the (not publicly available) Lyoness US compensation plan. I suggest you go read the finer points of it again. There’s a reason Lyoness don’t disclose it openly on their website to the general public.
Recruitng and investing in ACs. Purchasing can be completely left out of it.
As I understand it, Premium members are only those who invest in ACs upon signup? If a Lyoness member joins and then later chooses to invest in ACs, they don’t count as premium members right?
Thus claiming his downline is supported by “shoppers” could be misleading.
I am an original U.S Lyoness with $3000.00 worth of positions that I bought in 2010. What a mistake!!!!!!!!!!
I will gladly sell my units!
TÜV is an ISO certifier, so Lyoness can’t have both. 🙂
TÜV Rheinland’s registry shows Lyoness is registered with ISO certificate for Geprüfter Preisvorteil (no further description available).
“Geprüfter Preisvorteil” probably means “Proven Price benefit”.
This is the same registration I have checked before when I checked Quality Austria.
I was mostly asking about the other certification, the “Accounting certification” you claimed was about the accounting units, but probably is about a $200 software for book-keeping.
Have you decided any strategy there yet?
Back it UP, or back OUT of the situation?
Or delay it for 2 days, or ignore it?
Back out of the situation is the easy way out, where you still can restore some of the credibility related to it, from -1 to 0 (from “misleading info” to “none of the credibility claimed”, or from “red flag” to “neutral”).
You won’t score any points with that solution, but you will recover a point you have lost earlier. I haven’t kept track of the points, but your current score is probably around -5.
Regarding TUV certification,
During an intense two week assessment, TÜV Rheinland examined not only the price benefits, but also the different types of shopping available and Gift Card Down Payments for future purchases.
This independent and voluntary examination of Lyoness included an analysis of the quality management processes, the complete contract process with Loyalty Merchants and consumers, as well as customer satisfaction.
iso Certication
In September 2010, Lyoness underwent and was awarded the ISO-9001:2008 certification by Quality Austria GmbH. The ISO 9001 standard aims to use uniform terminology. Terms such as requirements, customer satisfaction, product, process, system, quality and quality improvement are defined and are therefore internationally comparable.
Quality Austria, Trainings, Certification and Appraisals GmbH, is the market leader in Austria. It is a member of the most important international quality organizations and is active in more than 50 countries.
As part of the ISO-9001:2008 certification by Quality Austria, Lyoness was also awarded the internationally recognized IQNet certification. Founded in 1990 IQNet is an international umbrella organization comprised of national market leading accredited system certifiers and has 40 partner countries worldwide.
The IQNet certification is awarded together with the ISO-9001 and ISO-14001 by the relevant national representatives, for example Quality Austria.
You should at least provide a source Peter.
I think its taken from this Lyoness propaganda that comes from lyoness. And based on that, how do you think they will tell it? Of course everything is good and shiny and way better than it actually is.
Anyway, here is everything I could find about the certificates.
From the source above:
And this part of lyoness is indeed working and legal, as previus stated (not that a certificate proves that something is legal). Lyoness buys gift cards for a discount, bargains with the stores/merchants for a discount, etc. and all Lyoness members can use them. Simple and widely used.
There is not much information on the certificate since its crafted especially for Lyoness: Lyoness TÜV Certificate
Long story short, TÜV verified:
1. “money back with every purchase”
2. “business partners are paid correctly based on the commission model”
3. “the weekly payment transactions”
Some comments
1. This is the lyoness slogan, and is true, since you get at least 1% cashback on every purchase.
2. They don’t mention that the model is verified, just that Lyoness follows its own model according to the agreement.
3. All payments are done once a week, probably to keep the transaction costs low.
Now to the ISO. The ISO is aimed at the quality system/management and especially at products, which Lyoness don’t have since its a service company. This tells there customers that they work hard to have a good (and improving) customer satisfaction. Follow the guide lines provided, and the certificate is yours.
ISO expectations: Quality Austria and Wikipedia
List of Lyoness ISO certificates
None of certificates proves that Lyoness is not partly an investment scheme.
Peter,
I admire your persistence in defending Lyoness. Otherwise, your arguments are vague and general. They in no way address the issues that others raised.
I am glad we’re having this discussion, but this also shows that defenders of certain… opportunities, may not have done their full “due diligence”.
The TUV certificate just says “Lyoness will do what it said it would”. it doesn’t say anything about it being legal. Same for the ISO, which is a “process certification”. (I’ve been through ISO9001 certification process)
There’s also a bit of “oh by the way” where they realized there are little “gotchas” they may not have noticed before hidden in the disclaimers and updates and whatnot.
@Peter Fehr
You didn’t mention the Accounting certificate here, so I’ll guess your strategy ended up on “Back OUT of it”?
Then you shouldn’t mention that certificate again, and you can probably drop the whole “credibility-strategy” you had. That strategy was only misleading, and you will restore a point you have lost earlier by dropping it.
The ISO-certification doesn’t tell us anything about “credibility”, it tells us they have a management system in place and has verified the cashback-solutions. But that has never been an issue, either. What type of accounting software they’re using hasn’t been an issue, either.
My overall impression is that Lyoness is faking “credibility” in order to trick people into the system. For a merchant not blinded by greed, that should be a huge red flag. Please prepare for a possible “takedown” of this opportunity?
This is a long thread and I confess to not having read all of it, so I apologize if this, or a similar question, has already been asked.
To those of you who are pro-Lyoness, can you please answer this question:
Let’s say I joined Lyoness on Monday and paid my $3,000 down payment, then succeeded in sponsoring 20 others (10 in each leg) who also paid their $3,000 down payment by the end of the day Friday. Each of them also sponsored 20 (10 in each of their legs) who paid a $3,000 down payment, also all within the same 5 day period.
I’m only interested in knowing if I understand this part of the plan correctly, so let’s assume in this scenario that no one purchased any goods yet during this 5 day period from any of the Loyalty Partners.
How much money would I make?
Thanks for your help.
@Len depends which AC level you were investing in.
As per official Lyoness marketing material (cited in the review):
Cash earnt would be $9,108 (~300% ROI) once you got enough people to invest (not sure which AC level that it is though as they don’t state).
Wouldn’t my initial $3,000 payment qualify me for AC IV? Or am I still not even close to understanding this?
It would, but you could also invest in lots of smaller $75 units too or any of the other lesser AC units.
I think the “Business Member” is a joining scheme that’s seperate to the AC units. As you can see the ROI’s don’t match up ($1800 doesn’t go evenly into $3000).
My condolences if you’re trying to get your head around the Lyoness comp plan, no doubt you’re experiencing the same headaches I did.
To simplify, let’s assume everyone joins with a $6,000 down payment rather than a $3,000, so all are AC V.
Otherwise, same scenario. You enroll 20, 10 in each leg, and each of them enrolls 20, 10 in each leg, all in the same week. Nothing else takes place at this point.
How much would I earn?
You’d earn the AC5 payout. I list the ROI % in the conclusion of the review and actual dollar amount in the “compensation plan” section.
$19,800 cash.
This would be the cash portion, but $43,800 is my actual earnings, yes? That is, $43,800 is applied as income on my 1099?
Peter, or any other Lyoness supporter, do you agree? In this scenario, exactly as described, would I be paid $19,800 cash, but have total “earnings” of $43,800? Or some other amount?
The 1099 I have no idea (does loyalty credit count as income?).
As I understand it credit is paid out in gift cards which can then be used to shop at merchant partners or given away as incentive to new investors.
If I can use the $24,000 credit to purchase goods from those Loyalty Partners, then this would surely be considered income by the IRS – even if none of it is actually used to purchase goods.
This invokes the same concern we had about Zeek. I wonder how many US reps in Lyoness understand this, and how many are going to have a “WTF!” moment come next January.
HI Len,
FYI, People ……
First of all Len the most you can buy in is $3000.00 creates
AC1 7 units 7*$75.00=525, AC2 3 Units 3*225=$675.00 AC3 3 units 3*600=$1800.00 all adds up to $3000.00.
You must also purchase $600.00 in gift cards.
If you wish to buy a unit at Level 4 each unit costs $1800.00 plus you must buy $600.00 in gift card as well.
Your question is a little hard to answer, because I must make some assumptions. There are 8 levels in Lyoness. By making a $3000.00 down payment automatically puts you at level 1 which 100 points.
In the first month lets say you sign up 20 people.
One time payment of $1500.00 for the members cash
Gift Card .5% 12000.00*.005= $600.00 cash
Here you would receive one time payment of $2100.00
For the units they will be credits
AC1 3*(675+198)= 2619.00
AC2 1*(594+1275) = 1869.00
AC3 1*(1980+4380) = 6360.00
net total 10848.00
Combined 12948.00 is the one time payment
There is some more bonus money but it is not much.
I will double check the numbers with my upline when they come next week.
You must claim all your moneies as income as well.
pf
Just to clarify the one time payment of $1500.00 at level 1 you $1.875 for every unit and 1 unit is a point.
The gift card .5% actually should only be $18.00 because it goes 2 levels deep…so please take that out of the equation.
But there is a loyalty commission which means when someone in your downline makes a direct commission of at least $1000.00 you benefit as well with 18.75% so you would make and additional 187.50 and you would 2 directs in your lifeline so that is 375.00.
and the indirect you can make 6.25% which is $62.50 as well this part is cash ..so you can make an additional 4*62.50= $250.00 in Cash added together is 625.00 in cash
pf
It seems like you have “got it”, anyway. 🙂
And thanks for adding additional points to the discussion. I hadn’t thought of 1099’s yet. I have mostly tried to analyse it from the viewpoint of consumers, how “meaningful” parts of this system will be for an ordinary consumer, and it doesn’t make much sense.
Lyoness has some different red flags than Zeek, but it certainly has plenty of them. It probably has more red flags than Zeek.
Post #181 from “Vikinged” is the entry point I have used when I have wanted to link to a neutral description rather than to my own posts. He gives a neutral description for how the system works after he has joined it.
Both Peter and Oz have confirmed what was already my understanding as well. That is, people can join Lyoness, invest a huge amount of cash, never purchase a single product from any of the retailer partners, and make large amounts of money.
In other words, the scenario I described involved nothing more than a massive exchange of cash.
That’s indicative of an illegal pyramid scheme.
I’ve been doing my own legal research on Lyoness for about 6 months now. I have discovered that all monies paid into Lyoness go towards the purchase of gift cards.
100% of the down payments are used towards gift cards and also securing units for the purchaser. This gift card money is used to prime the pump and secure the contract between Lyoness and the merchants. Call it a bribe if you want to use Chicago language.
The money paid out to referring reps is generated 100% from merchant fees paid into Lyoness in a special account. No money from down payments is permitted to be used for commission purposes.
All down payments are required for merchant card purchases and must be available for audit verification. So from all the evidence I have gathered, Lyoness is doing this business correctly and is 100% legitimate.
@Bernie
Nice try but there’s an obvious disconnect here,
in that gift cards does not equate to product sales at the merchant level.
Furthermore unless merchants are paying >100% the cost of money invested back to Lyoness dollar for dollar, your explanation further makes no sense.
Furthermore you fail to provide a source for your “legal research”. As per the official Lyoness compensation plan and marketing material, you can invest money directly with Lyoness, convince others to do the same and then earn a sizeable cash ROI.
Merchants are completely out of the equation in the above scenario.
Bernie,
Thanks for your take on this. However, what you have stated completely contradicts what Peter said.
If no commissions come out of all these $6,000 down payments, and there are no goods purchased from any of the merchants yet (in my scenario described above), where does this $12,948 come from?
What would be your answer to the question I posed above (post #298).
Perhaps you should get the facts from attorney Kevin Grimes. My examples may not have been the best choice of words, but the point is, it is clear to me the company is paying these commissions in advance from their own profits earned by merchants fees.
Much like Pre Paid Legal pays full commission in advance on the down payment for legal coverage.
Yeah, cuz that worked out so well for Zeek Rewards.
Your choice of words doesn’t matter, only the idea behind them.
I’ve said this a few times now but as long as the following is true:
Lyoness is an investment scheme paying out ROIs from money invested by new members.
And if the money was indeed coming out merchant shopping, don’t you think the requirement would be to purchase goods not giftcards from merchants?
Instead all you have to do is deposit money with Lyoness itself. You do the math.
Legal services (prepaid or otherwise) are not the same as gift cards. Furthermore, as demonstrated above the ROI scheme has nothing to do with merchants as the money is deposited with and paid from Lyoness itself.
Kevin Grimes is one of the very best MLM attorneys. Ira Sorkin and F. Lee Bailey are two of the very best criminal defense attorneys.
As Oz just pointed out, Kevin was Zeek’s attorney. Mr. Bailey represented O.J. Simpson. Mr. Sorkin represented Bernie Madoff. Are you suggesting the quality of one’s legal representation is indicative of their legality?
Bernie, if I joined Lyoness as an AC V with a $6,000 downpayment, then enrolled 20 others (10 in my top leg, 10 in my bottom leg) who each enrolled with the same $6,000 downpayment, and each of those 20 enrolled 20 others, again with $6,000 down payments, 10 in each leg, and no one purchased any goods from any of the loyalty merchants, would I earn an income, and if so, approximately how much?
I do not have an answer to that. I can only state that if Lyoness wants to compensate people from it’s billions in revenue, then it should have that right to do so. As long as monies from down payments are not recycled to pay commissions, I have no problem with it.
I find some of the comments above trying to connect the word ponzi with Lyoness sheer stupidity. I’m sure Fridel had valid concerns about bringing his company to America where everything is called a ponzi when they can’t comprehend it.
I have heard reps state we hope to keep the dummies away. Not easy to do in America with the fastest falling IQ in the world. So I share Fridel’s concern.
I’m not asking for an exact number. Just put me in the ball park.
Oz says $43,800. Peter says $12,948. Who’s closest?
As Bernie Madoff have said that his investment scheme (Ponzi) was “too complicated for outsiders to understand”, your citing and what that guy said is hardly inspiration for confidence.
http://en.wikipedia.org/wiki/Madoff_investment_scandal#Sales_methods
Corporate attorney is NOT in the business of defending their client in the public. Corporate attorney is for corporate questions on law and if needed, appear in court relating to lawsuits and such. You’re just name-dropping.
@Len
Correction, Lyoness says $43,800. All my information was sourced from Lyoness material (which is not made public on their website for obvious reasons).
Given the above repeated scenario where merchants are not involved (all money is paid to and received directly from Lyoness, subject to additional investments made directly with the company), that is the case.
The old ‘you just don’t get it’ excuse, taken straight from the Ponzi Excuses 101 handbook.
Yawn.
Having had to run off to Grimes for answers, I think it’s clear the only person who doesn’t get the Lyoness compensation plan mechanics is you.
Grimes fed you the same “Zeek Rewards is not an investment scheme” rubbish and that seems to have suspended any further analysis of the actual mechanics of the compensation plan on your behalf.
Of course if Lyoness runs into any legal troubles in the future you can then tell us how you were misled/trusted the leaders yada yada yada. Just ask former Zeek Rewards members how that’s working out for them.
Grimes was hired late by Zeek to provide training. Not to represent the company. He basically did it for the easy money.
Getting back to Lyoness, you guys can say all you want, but here are the facts. (Ozedit: cut the market spam. The facts are that you can invest money directly with Lyoness, convince others to do the same and earn a ROI. End of story)
Hello Oz and others,
The minor issue I still continue to have with this debate… is that downpayments on your future purchases are not required in order to earn with this model. You can earn soley on shopping. In addition, even if you DO make Downpayments, you STILL are NOT required to enroll others who make down payments to earn.
In fact, millions have joined lyoness just to get a discount.
I do however agree with Oz in regards to the “option” of Downpayments on Future Purchase as a risky compensation feature. It’s not required. But nitpicking — yes it is an option.
I personally can not see any other benefit to down payments other than the ability to earn quicker.
BUT, again even though you make the Downpayment, you are NOT required for others to make Downpayments in order to earn from this model.
If I am not understanding something in regards to this downpayment feature OTHER THAN THE ABILITY TO EARN FASTER… will someone PLEASE expose my ignorance in a way that I can fully digest the sense of this and how it relates/makes sense to a SHOPPING program)
With that being said… I have difficulty believing that the Founder just designed this Comp Plan with an evil grin, and his Charities, Greenfinity Project, Child and Family Foundation, along with Nelson Mandella are some ‘wicked’ plot concocted with no such purpose other than just to rake people of their money and do irreversible damage to their reputations.
Finally, Lyoness doesnt posses a 9+ year track record, and god knows how many more well known names affiliated with them for good looks. Yes, we can surgically nitpick the aspect of ‘affiliate’ of Starbucks, Walmart, Khols, Kmart, Sears, CVS, Homedepot, Petco, and a slew of other small businesses, in which I could go on and on…
But, I simply have trouble believing that brands of this caliber would even RISK such affiliation, or any form of contentedness with such a Company.
To me, these things are very RELEVANT. And yes chang your bored with the amount of merchants in your area at this current time. We get it. Lyoness has attracted millions of members. I think they’ll do just fine without you sir.
@Ronda
Not required but possible (and arguably primarily how Lyoness is marketed and participated in), thus it’s a Ponzi scheme.
You can’t add $2 lollipops to a Ponzi scheme and then claim it’s legit because people can buy $2 lollipops. Doesn’t work like that.
You’re missing the point, Ronda.
The question is not whether or not you are REQUIRED to enrol others, the question is whether or not you CAN make money solely on the basis of enrolling others.
IOW, to remain legal within the U.S. a company has to have in place mechanisms to ensure it cannot be used as a pyramid or endless chain recruiting program.
It’s simply not good enough for a company to have “nudge, nudge, wink, wink” token product sales while simultaneously ignoring the fact members are earning simply based on recruiting.
It’s not only the illegality aspect of such a business model which should raise red flags for those looking for a legit long term income, it’s also the fact that “pyramid” or “endless chain” opportunities are inherently doomed to collapse under their own weight, no matter the quality of the “product”
Has anyone ever seen a more complicated and over-engineered business structure? Austrian accountants at work! I feel he largest red flag is what this structure will “cause to happen” in the nitro-burning US MLM world.
The company cannot publicly explain how it actually works. The top promoters struggle to explain the math.
What is happening on the North American scene is that people are being encouraged to buy their way into a structure that will pay off big for them.
Sure you can shop your way to benefits. But unless you are “Premium” you cannot sponsor in other countries. And unless you join as Premium….your potential returns are limited. They are running 5 separate matrix panels.
North America? You cannot pay by credit card, debit card or direct bank transfer. Just checks and money orders.
How many red flags so far?
@roundman
It’s been 9+ LONG years. Visible. 47,000+ people are purportedly joining Lyoness everyday. Kmart was just added. Sears was just added to the network.
Days ago…
After all these years….
You mean to tell me… that not one of these massive, branded, highly recognizable (even Billion Dollar) Corporations have checked this out with Authorities, before allowing their Logo’s and affiliations to be put on a Website such as Lyoness?
You think not of them (at the very least) never clicked the google button, and seen the Scam “Claims” against Lyoness and made an educated business decision before allowing this “affiliation”?
Plus 2 1/2 million people and growing? Are they all just that stupid?? Is that what your saying??
It’s not like Zeek with the Lure of daily revenue share put on autopilot. It’s no where near that easy. In fact, you need a fairly substantial network before you make anything worth even mentioning with Lyoness.
And explain to me what an “endless chain” opportunity is. Pyramid to me is Vague. Show me a Corporation (or even) our gov’t that is not in the form of a Pyramid.
Why not check INTENT, as in how much payout did Lyoness pay out in a year, and how much of that is from “direct” AU buys, and how much is from INDIRECTLY generated AU?
If MAJORITY of income generated is through shopping, then they are fine. Otherwise, it’s a Ponzi scheme where members are buying AU and encourage others to buy AU to generate their income. The fact that they mix the two together is extremely worrisome. It’s almost as if they intend to confuse the issue.
It’s far more likely that Lyoness will NEVER release this information though… unless they’re forced to.
(Was studying the Burnlounge case. They did *seem* to offer a legit service, but MAJORITY of their revenue is derived from their members, NOT sale of music as they claimed, thus they are ruled to be a pyramid scheme.)
They are joining as MERCHANTS, which is irrelevant to the affiliate program.
And you’re citing one of the most frequently used defense by scammers (not saying you are one, but you’re doing the same thing) known as “association fallacy”, as in “_____ is famous, so she/he/it couldn’t possibly be endorsing a scam.”
Bandwagon fallacy. Being popular is not the same as being legal or right. Smoking is popular, and DSRE pyramid scheme in Colombia had SIX MILLION members. So what?
And you can accelerate that by BUYING AUs, and convincing others to do the same, can you not?
Fallacy of equivocation: pyramid scheme is not the same as ‘pyramid shaped’.
I suggest a visit to Wikipedia.
Ok, enough of this speculation of what “might” be and is “arguably” the way it’s “marketed”
Chang says it’s a “borderline” ponzi scheme.
You Oz state: “Either it IS a ponzi or it isn’t a ponzi”. You have went on record to share with the entire world that Lyoness IS an illegal Ponzi.
Very Well.
Enough of this uncertainty….
What authority does one contact to confirm the Lyoness compensation structure is indeed an illegal Ponzi Scheme?
In the US, Ponzi schemes are usually investigated by the SEC, that’s sec.gov
So just that I have this straight Mr. Chang you are also stating that Lyoness is an illegal ponzi scheme as well? Is it borderline? Or is 100%? Which is it?
ok, nevermind. I just seen your previous post. Thank-you.
@Ronda — Oz and I have different criteria.
I give the company a bit of room for doubt. To me, a company can operate as a Ponzi, but only in a tiny part (a few percentage points of affiliate’s income) That is something that can be fixed by modifying the business model.
However, this does not appear to be the case in Lyoness. Recruiting free members does not generate much, if any income. Only by buying AUs and convince others to buy AUs can you hope to achieve any significant income, thus, making it a potential investing scheme.
There’s also the danger that Lyoness will pass the Howey test:
a) investment of money due to
b) an expectation of profits arising from
c) a common enterprise
d) which depends solely on the efforts of a promoter or third party
And so far, it seem to pass, which would lead to it being ruled unregistered securities much like Zeek.
You said: And you’re citing one of the most frequently used defense by scammers (not saying you are one, but you’re doing the same thing) known as “association fallacy”, as in “_____ is famous, so she/he/it couldn’t possibly be endorsing a scam.”
Wow your manipulation of context is good as it gets.
This is not a “normal” “he or she” comparison. Just about Every major household merchant and new merchant is on the Lyoness Website. SO that absolutely MAKE THIS ASPECT RELEVANT.
You don’t think that even the affiliate side matters to them? When you google and see Lyoness scam? That bares no relevence to thier affiliation? OMG give me a break. Why? because YOU say it’s not.
Besides, Anything is possible. I GET THAT. I meant that is not likely in regards to this point. Your name could be “possibly” be chingy. And Oz could actually be the “real” wizard of oz.
There’s not much significant income? Are you serious? Maybe not to you…
But you could recommend 5-10 people who just shop (no units), and they realistically could do the same, and so on. What if a trucker, or general contractor landed in that mix?
Anyhow, With eventually 1,000 shoppers in your network… down the road shopping as they normally do you could be making 30,000 – 50,000+ per year extra.
Compare that to the earnings in MLM, where people drop out like flies, and you have to recruit over and over and over again. Compare that to working a job where you have to work over and over and over again until your either dead or deadbroke.
No monthly fee’s. No autoship. Little to no attrition like an mlm.
Ronda.
I understand the point you are trying to make, but please understand that the “they’ve been in business for X years…” or “look at all the other reputable people who are associated with them…”, or “but it’s optional”, is a strawman’s argument.
Equinox was in business for almost 8 years before the FTC and 15 state AGs closed them down for operating an illegal pyramid scheme. Jesse James robbed 36 banks before he was caught and prosecuted. It’s illogical to try and impart legality to robbing banks by pointing out that Jesse James had done it 35 times without consequence.
Furthermore, Zeek Rewards had numerous reputable people endorsing and promoting them. The president of an MLM trade association who’s purpose was to educate and protect distributors openly and strongly promoted Zeek.
More to the point, several online shopping schemes, such as Km.net and BigSmart, had essentially the same affiliate relationships with several of the same merchants associated with Lyoness (i.e. Dell, Martha Stewart Living, Amazon, Offcie Max, etc.). Km.net and BigSmart were both closed down by legal authorities for operating an illegal pyramid scheme.
Also, if a pharmacy were to offer crack cocaine, but it was only 5% of their product inventory, they wouldn’t go far with the argument, “But the purchase of crack cocaine is optional, and most of the drugs we sell are perfectly legal”.
If there is ANY way to make a significant amount of money by doing nothing more than investing large amounts of cash into Lyoness, and getting others to do nothing more than invest large amounts of cash, without the purchase of a single item via a Loyalty Merchant, then this would be a huge legal red flag.
And so far, no one has given me the right answer to my question above (#298), regarding how much money you would make if I joined Lyoness with a $6,000 downpayment, and enrolled 20 others who did the same.
The answer should be… You would make absolutely NOTHING.
I’m not picking on just you here Ronda, because I’ve seen these claims by numerous Lyoness enthusiasts. They are also incorrect.
First of all, by any logical or legal definition, if your program involves multiple levels of people marketing, and it pays commissions upline more than one (multiple) level, it is multilevel marketing. Lyoness is most certainly a multilevel marketing program.
And no, Lyoness doesn’t have a monthly autoship. Instead of having their reps buy $100 of product every month for 30 months, they offer the (strongly encouraged) option of paying the whole $3,000 up front.
If there were actual products being purchased that could be called a “front load”. Sans products it could be deemed something even worse – an “investment”.
Finally, if a product based MLM company were to claim that the $25 enrollment fee was for a “lifetime” distributorship, but then claimed they had “virtually no attrition”, regardless of the distributors activity level, you’d likely call that BS, and you’d be right. But that’s precisely how Lyoness is coming up with their “no drop outs” claim.
@ Len
Just because there is a down payment “option” does not make this company a “scam”. And just because there were others with creditable ties — does not necessarily make Lyoness Guilty either. If it’s not technically legal, I’m sure they will change it.
In the end, the decade track record is irrelevant, their ISO Audit’s are irrelevant, Thier Billion Dollar affiliations, and……. compliance in the US is irrelevant, there’s no money to be made unless you make down payments,… And their Charitable Projects — all lend them no creditably. Right. Ok.
The only thing that is relevant is your opinion of what “might” happen and your savvy manipulation of context through out this forum. Got it.
Oh … If you tolerate insults to no end please make any simply make any comment that is indifferent to the witch hunters on the this Jerry Springer like forum to keep it near the top of google.
Ronda, I am not Oz, Chang or Norway. I am still in an investigative mode and sincerely trying to understand what I might be missing here. I have posed what should be a very simple question: If I join Lyoness with a $6,000 down payment, get 20 others to do the same (10 in each leg), and no one buys any products from any of the merchants, how much money would I make?Approximately. I’m just looking for a ball park number.
If the answer is “zero”, then I obviously still have a lot of homework to do.
If the answer is between $12,948 and $43,800, as has been claimed here, then how does Lyoness rationalize that this massive exchange of pure cash, with no actual product being purchased from any of the merchants, does not make them extremely legally vulnerable?
So far three Lyoness supporters within this forum have had an opportunity to answer this question. So far they are 0 for 3.
Hi
Buying you own units do not make any sense Chan. That is a money losing proposition.
Where do you get 6000.00 from Lyoness you only need 3000.00 to become a Level 1 premium member. why would you want to put in more…..?!?!?
I Stated in earlier posts just buying units will make you broke because you would be putting in real money and receiving credits back. It takes a lot of money spent in your lifeline to generate a cash unit.
When you recruit people in to become premium members they do not generate cash units only credit.
This in it self makes it not a ponzi scheme.
pf
And that’s all I said: it’s not legal the way it is presented. Yet you feel very insulted when I say it. Why?
I offer different viewpoints from Oz or M_norway on the same problem. You simply refuse to acknowledge any of them and use logical fallacies to counter our explanation. And now you accuse us of “tag team”, indicating some sort of conspiracy.
Are you running out of logical arguments?
Perhaps, if they acknolwedge this truth, they’d have to admit that it *is* a Ponzi scheme, unless they come up with some sort of rationalization, and right now they’re desperately researching this rationalization?
I have one, but I’m not telling any one just yet. It’s very ambiguous, as ambiguous as Burnlounge.
In case nobody knows who Len Clements is… Mr. Clements runs MarketWave, a MLM Consultant and expert in MLM comp plans. His research paper / review of Zeek is worth a read, though it did take a little too long. 😀 But then, we all wish we caught it faster, right? 😀
Hi norway,
I stand corrected on the accounting certificate it is TUV certificate, that i mean. they did the audit on the accounting program in lyoness. BTW they have hired Grimes & Reese to make sure Lyoness is compliant on an USA laws.
Lyoness must adapt to every new country they enter. The tax laws, ponzi scheme laws, banking systems. So I read when they first came into USA, they did not comply with some of the rules there 2010, but since that time have made changes to there compensation package to accommodate USA laws.
So any issues with how they run the organization will be addressed by the law firm and Lyoness will comply as well…
pf
http://www.areadevelopment.com/newsItems/5-22-2012/lyoness-management-miami-florida-operations-26282622.shtml
Just opened up in Miami..
The also have an office in the Empire State Building.
When they go into a new country they buy the most expensive office space they can get to give them creditability that they are not jokers. They have a child and family foundation and green infinity program to help the earth. They build schools and upgrade orphanages in third world countries..
YOU GUYS DON’T GET IT, LYONESS IS MORE THAN JUST AN MLM. THEY ARE ABOUT EDUCATING THE POOR, TAKING CARE OF THE YOUNG, AND GIVING PEOPLE WHO HAVE A LITTLE BIT OF MONEY, AND WITH A LOT OF MOTAVTION CHANCE AT WEALTH…
pf
Absolutely Peter I (and millions) of others apparently see this. I have had associates of mine physically walk right into the Empire State Building and report the class of this company.
But on this forum such factual details are “irrelevant” and “illogical” discussion. Good Point about the downpayment though. I do at least credit Oz and others about that and hopefully we will have more clarity in regards to that soon.
I’ve visited Equinox’s home office, and have seen images of Bernie Madoff’s and Enron’s. All were spectacular.
Credibility should be earned, not purchased.
@Ronda
The authority of common sense.
You put in money, convince people to put in a fixed amount of money after you and then earn a ROI from their invested money.
Nothing is bought and sold.
No because as mentioned countless times, you can invest money and earn a ROI from other people investments bypassing the merchant side of things all together. The merchants simply record sales as normal, they aren’t the ones running a Ponzi scheme or participating in one.
It’d be like claiming Amazon.com was a Ponzi scheme because they dropshipped for Zeekler. And it’d also be as stupid as claiming Zeek Rewards wasn’t a Ponzi scheme because they used Amazon to drop ship (which is what you’re trying to do with the namedropping of merchants).
They could also just join, invest $x, convince enough people to also invest $x and earn a ROI off their investments. That’s the problem that makes what else could happen completely irrelevant.
Strange… plenty of these income opportunities say that too. Doesn’t mean it’s true…
That’s why I’m a skeptic, and you’re a true believer. 🙂 We have different standards. 🙂 I’m “trust, but verify”. You’re “I believe first, check later”.
You’re right, it’s relatively irrelevant. If you feel it’s relevant, then please fill in some factual info for WHY you consider it to be relevant.
* the ISO-certification. WHY does that add credibility to Lyoness? Clarify it with some details about what the ISO-certifications are about?
* the charities. WHY does that add credibility to Lyoness?
Note:
You brought those topics up, as some sort of marketing efforts. So I’ll guess you are prepared to fill in some more info and answer questions about it? Otherwise, it adds very little meaning to the discussion if you “only wanted to mention it”.
Peter Fehr gave you the correct answer in post #303. You can NOT buy in at the $6,000 level directly, you’ll have to go through the lower levels first.
Oz also had a correct answer in post #317, assuming you could buy in on that level directly and skip the lower levels.
@Peter
I know you’re new to Lyoness but cmon…
If enough people invest a fixed amount of investments, this is not true as part of the ROI is cash.
There are two components of a Ponzi scheme, a practical mechanical one and a legal one.
Only a court can decide the legal sense, but in a mechanical and practical sense as long as they allow members in any country to invest money and earn a ROI after enough new investments have been made by members then Lyoness fits the definition of a Ponzi scheme.
You cannot hire lawyers and magic away that fact. Nor does forcing members to buy a gift card change it. It’s a punt to try and ward off the authorities but doesn’t change the core mechanics of the AC component of the compensation plan.
Neither did Zeek’s non RPP shenadigans or their hiring of lawyers and when push came to shove, a court and the SEC only confirmed what we’d been discussing here for over half a year.
Your office space doesn’t give you credibility in MLM, your business model alone does.
And David Murcia of the Grupo DMG Ponzi / pyramid in Colombia have villas around the world, a garage of a dozen exotic cars, yachts… So what? He’s spending time in a US cell and will be extradited back to Colombia when he’s done here to serve sentences over there.
Why does the address of a business affect how LEGAL they are? Are business in Anytown USA somehow LESS legitimate than a business in Empire State Building?
@Ronda
What do you mean “good point”, the whole AC unit investment scheme is the single reason Lyoness is a Ponzi scheme and overshadows anything else the business does.
You want us to pull a Troy Dooly and focus on the merchant side when the AC investment scheme is the glaring Ponzi red flag? Not gunna happen, and ask Dooly how that worked out for him.
I was referring to the right answer from a legal standpoint. When I ask how much money I will make by me and everyone I enroll just sending cash to the company, with no products being purchased, the right answer is “you will make nothing”.
Perhaps right but definitely not factual in the case of Lyoness.
Can you please post the link!!!!!
Lyoness do not make their compensation plan publicly available (for obvious reasons). The information in question was forwarded on to me by a concerned person who was being prospected with Lyoness US marketing material.
Questioning the validity of the source material is yet another strawman argument, whilst you continue to fail to address the concerns and questions raised.
As with copy and pasting marketing spam from who knows where, this will not get you very far here.
Rhetorical question: Is Peter and Ronda a bit undereducated about their own comp plan they are defending?
It can be found in post #42.
* GTC = “General Terms and Condition”, the agreement between Lyoness and its members.
* “Appendix”, the compensation plan.
The “Loyalty Credit” in the compensation plan is similar to a virtual currency, and can only be used to make purchases inside the network, e.g. buying giftcards.
BTW, here’s the down-payment explained (in the GTC):
Down-payments are usually NOT regulated by laws other than the unwritten ones, e.g. “Common Business Practice”.
In theory that sounds great for the business, but it actually means it’s not protected by laws either. So they can’t claim “This is a completely normal practice, and is regulated by XX and YY laws”.
From a consumer viewpoint, it seems rather irrational to buy giftcards other than as gifts. It becomes even more irrational to make a down-payment on giftcards, e.g. make a $225 down-payment on a $7,500 giftcard — and being bound to pay in the remaining amount gradually.
I just spoke by phone to an avid Lyoness supporter. He claims Lyoness is taking the position that these debit/gift cards are the “product” that you are buying with your downpayment.
Can a Lyoness supporter confirm this?
Request to Lyoness critics: Please let the supporters respond before tearing this argument (or them) apart. Thanks.
If you are injecting money (investing) and expect a return, you are out of luck. Period. Get the $$ out of your eyes and take a breath. One breath, two, three. Ok. You should be seeing clearly now. No product, no business. No product, no business. No product, no business.
By now you should have a clear, concise view of the HYIP landscape. Scary place to be. Unless you like to throw $$ in to slot machines. Same chance of making up your $$.
Giftcards are good enough as “tradeable products/services” for me (with the focus on “tradeable”). My main focus has been on the down-payments, not on the giftcards.
Technically speaking, a giftcard is a contract between the giftcard provider and the buyer, a contract about an equal exchange of goods and money. It holds a value similar to the amount you pay for it, in the form of liability for the provider to deliver an equal amount of goods.
So NO, a giftcard is NOT a product in itself. It can be classified as a “tradeable service”, but it can’t be classified as a product.
Down-payments are also contracts. In Lyoness, the main motive for signing these contracts is the “system” itself, not the service connected to it. The system promises a ROI if you recruit other consumers into the same system and make them sign similar contracts as you did.
Lyoness compensation plan:
1 and 2 are connected to cashback
3, 4, 5, 6, 9, 10 are all connected to recruitment (either in reality, as a direct requirement, or indirectly).
7 and 8 are only bonuses, connected to the accounting unit system.
All the money in Lyoness is from discounts. Downpayments is the discount. If you chek compensation plan you will see that.
Downpayments aren’t a discount, they’re an investment in virtual account units.
You can’t get a discount if you’re not actually purchasing anything.
Downpayments is a discount because units is a discount. I tell you only discount generate all Lyoness bussines. Units is generate from discount. You can generate a units from downpayments and you can recuperate this if you want with future shoping. Downpayments is not an investment.
Can != is. Again, what you can and can’t do is overshadowed by the fact that you can invest, convince others to do the same and earn a ROI. There’s no shopping and there’s no discounts with this option.
@nelson
Down-payment is an AGREEMENT between you an Lyoness about purchasing a giftcard, which in itself is an AGREEMENT rather than a product. There’s no DISCOUNT connected to that purchase.
The Accounting Unit system and the Career Unit system are only “internal systems” connected to the purchase agreements, and they pay out benefits (financial gains) connected to the recruitment of others, making the same type of down-payments as you did.
Lyoness is selling a “program” where you can earn financial gains in several different ways, through the recruitment of others. You CAN earn it through your own or other people’s shopping too, but that part isn’t very significant.
Giftcards have very little value connected to the card itself. The value is connected to the money you “load” it with, not to the card. So a giftcard is actually NOT a product, other than a small amount for the card itself.
THE GIFTCARD CHAIN
A: Manufacturer of cards:
For the manufacturer of a giftcard, the card itself is a product. Empty cards doesn’t hold much value as products, but they are real and tradeable products in a relatively limited market.
B: Provider of cards:
For the provider, the empty giftcard is a product when bought from the manufacturer. The preloaded giftcard is an IOU, an agreement that the provider OWES the buyer an amount of goods, equal to the preloaded or printed value. It’s not a product for the provider, either.
C: Retail seller:
For the retail card seller, selling giftcards is a SERVICE. They make the giftcard available for the consumers, and can make a “sales profit” on it, on the difference between PRICE IN and PRICE OUT for a preloaded or printed card. The “sales profit” is connected to the service of making it available rather than to any “product”.
D: The consumer
The consumer buys an IOU from the provider, an agreement that the provider will deliver an amount of goods when requested.
DOWN-PAYMENTS
Down-payments and giftcards don’t match well together. A down-payment for a giftcard is more similar to banking services than to trade. The down-payment creates an IOU for the retail reseller, a liability towards the buyer.
At this point there is no real exchange of values, like there should be in normal trade. There is an “exchange of values” MONEY –> LIABILITY rather than MONEY –> GOODS, but an unsecured liability isn’t any real value.
Liabilities connected to giftcards should normally be limited to the provider –> consumer level, to a level where there is reasonable efforts to secure the liabilities. The down-payment fails the normal trade principle about “exchange of values”.
The down-payments are most likely illegal. Down-payments are not regulated by laws, but normal trade practices are (in Commercial Laws). A practice can be illegal if it’s NOT part of something too, e.g. if it fails the tests for normal trade practices.
Most of Lyoness’ Loyalty Merchants seems to have ignored standard rules when they signed up, and have only focused on their own “bottom lines” or something. That’s a recipe for failure rather than a recipe for success.
So long as this “down payment” scheme exists as is, it makes the WHOLE Lyoness operation a Ponzi/Pyramid scheme.
If Lyoness wants to legitimize itself, it needs to end the whole AC/AU scheme and stick to the cash back part.
If there is a recruiting kickback, it should be based on the shopping habit of the recruit (how many $ spent buying gift cards that are ACTUALLY SPENT on GOODS) an
For the records, i own two companies in Greece which are Loyality Partners and as i’ve written before here, we’ve been earning new clients from installing the Loyality Card in our offices.
We are already satisfied with the result and anybody can ask me and i will show them the exact number of clients and exact number of cash it has been generated through the Card. Of course we expect more in the future…
So for the ones who don’t know yet we have two major changes here:
1. People can get in the website lyonesss.net and register by themselves. No need for “someone” to register you. It’s free for all to get the card and become members of this club.
2. Loyality Partners in about one month from now, will join without the need to buy any downpayments! So no need to relate companies/SMEs with the Network Marketing.
The price to join will be high but there will be some good stuff. If you ask me, i prefer to join as a business partner as i did, and then register my two companies for 320euro each. It is said that the cost to join will be about 1500euro. This is not official though about the actual costs.
So Consumers and Loyality partners will be out of the Network Marketing thing (which i like very much) and only 1) Premium Members or Members that have bought downpayments will play that game, because they believe in the idea and help it become truth around the world, that’s why they will be rewarded.
(Ozedit: removed spam)
I have received an answer to my hypothetical question (above) in another forum that contradicts those that have been provided here.
“Len, the answer is $0. You would earn $0. Everyone who joins Lyoness as a member must accompany their downpayment with a min. purchase of $300 from the Loyality merchants.”
Is this true? Are new members of Lyoness, who join with a $3,000 downpayment, required to purchase at least $300 in actual goods from any of the Loyalty Merchants before they are eligible for commissions?
AFAIK, this only went in very recently. This $300 purchase requirement was never mentioned until, maybe a week ago or two ago here.
Ref 1: “Buy $300 gift card”, not stated as a requirement
https://behindmlm.com/companies/lyoness-us-review-cashback-and-investment-returns/#comment-80430
Ref 2: “You have to buy $300”, stated as requirement
https://behindmlm.com/companies/lyoness-us-review-cashback-and-investment-returns/#comment-93654
https://behindmlm.com/companies/lyoness-us-review-cashback-and-investment-returns/#comment-93863
Hi Len,
Actually Len, your partly correct. Since August 1/12 They have amended the compensation plan. You must make merchant purchases of $300.00 if you want to make $1500.00 in down payment, and $600.00 if you want to make $3000.00 in down payments for units in both instances.
Again with the merchant partners? How many times do we have to say that the merchant cashback side of things is irrelevant when you have the whole AC investment scheme running?
So ‘blahblahblahblah Lyoness will still cater to those participating in its AC unit investment scheme’.
With the AC unit investment scheme still intact, what was your point again?
@Len
Not per the Lyoness marketing material. Ask to see some official marketing proof to back up their claim (and if it exists please share it here so I can update the article).
I’m aware of the gift cards but they are irrelevant. Putting money on a gift card does not equal a merchant sale (you can use the gift card as a placemat, throw it in the bin, give it away to convince someone new to invest etc.).
The core mechanics of you investing a large amount of money, getting others to to do the same and earning a ROI on your efforts remains.
Thanks, Mat.
Is this a requirement to purchase $300 or $600 in actual goods from any of the loyalty merchants, or $300-$600 in gift cards?
Hi Len,
FYI, The Compensation Plan does not apply to Premium Members. The compensation plan is only used for IBR (independent Business Representative and Members of Lyoness.
What explicitly is a “booked purchase”?
So the fact remains I can join Lyoness as a Premium member, invest $3000, convince others to do the same and earn a ROI without purchasing any products right?
Mat,
This is still not clear. Would the purchase of a gift card count as a “booked purchase”? Or are “booked purchases” only those purchases of actual goods from any loyalty merchant?
The General Terms & Conditions I have does not contain the same language you have quoted above. Rather, it specifically states that $300 or $600 in “gift cards” must be purchased.
I assumed this was the most current version of the T&Cs considering it’s the version that is presented on the Lyoness website here:
http://www.lyoness.net/us/agb.aspx
Booked purchase is a confirmed transaction.
You must first spend $600.00 either on-line, at a merchant or order gift cards.
Booked Purchase definition.
1. You’re using Canada’s T&C which don’t appear to be the same as the US.
2. All of that is irrelevant when it doesn’t apply to premium members (those that plonk down $3000 or more with the expectation of earning a >100% ROI after a fixed amount of people do the same after them.
1. The American and the Canadian are exactly the same.
2. I looked at past posts, how do you get your ROI. PLEASE POST? If I sign up 1 premium member I get $75.00 cash or ($1.875 * 40 points)at the end of the month for accounting level 1. 2 members $150.00 etc.
As per the comp plan, each AC pays out a cash ROI if a fixed number of new investments are made after it. Go read your compensation plan.
Premium members don’t use the compensation plan.
So the fact remains, everything else is irrelevant whilst Premium members participate in a Ponzi scheme.
Mat,
Here is the corresponding section of the T&Cs that are currently posted on the Lyoness website, which seems to differ significantly from the section 5.4.3 that you quoted above.
This appears to clearly and specifically describe how *nothing* is received for the downpayment until it is “topped off” (paid in full), and is entirely based on the purchase of gift cards rather than actual goods via the loyalty merchants.
Since I pulled this off the current Lyoness website, it would seem that your version is either outdated, or perhaps there is a difference between the US and Canadian T&Cs.
Can you link to where your version is published online?
Thanks, Mat.
My link comes from my personnel web office. Version April/2012
The down payments will create units.
Once topped off, the gift cards order, than you can make a purchase at a Lyoness merchant.
I meant nothing as far as tangible (commissionable) products.
Let’s put aside for the moment the question as to why Lyoness is providing to the public a very different set of Terms & Conditions as to what they are privately providing their reps.
Here’s the part that’s still confusing…
If you have to make a $300 “Booked Purchase” before you can make a $3,000 down payment toward a Gift Cards, how can Gift Cards be considered a “Booked Purchase” (which they are)?
This seems to be saying you have to buy $300 in Gift Cards before you can make a $300 down payment towards the purchase of Gift Cards.
The advantage of making $3000.00 down payment with purchase $600.00 giftcards is that it makes you a level 1 career mode, instead of being a IBR or Lyoness Member.
When you order gift cards for Exxon they will consider it a booked transaction and you would get your benefits right away and they mail you out your $600.00 in gift cards.
Your correct with your statement.
I hate to interrupt, but a part of a giftcard can probably be commissionable.
If the retail seller gets 20% discount on a large quantity order, similar to a wholesale price, those 20% can be used as discounts to the customers or commissions to a sales force.
Making giftcards available to consumers is a tangible service, and shouldn’t be different than tangible products — other than in which part of it is tangible.
* An empty giftcard is a tangible product, e.g. when sold from the manufacturer to the card provider.
* A preloaded (or printed) giftcard is technically a contract. The contract itself isn’t commissionable. The contract is about delivering an amount of goods, equal to the printed or preloaded value of the giftcard.
* Making the contract available is a tangible service. Wholesale discounts/commissions derived from this service can be used to pay commissions to a sales force.
* down-payments on something like this are probably not commissionable, or they are commissionable for the difference between wholesale and retail. But more important, the down-payments can be illegal.
A down-payment is technically a contract in itself.
Lyoness’ concept is too complicated for me. I’m not specialized in any areas, and I will usually use qualified advisors when my own insight isn’t enough.
Something in lieu of product cannot be commissioned in an MLM program until it is actually redeemed for product. There is much legal precedence on this (e.g. American Gold Eagle, Gold Unlimited, Passport to Adventure).
A Gift Card is essentially a debit card. It is simply an alternative form of currency. Kind of like writing a check for $10 to buy a roll of quarters.
You can now use the quarters to buy actual, legally commissionable, products. But the roll of quarters is no more a “product” than a $10 debit/gift card would be. What you actually purchase with the debit/gift card is the commissionable product.
Been saying it all along, all that’s happening here is Lyoness are accepting investments but are trying to pass them off as “purchases” when infact nothing is being purchased.
When enough new investments have been made after a particular investment, the investor gets a >100% ROI, part cash part store credit.
The first part of the equation has nothing to do with merchants as Lyoness themselves handle all of the money.
The difference between giftcard and debit card is that the giftcard can only be exchanged in goods or services. Debitcards can be exchanged in cash. So they are not EQUAL to each other.
For debitcards, all the fees are commissionable. Startup fee, yearly fee, transaction fees.
For retailable cards to load a prepaid mobile phone, the price of the card OR the difference between PRICE IN and PRICE OUT will be commissionable.
This distinction is completely irrelevant to the point. So take all references to “debit card” out of my previous post. Gift cards hold cash value commensurate to the amount of cash you traded for it. That amount can then be deducted from the gift card balance to purchase goods in lieu of cash.
Gift cards are not a product. They are an alternative form of currency. In fact, these cards are simply a vessel that holds YOUR currency.
Which brings us back to the question: Can I enroll in Lyoness and pay them cash, then enroll others into Lyoness who also pay cash to Lyoness, and earn future income from these cash investments without any of us ever purchasing a single item from any of the loyalty merchants? That is, from nothing else than large amounts of cash going in and out?
The answer still appears to be YES, and this is a gigantic legal red flag.
downpayments= gift card, debit card
When i put my money on gift card i don’t buy anything but somebody win something (bank, company,etc). Like the same whem i make a downpayments for future shop somebody win something (my sponsor, lyoness).
When i put my money in debit card somebody win something .
In this three situation i don’t buy anything. Is a gift card and debit card a Ponzi ?
Nope, you exchanged your money for gift card for whatever the value is, usually ‘same’ value. They didn’t “gain” since it’s an EXCHANGE.
Not the same. You can’t spend a down payment, but you can spend a gift card.
I guess what I am saying is you’re comparing apples and oranges. Down payment to a gift card is not a gift card in itself.
Donwpayments is the same value and i can spend – 2 posibility 1. Recash (go to GTC)
2. Put the rest of amounts and buy something and unit from downpayments go to units from shoping.
So the fact remains it’s possible to purchase gift cards with no money going to the merchant as they’re bought from Lyoness, invest $3000, convince others to do the same and earn a ROI once a fixed number of new investments have been made after yours.
I wonder HOW MANY TIMES Oz has to repeat this point, until now no Lyoness defender has been able to address this area of suspect in the Lyoness scheme.
Down payment implies INCOMPLETE purchase. why is it called “down payment”, when what you are describing is just a straight gift card purchase, albeit, load with lesser amounts?
Aside from the very detailed explanations above, the way i see by making a down payment and by considering that downpayments generate units, (units that otherwise would be generated in a long time from the discuunts granted by the commercial partners), in practice a downpayment is a more like a “promise”:
“i will actually buy and pay in the future from lyoness partners goods and services in such an amount that the discunts i will receive will generate me 1 unit (let’s say) but i am not willing to wait a year to do that.”
Si instead of getting an unit after i spend x dollars, i get the unit ahead by downpayement and spend the money later. The reasons for which i want to get this unit may be:
a) a lot of guys already in my downline and i don’t want any of them to generate units that pass me by untill i have my own or
b) i’m looking and hopefull that i will convince other guys to make also downpayments. Either way the idea of downpayments is not as healthy as the idea of waiting for the money to be generated by actual purchases itself.
But it is there and it exists and i believ that lyoness embraces it because by downnpayments if they gather multimillion dollars this way they may go do a commercial partner and show them: hey look, we have potential customers that already downpaid a lot of money that can only be used by shopping at lyoness commercial partners. Do you want to be in the mix?
Aside from that there is also the part where this looks and is a ponzi scheme. Money switch places without being backed-up by a solid transactions. The way i see it, lyoness is an idee: you think it will grow (lots of customers buying from commercial partners using their cards in the future) it does worth even to make a downpayment as you will eventually achieve your ROI.
You think it’s risky, apply for a free regular customer as there is no reason to make a downpayment if you dont’t have a downline or you are not sure you will ever have one.
Oz, I must reject your fundamental presupposition that in U.S. law gift cards are not purchases and are equivalent to cash. According to the Internal Revenue Service, sales of gift cards are accounted for as purchases of products and/or services.
Gift cards may be conceptualized as “cash” by some, but in my research I have not been able to identify a single U.S. Lyoness merchant who will exchange a purchased gift card for cash. Have you?
And even if there are merchants who engage in this practice, it would be a gift card that was exchanged for cash; one financial instrument exchanged for another, and accounted for as a transaction, not as a direct equivalency.
For example, if you approach a Walmart checker and hand him or her a $20 bill and ask for change, he or she will be able to hand you four $5 bills without logging a transaction, since there is not a change in financial instrument (it is a “cash for cash” transaction).
However, if you hand this same cashier a $20 gift card and ask for four $5 bills, they will not be able to fulfill your request. From the position of the Internal Revenue Service and all retailers I have researched, gift cards are absolutely NOT legally equivalent to cash.
At the beginning of last year, the IRS clarified a number of tax and accounting questions by issuing:
http://www.irs.gov/irb/2011-05_IRB/ar01.html#d0e31
Deloitte provides a very good summary, including how gift card sales are accounted for on balance sheets (including classifications as liabilities relative to time):
http://www.deloitte.com/view/en_US/us/Services/tax/d5fdf1c00c7ee210VgnVCM3000001c56f00aRCRD.htm
At the page linked above, see “A taxpayer generally must recognize advance payments (e.g., sale of a gift card) in taxable income in the year of receipt, because receipt satisfies the all events test of Treas. Reg. Section 1.451-1(a).”
If you are interested, you can learn how income from advance payments (gift cards) can sometimes be deferred, which postpones a merchant’s tax liability in a potentially positive manner. Nonetheless, it is very clear that purchases of gift cards are a taxable event (to the taxpayer, not the customer) and are not a cash equivalent.
I am not a Lyoness member or defender. I like to focus on facts. My interest in Lyoness started by assisting a dear friend in her due diligence efforts. As I was making my own investigation, which commenced in March 2012, I attended a live, virtual “webinar” hosted by Lyoness member Dr. Rik Wahlrab, DC. He asserted that (and I am paraphrasing)
1.) When a member makes a partial gift card order, Lyoness buys from selected merchant those gift cards so the appropriate product sales are generated;
2.) The merchant pays Lyoness all of the applicable commissions, and then Lyoness pays the member. Dr. Wahlrab’s assertion is that ALL commissions are generated by member purchases and paid by merchants; thus, a legitimate business model and not a Ponzi or pyramid scheme.
I do not expect Lyoness management and/or legal counsel to comment in this thread. This context is too “messy” and their comments could be easily misconstrued.
I DO think Lyoness would be well-served by amending their GTCs and/or marketing materials to include the specific mechanics of HOW, specifically, partial gift card orders are accounted for behind the scenes in their internal systems. Doing so would bring to rest concerns expressed in this thread, some of which I consider to be valid.
@Jeanette
As per the URL you linked to:
Lyoness are not a retailer, in that they retail nothing. No product or service is available for purchase from Lyoness at a retail level.
The fact remains, I can deposit $X with lyoness (not giftcards) and after y amount of investments have been deposited with Lyoness after my own, I receive a ROI equal to >$X.
Along with this cash ROI paid out, yes you also receive giftcards, this however does not negate the cash ROI paid out (which is how people make money in Lyoness. Nobody makes money with cashback).
You can crap on about merchants all you want, it does not change the above.
Lyoness appear to enforce a rule on their affiliates not to disclose this information publicly, because of the obvious fact dropping money with Lyoness, purchasing nothing and getting a ROI when a fixed number of subsequent deposits have been made looks like a Ponzi.
As per a recent comment made by a Lyoness affiliate in a public discussion:
There’s a reason Lyoness hide their compensation from the general public and only show the merchant cashback side of things up front.
As a Lyoness member I have received plenty of monies as cashback either from my own spending, the spending of directs in my lifeline, spending from indirects in my lifeline and from spending from others in the Lyoness stratosphere. The latter due to being a Premium Member.
Oz’s comments are not only illegitimate but also smacks of ignorance. Still can’t grasp the concept after all this time? And I suppose your comments are based on facts? Please share with us your source of this particular comment “nobody makes money with cashback”.
If you mean investment sure. It’s well known functionally the spending is negligible with most of the money being generated being
downpaymentsinvestments made by members.You can provide your own statistics if you like, moneys earnt via investment vs. spending.
You’re telling us that
(Point 1)
A: The member makes a down-payment
B: Lyoness pays the merchant for a partially paid giftcard
(Point 2)
C: The merchant pays Lyoness commissions
D: Lyoness pays the member part of the commission
A + B + C + D:
Member –> Lyoness –> Merchant –> Lyoness –> Member
Have Dr. Wahlrab done anything to verify his own theories?
A qualified person will usually be expected to be able to defend his own theories, so people can be able to separate facts from fictions.
And since WHEN did people start to use Chiropractors as business advisors, and quoting them as “reliable sources”? 🙂
I’m trying to check the logic here, and none of it made any sense.
* Wahlrab’s theories seems to be “far out in the wilderness”, “high up in the blue” or any other description for lack of contact with reality.
* Using a Chiropractor as a business advisor might have made some sense to you, but the logic doesn’t make much sense. Most people knows that dentists are far more reliable as business advisors. 🙂
Another point:
The links to the IRS clearly stated that giftcards are payment for future purchases, and they are not products in themselves. Are you trying to verify OUR statements here rather than your own?
If I have interpreted it correctly:
1. Giftcards are NOT products or services in themselves. They are liabilities for future purchases.
2. When a consumer returns a product to a merchant, refunds in cash or giftcards can be treated equally. They are not EQUAL, but the IRS allows them to be treated equally to make the system become more simple to understand.
It would have been, if you only had made a PROMISE to pay. The flaw in your theory is that you’re making a real payment, not a promise.
OK guys, I have just wasted far too much of my valuable time reviewing the bulk of this discussion. lol
I am going to now interject into the discussion, but before I do let me offer the following:
I have no desire to defend nor bury lyoness, I am NOT an attorney, I am NOT an accountant, but this is who I am…
I am a 30 year business person who is president of a small service business, partner in a local trade exchange business, and co-owner and GM of a successful well known local brick and mortar flooring franchise location.
I also am a successful online marketing coach/mentor/marketer. IN addition I am not an avid MLM participant though I am at this moment just beginning activity in this space which I have intentionally avoided much of my life for my own reasons I may share later.
I share this because there seems to be a lot of “opinions” being expressed here and though mine is just another one, I thought it refreshing to add one that comes from a REAL LIFE EXPERIENCE perspective. (you’ll know why this is important when I begin to share my opinion)
Point of this is as some have stated legitimacy must be “earned” well I am quite sure I have EARNED the right to form a solid opinion with my personal business experience.
DISCLAIMER: I am as of 15 days ago a “free” Lyoness member. The sole reason at this point is the following:
I have been commissioned by one of the top leaders in Lyoness(us) to build and launch an ad campaign for the sole purpose of building the base of “shopping membership”. we will be targeting females who live in households who spend an average of 24,000+ per year (which is about average in the US).
I think an important additional point is this leader claims they were personally approached by Lyoness to grow the US shopping base (NOT the business builders). To me this does speak to the official position of the company.
I will be addressing some VERY relevant business points one at a time. I will also add I just don’t have the time to enter a debate, so please understand any petty manipulations or scrutinization of my statements will be ignored and I will not respond. I will address any VALID rebuttals.
I am and will be evaluating and “testing” if you will the validity of if you can make any money in Lyoness through cash back ONLY and will later share the results of this test market with you all. This campaign will launch in about 1 week.
@Biz
You do realise all of that is irrelevant when you can simply deposit money with Lyoness and earn a ROI when enough new investments have been made after yours right?
Ask your “top leader” friend how much money they’ve made from recruiting premium investors vs. the miniscule amount of units generated via the merchant shopping side of things.
1st point, I would hope we can all agree on using this definition from wikipedia as the definition of a “ponzi”
This being assumed I will from a “BUSINESSMAN’S PERSPECTIVE” (NOT AN MLMER) offer why i believe Lyoness is indeed NOT a Ponzi:
The main thing to note is simple..in order to be a ponzi a REQUIRED component is “pays returns to its investors (though I will not call members investors)from their own money or the money paid by subsequent investors, rather than from profit earned by the individual or organization running the operation”
SO simply put, I will be sharing from a business man’s perspective HOW Lyoness can sustain the model by earning adequate profits from “running the operation”.
Now I can already see how some people here have simply “decided” they are right and won’t be open to this.
Does the AU portion of Lyoness expose it to member abuse, well, maybe..but I am here to address FACTS not manipulate definitions and phrasing etc…
SO before my next post gets into the meat, I am going to state that anything I say I am going to try to keep neutral phrasing.
IE:the debate about gift cards…it doesn’t matter the technical definition of is it a product, is it a service, is it an IOU. If YOU walked into walgreen’s and purchased a gift card to the apple Itunes store for $25 to give as a christmas gift would you as a consumer believe you have made a Purchase? The answer is YEs so let’s stop manipulating phrasing and talk about the FACTS. 🙂
What matters IS when a gift card is purchased for a loyal merchant in Lyoness an exchange of money for something of value has taken place. Furthermore I have offered Gift cards as a merchant for years and when a retail card seller sells a card to a “different” retail entity the retail entity that must honor the card is paid an agreed upon fee for the card. (
example I buy a $300 gift card to walmart from Lyoness, lyoness must pay walmart somewhere between $225-$288) therefore the “MERCHANT” or walmart in this case has received money and a “sale” has been made. (again not relevant if it is goods, services, contracts..it is something of value offered for money)
So this is point #1 the gift card purchase IS a revenue stream for Lyoness, my guess is they are buying them in huge bulk quantities at the $225 level and making about 25% or maybe more at this level, my personal experience is 25% is usually the traditional volume discount. This is a HUGE revenue stream for lyoness.
That’s excellent.
You make the ideal candidate, then, for someone/anyone who comes along hiding an endless chain recruiting /pyramid scheme behind an “MLM” company.
In fact, there is no more valuable weapon in the arsenal of the endless chain recruitment scheme owner than the true believer who keeps focus on the marketing side of the MLM, thus allowing those who profit solely from the recruiting side of the biz to carry on unobserved.
It’s simple, really.
If Lyoness wants to be considered as a legitimate MLM company, all it has to do is ensure members cannot earn the bulk of any income by recruiting.
By refusing to do so, Lyoness will forever be branded as just another get-rich-quick scheme in disguise
point # 2
Retail affiliates. I am a retail affiliate for Walmart.com for example and I get 5% commission for referrals…I am also an affiliate for several other merchants that are in lyoness, and they pay me in some cases 5% or better MORE than Lyoness offers it’s members.
What does this mean? it means every time someone “SHOPS” and spends money lyoness is giving cash back but pocketing a profit that comes off the top as the “spread” if you will on the difference between what Lyoness is getting from the merchant and what the total “member benefit” is.
again a HUGE revenue Stream as well as a HUGE motivator for Lyoness to “PROMOTE” Shopping because everytime someone does they make money. 🙂
See guys this is how a true business person sees this NOT an MLMer. there is legitimate profit to be made everywhere in this model…
@Biz
Please don’t waste my time.
Perspective has nothing to do with it. A business model defines a company as a Ponzi.
Step 1. Join Lyoness as a Premium member and invest your money.
Step 2. After a fixed amount of new investments have been made following your initial investment, you earn a ROI.
No goods or services are required to be purchased and all money is deposited with Lyoness, who also pay out the ROI to their affiliates. This does not involve any merchants.
Using it as it is intended to be used, that being as a Ponzi investment scheme is not abuse.
You cannot selectively decide what parts of the business model you want to ignore if you’re analzying the Lyoness business model.
As long as the AC unit investment scheme exists Lyoness is a Ponzi scheme and the merchant side of things is irrelevant.
Itunes have products, so do Walmart. Lyoness has no retailable products or services. “Lyoness giftcards” cannot be used to purchase anything from Lyoness itself. Thus, comparison to actual retailers is irrelevant.
Irrelevant.
Irrelevant.
Irrelevant.
Uh what? First you present yourself as some neutral “business person” wanting to evaluate the profitability merchant side of Lyoness… five minutes later you’re telling us how huge a revenue the merchant side of things supposedly is.
Riiiiiiiiiiiight…
@oz
No OZ it is quite NOT irrelevant, seems that’s about the only defense you have …lol
the ENTIRE point is in order to be classified as PONZI they must be using “NEW” money to pay “early” money, and NOT from business profits. I am contending that at this point there appears to be plenty of business revenue to substantiate this model.
Frankly that is all you have asked from the beginning of this thread. I can tell you right now, I could make a fortune in profit using the Lyoness model and NEVER sign up a single premium member. do the math buddy….
I recruit 100 us females who spend $24000 per year, I get an avreage of 1% (.5 +.5) of that money that is $24000×1000=$24,000,000 spent @ 1% = $240,000 in MY bank account just from recruiting “SHOPPERS”
Dude your arguement has NO LEGS….
Listen I get your point about the AU system and it “could” be abused, but it doesn’t “NEED” to be the numbers work everywhere if you stop thinking like an mlm er and start thinking like a businessman. 🙂
who said anything about a “Lyoness” gift card? I didn’t haha you crack me up man, I have better things to do.
IF your wrong, right or crazy I still am getting paid to make an ad campaign so I am off to work, have a great day Oz.
I like how predictable your responses are 🙂
As long as the AC unit investment scheme is operational, anything to do with the merchant side of things is irrelevant.
Step 1. Join Lyoness and invest money with Lyoness.
Step 2. After a fixed amount of investments have been made following your own investment, you are paid a ROI by Lyoness.
No products are purchased, and no money is handed over to merchants. All money is deposited with and paid out by Lyoness.
You can choose to ignore this and crap on about merchants and shopping, however it does not change the fact that the above is readily actionable and thus makes Lyoness a Ponzi scheme.
Then why have it in the first place? It’s an obvious Ponzi scheme so if the merchant side of things was profitable, as you claim, why allow members to invest and earn a ROI for doing nothing more than soliciting new investments made after their own?
Doesn’t make much sense does it, unless of course the Ponzi side of things is where the real money is at.
The money is handed over to Lyoness, not the merchants.
So once again it comes down to your own personal bottom line. So long as I’m getting paid, f’em right?
I’m sure you can appreciate that the analysis and discussion here on Lyoness extends well beyond your own personal finances, and whether or not there’s money to be made associating with obvious Ponzi schemes.
Toodles.
Oh… and in the future when introducing yourself you might want to change this:
to “I’m being paid by Lyoness to run a marketing campaign and my first job is to address analysis on the internet indicating Lyoness is a Ponzi scheme by pushing the merchant side of things and completely ignoring everything else”.
And good luck recruiting 100 females ready to spend that kind of dough. Your logic is baffling. All I can say is… There is one born every minute.
I wish you could understand what I am saying. I agree you will get a one time fee for recruiting members but if nobody shops in your lifeline than all you will ever earn is is credits…..
Not cash.
You must shop to take advantage of your credits. In the USA because it is so new, you very limited places to shop.
So if you have earned 100,000.00 in credit you wont be able to buy a house or a car or furniture.
So what kind of ponzi scheme is it..a credit ponzi scheme.
Lyoness is built by shopping and if you shop you save and can earn cash units. This is the model, very simple shop and save and accumulate units and build your lifeline.
A downpayment is not shopping. You join as a premium member, make your investment, buy whatever token giftcard you have to (a small proportion of the overall amount being invested), toss the giftcard in the bin (or use it to lure new investors in), and after a fixed amount of new investments have been made after your own, earn a ROI greater than your initial investment.
Part of that ROI is cash and the cash component is greater than the initial cash investment made.
All monies are paid to and paid out by Lyoness, bypassing the merchant system altogether.
This is per the Lyoness US compensation plan material (which is hidden from the general public and as per comment #402, not permitted to be published online by Lyoness affiliates).
OR,
you recruit 100 US females a year who spend NOTHING, who also recruit 100 US recruits who spend NOTHING who also recruit…………………
VOILE
Endless chain pyramid scheme, which genuine MLMers will avoid like the plague.
get-rich-quickers on the other hand can’t get their wallets out of their pockets quick enough.
Thus the need for BehindMLM.
You’re answering the WRONG QUESTIONS. Nobody is questioning the cashback offers.
The question is about the “purchasing of accounting units” and how you get compensated by other recruiting other people who do so.
Looks like Lyoness is a pyramid scheme after all…
I am, indeed, a Lyoness member, but I resisted paying 2000 euros (in Europe those $3000 equals 2000 euros for their business proposal).
Posibility to pay by phone is not a service?
Pay who? Pay a third party (i.e. a service like Paypal or VISA / Mastercard), or pay Lyoness?
As you know Lyoness offers posiblity to pay with smartphone,securely. I think this is an service like Visa, Mastercard etc.
Doesn’t it seem odd that such a big, rich company with such a long success track comes to North America without proper banking relationships?
Perhaps they are simply wary of the chargebacks that would come when the fraudsters pounce?
It’s quite the inside game. Only Premium members may sponsor outside of their own country? So it is 3 grand to play like a professional? Then wait to see five matrices fill up? Austrian Accountants on Steroids.
I have seen many good webinar presentations from earnest leaders….but my gut says no. Too damn many rules that do not make sense.
Also interesting to me was the addition, just in August (after consulting with US lawyers) of the requirement to buy $300 or $600 in gift cards BEFORE YOU CAN BUY UNITS. IMO, a rather poor effort to prove to the feds that shopping was really happening.
Best article written about Lyoness. Congratulations !
Despite de fact that I’m a Lyoness member myself, I’ve tried to understand the system behind the scene, and after several simulations I came to the same conclusion: Lyoness is a pyramid scheme.
You didn’t answer the question. PAY WHO?
K. Chang, pay the merchants/retailers/stores for goods and services via the smartphone.
That means a balance in the Lyoness account is held by the member and the smartphone can be used to pay for goods and services by debitig the balance in the members Lyoness account.
From my lyoness account to merchat.
So they are operating as a bank or Paypal-like entity. Who is their bank or payment processor? (Before you claim they are like Paypal, Paypal is licensed as a bank in over 30 of the 50 states in the US, plus several countries in Europe and Asia, last time I checked).
No they are not operating like a Paypal or a bank. Although using modern technology like a smartphone app, the actual process is not as efficient as a paypal or bank involvement.
It’s somewhat antiquated but to cut a long story short, the Lyoness member obtains a ticket number or PIN from the app and then provides this 6 digit number to the merchant. Personally not as efficient but works just the same.
I believe that once the merchant processes the transaction it triggers a transaction to Lyoness for the payment behind the scenes through each company’s bank, i.e. the bank for Lyoness transfers the money to the merchant/rertailer bank, and lyoness covers this by debiting the Lyoness member’s purchase account.
Works well but the end user experience is not as efficient as say card swipe. I think this technology will be enhanced if and when Apple and co introduce ‘near field’ technology for example on their smartphones.
At the moment it appears Apple are holding out I think to ready themselves for their own payment system and not allow competitors – banks etc – to gain a head start with consumers.
They are holding client balance, are they not?
Thus, they *are* operating as a bank holding cash value.
Again, which bank do they use?
No they are not. Here in Australia Lyoness use Westpac bank for their banking needs. Lyoness members deposit money to their Westpac bank.
Lyoness are holding a client balance on their online account but its paper money. The actual dollar value is held with Lyoness’ bank the same way you buy a house and place a deposit. The estate agent is holding the deposit in their own trust account with their own bank.
Not a bad analogy to use. But nothing more, nothing less.
@Bozzo — you seem to contradict yourself a bit…
I wrote
and you replied
Then you wrote:
So is that a yes, or a no?
Real estate transactions such as payments are held in escrow accounts (or trust account, probably same thing), not regular accounts, as it’s not really either party’s money UNTIL the deal was consummated. It can’t really be compared to purchase of gift certificate balances.
Yes I think you nailed it. The money held by Lyoness on behalf of members is essentially held in escrow. The money is always the member’s money. The only interest Lyoness has with members money is to ensure that their merchants/retailers receive their cash for products sold.
This is Lyoness’ only interest because if they oversee the payment between the Lyoness member and merchant, Lyoness receive their commission. They don’t act as a bank – otherwise they would have their own banking license – BUT I reckon its where they want to be in about 10 years time.
I reckon this is so because they don’t have any banking facilities or credit card facilities for members to use directly through Lyoness. A member must deposit cash only to Lyoness’ bank account. No direct debit facilities which leads me to believe they are holding out for bigger ambitions in the years ahead.
This is for another day but getting back to the last issue, Lyoness does not act as a bank the same way other business hold your deposit for various products and services. I think we’re getting side-tracked.
The main point is that a Lyoness member can use their mobile phone to purchase goods and services from Lyoness merchants. Its an antiquated process where by the Lyoness bank pays the merchant bank. And Lyoness take it from your purchase account similar to holding in escrow. Its a very simple set up.
It’s a simple call to your local bank to see if the Lyoness account is an escrow / trust account or not…
It’s a non-issue for me K.Chang. I pay the money to Lyoness’s bank and I buy goods with the money via Lyoness. If they hold it in the sky or they use a 3rd party, it’s irrelevant to me.
If you’e interested in it – and it sounds like you are – feel free to go and ask Lyoness direct. I myself particularly don’t care much really. It’s not a major issue for me; trust, escrow, whatever you want to call it, it’s not high on my list of Lyoness concerns.
Feel free to let us all know after you liaise with Lyoness.
In other words, if it works, who cares if it’s legal or not?
That’s a cognitive bias on your part.
Like I said, please let us know what Lyoness advise. My only opinion is that they use a banker in each country. If that is illegal then you might be onto something I was unaware.
FYI,
I had a upline from Austria come into my city to do a presentation and workshop. He informed me there are changes coming to Canada and United States compensation plan and the General Terms and Agreements. This is not official but is what is happening right now.
They have eliminated the premium member now, so you can not buy into accounting level 1. They are going to rewrite the CP and GTA. How far they will go it will be big news.
I am speculating here.
Lot of these changes they have made since I got involved is partly due to the point brought up on the site. The purchasing of units. Early they have forced premium members to purchase an additional 600.00 in gift cards. Now they are eliminating the premium member. Interesting they are doing this because it is also connected to purchasing units.
I also understand and this is NOT SPECULATION. In California there is a level 7 Lyoness member. He is the fastest Level 7 every in Lyoness history.
Now the speculation part.
For the amount of premium members in California I believe there was no shopping done, just recruiting so this fellow in California knew this because he was a MLM professional and saw the weakness in the compensation plan,GTA and exploited it.
I know Lyoness has a good model and will do everything to protect it. I believe they will make the necessary changes and if ends being not being able to buy purchase units, they will probably do it.
Mat, I agree with many of your statements. There’s been opportunities to game the system and Lyoness periodically have amended the process.
The forced gift card purchase was introduced to stifle gaming and this has worked well. But also generally Lyoness close down Premium membership after the founding members have built the building blocks of Lyoness in that country.
The only way to become a premium member thereafter is via spending of 30k two years in succession I think.
To Lyoness’ credit they do constantly look at loop holes where members abuse and close these. There are no credit checks or criminal checks on new members so like most things it can attract the unscrupulous operators.
@Mat
Actually right here, right now they have a Ponzi scheme.
I’ll believe any changes when I see it. The MLM industry is littered with broken corporate promises so it’s best not to take any notice until something is actually done. Ditto speculation.
I am glad to hear however that if any changes are coming, that Lyoness inadvertently are acknowledging that as it stands, their account unit business model functions as a Ponzi scheme.
Oz, if there was no shopping activity or system in place yes it can be viewed as a Ponzi scheme but their shopping activity and the creation of units purely from shopping activity, sustains the system and hence why its not a Ponzi.
My accounting system, and the money I’ve earned from others has come from commissions from other shoppers, I.e from their hopping activity.
But my understanding is that US authorities have given the green light to Lyoness system so if you have information contrary to government please share with us.
I certainly don’t want to be part of a Ponzi scheme so please share your information and importantly perhaps provide your information to government. Sounds like the government have been hood-winked and you know more? Am I correct?
The existence of a system where people “CAN” shop does not negate the fact the possibility exists for people to remain in the system and make money solely from recruiting others, who recruit others.
IOW, an endless chain recruiting scheme.
Undoubtedly, get-rich-quickers see Lyoness as a viable proposition.
Serious MLMers, on the other hand, will recognize both the illegality and the long term unsustainability of a business which allows such solely recruitment oriented activities to exist within its’ business model.
No I think you’re not updated. Lyoness members cannot sign up new members as you state. They cannot “soley” recruit new members. This loophole closed some time ago and many of the tricksters have stalled in their recruitment drives because now they have to work and get new members to understand and use the shopping component otherwise their account doesn’t become active.
Again, many posters here wave the “illegality” word but I’ve yet to see a government publicly state Lyoness is an illegal scheme. Please show me where this is stated because I don’t want to be part of an illegal system.
If you can present facts I’m all ears but please type facts and refrain from assumptions. If I don’t know something I will state it and not post it as gospel.
I’ve read the entire post and I have yet to read where the US government, or in other jurisdictions, where the Lyoness program is an illegal operation. If you can find me this info, rather than speculate, please point me or link it here on this post. Thanks. B.
You’re partly correct, it’s not a Ponzi scheme. It’s closer to pyramid scheme than to a Ponzi. I’ll guess “promotional pyramid” makes you feel alot better? 🙂
The difference between Ponzi and pyramid scheme isn’t really important here, since people have pointed out the same issues anyway — the down-payments and the purchase of accounting units.
You’re partly wrong, governments don’t give “green lights” to a company. Registration of a company isn’t equal to “green light”. The “green light” argument only adds an additional red flag to the concept.
A part of Lyoness’ business model is very similar to a chain recruitment system, where participants indirectly pays a fee to participate (the down-payments), where they can earn financial gains that derives primarily from the recruitment of others (paying the same type of fees), rather than from selling goods or services.
The majority of people who have joined Lyoness in the U.S. seems to have joined the income opportunity, so the majority of payouts have probably derived directly or indirectly from the down-payments rather than from the cashback solutions.
“ARTIFICIAL PURCHASES”
Since the payouts partially are paid in “Loyalty Credits” rather than cash, the system will generate some artificial sales of giftcards from the payouts. “Artificial” in that buying giftcards is not a part of normal behaviour for consumers in itself, other than for specific purposes.
* Buying giftcards as GIFTS is a “normal behaviour”.
* Buying giftcards for a reduced price or cashbacks is relatively normal behaviour, if the purchase of giftcards occurs around the time of an actual purchase.
* Buying one or more debit card can have some rational motives, e.g. to make more “anonymous” purchases on the internet.
* Using giftcards to “store values” is relatively insane behaviour for a consumer, since money stored in that way will be less liquid / less “convertible” than most other solutions (banks, etc.). Down-payments makes it become even more insane.
* In Lyoness, most of the giftcard purchases seems to be related to the down-payments and the payout methods rather than to normal behaviour. Some of the behaviour seems to be absolutely insane for a normal consumer.
Why ???
You’ve made up your mind.
If YOU want to take the risk or play money games, fair enough, it’s your choice and your money.
M_Norway, I will try and respond to some of your points you have listed so please forgive me if I don’t do justice to all. You have listed plenty.
Your comments are those form someone not a member and using the system. I’m right aren’t I? You would not state “so the majority of payouts have probably derived directly or indirectly from the down-payments rather than from the cashback solutions” if you were a member and viewed the benefits you received in your accounting program from shoppers commissions.
Now you mention the “insane” behaviour of gift card shoppers. I am one of those and I’ll tell you why I use it. Not long ago I bought a $500 gift voucher from Lyoness. The gift voucher was from a merchant I had been planning to buy an electronic device so I was going to spend close to $500 anyway.
I bought the voucher through Lyoness and immediately received $15.00 to my Lyoness account in cash. I then received the voucher in the mail. So before I have shopped anything I really had $515.00. And my team leader who introduced me received $7.50 for his troubles instantly as cash payment in his Lyoness account.
I’ve then visited the shop, asked for a discount and received another 15% off the purchase. Now I would have received the discount if I paid cash, credit card etc. Now not only did I get my discount in the store – with or without Lyoness – but I also received $15.00 cashback for purchasing the gift from Lyoness.
$15.00 I would not have received if I walked straight into the store without being a Lyoness member. Add all these expenses you make and consider the possible cashback for items you buy everyday.
I’ve just given you a sample. But your comments seem to be from someone on the sidelines that really doesn’t understand the remuneration benefits and system of Lyoness. This is obvious because any Lyoness member like myself can punch holes in the majority of points you’ve made.
If you’re member and you are commenting from experience I encourage you to back up your claims. Again, your comments are the sounds of the uninitiated. Don’t mean to sound rude but its so obvious.
@littleroundman, then why are we talking on this post? It appears naysayers here have made up their mind. I stated, I’m all ears. If you can present facts to me I’m outa here (the Lyoness system).
But all the naysayers here have a common trait. They don’t report their findings to the authorities. They make grand statements but when you ask for proof of their findings they turn it back on you.
The onus is on you and others to prove a fraud if you feel strongly about it. The onus is not on myself.
And, you know this HOW exactly ??
The U.S.A. has a current population of over 310 MILLION people.
The S.E.C. has around 3,500 staff.
Zeek Rewards lasted several years after it was first “reported”
A lack of action by the “authorities” does not equate to them approving or disapproving
There is no “onus” on anybody.
People who want to read and sign up do, others read and decide not to sign up.
Oz merely makes it easier for people to decide.
Fair enough. I guess there’s no issue then. You’ve summed it up very well in your comment above. That pretty much wraps it up.
I’m happy to attempt to answer any issue raised on Lyoness on this blog site to the best of my ability if anyone chooses to raise any issues.
My only tip would be to readers to share any knowledge you might have of any kind of fraud or any illegal activity you might be aware using the Lyoness awards program because I certainly don’t want to be a part of a system that rips people off if that’s what is mentioned here, whether Ponzi or otherwise.
Please share this info so I can also share with other Lyoness members. I’m all ears. Cheers. B
Here’s a hypothetical for you:
IF an online business WAS deliberately set up to be a fraud, how likely is it you or I would find “proof” ??
Wouldn’t it be more likely we’d find “clues” and “pointers” and “indicators” that readers could then use to make an informed decision ??
After all, it would be a pretty poor excuse for a fraud if it was so easy to expose it could be done on a blog such as this.
The sort of “proof” required to satisfy apologists and shady owners simply doesn’t exist outside of a full blown investigation.
@littleroundman, you make a lot of sense in your last post. I could not have said it better myself. I think this blog post can be closed now unless anyone has any other issues to raise. Cheers. B.
Your example was already covered by my definitions of “normal consumer behaviour”?
So your feeling of “punching holes” is only a method to mislead yourself. You’re only REPEATING one of my points, a point we both can agree in.
Try to address some of the other points I made instead, something you disagree in?
BTW, try to fix your OWN assumptions before asking others to refrain from assumptions?
Most “normal dialogues” will contain both facts and assumptions, and most of us will NOT have any problem with that (but some will point it out from time to time).
Here’s an example for where my only choice is to make assumptions, if I want to make an answer:
My assumption here is that you have a predefined set of ideas, where the Government is meant to be making statements about legality very early. It seems like you’re expecting to find public statements from the Government telling you if a business is illegal?
That assumption was necessary to clarify something where I don’t have access to the facts. The facts in this case is your own ideas and thoughtset.
M_Norway, I have to respectively disagree. These are not just my own thoughts or biases. I’m in fact a Lyoness member so I am communicating via a position of strength and dare I say with some knowledge.
I am using a program and actively participating in it and thus far cannot pick an illegal hole in the Lyoness’ program. But I’m happy to read any concerns posted and hopefully address these in methodical and civilised manner.
On the other hand, you’re not a participating Lyoness member, unless I’m reading it wrong.
So from my point of view, when I read comments on this blog site which are factually incorrect, it’s like reading that JFK was shot by his wife, there is no such thing as the moon, and Elvis is alive and well. That’s how I read it when reading some of the comments here on Lyoness.
I’m happy to provide answers where possible but the non-Lyoness members on this blog just seem to know it all when I know many of the comments are factually incorrect. And when I pose a question it invariably never gets answered. Why?
Read my questions that I have posted above. Maybe Elvis and James Douglas Morrison are alive after all.
Hi,
FYI,
This
This review has been going on for a while and a lot points have been brought up. I am Lyoness Premium member (sorry not premium member anymore, not sure what my title is now) as well, I also have my business registered with Lyoness.
I can validate Oz about the buying units and recruiting people into Lyoness to buy more units. This is a pyramid scheme and would get busted if looked at by more regulators and more closely.
The other parts of Lyoness can function easily by themselves. I was talking to my upline from Austria again today in more detail about the changes. I was informed the changes are not all applied to other countries only to the USA and Canada, because our laws our banking systems and Regulators are much different than Europe where it originated.
Oz, I agree actions speak louder than words. It seems Lyoness is very proactive and not waiting for somebody to shut them do. With 2.4 million members world wide and the USA with 330 million people shopping Lyoness have a lot to lose.
If anymore information comes my way regarding the CP or GTA I will post it and try to keep the review current.
By definition it can’t be a Pyramid scheme.
I’ll prefer to interrupt before this discussion becomes totally meaningless.
1.
The example I used for “assumptions” was about the Government’s role (not about your membership in Lyoness). Your statement was:
If you’re using that logic to decide whether something is legal or illegal, it’s clearly related to a “worldview” rather than to reality. In reality, Governments will be REACTIVE rather than PROACTIVE in publishing information about a specific company.
It will become rather meaningless to make this point become a discussion about something else, e.g. whether your membership in Lyoness is real or not.
2.
I pointed out that your sample was the same point as mine, one of the examples I used where buying giftcards is relatively sane behaviour for a consumer.
You didn’t “punch a hole” in the argument, you confirmed it. You only addressed a point we both can agree in, rather than the points we disagree in.
3.
I have already addressed your main point and confirmed it, “Lyoness is closer to be a promotional pyramid than a Ponzi scheme”. So you have already got an answer to your questions.
The difference between Ponzi and pyramid schemes hasn’t been really important in the contextes where people have drawn conclusions in any of the directions — “Promotional pyramid OR Ponzi scheme?”.
***
A meaningful answer here will be if you can address point 1 or 2. Point 3 will be rather meaningless, since I already have agreed in the main conclusion there.
1. Clarify your own “worldview”?
2. Give an example for something we disagree in, rather than a point where we already have agreed?
Whose definition? And in what sense? Please clarify your context.
So correct them. WHAT are factually incorrect? Please cite your sources, as many did above. Or are you just out to make edicts “you all are wrong”?
Frankly, if one can only get better information by joining, the company has severe transparency problems and may be guilty of “shrink-wrapped contract” fraud, which is NOT a sign of trust-worthiness.
Why? You don’t consider “indicators” and “signs” to be worthy of discussion? Perhaps you only accept the proverbial “smoking gun” to be acceptable?
No, on the contrary. Indicators and signs are great for discussion but what are they again? Please list them in point form and I’ll attempt to answer them one by one as honest as I can. But note, by way of example only.
If you state President jimmy carter was president of United States in the 1990s and I state emphatically that he was pres from 1977 to 1981 but you still disagree, then obviously I’m fighting a losing battle. Would you agree?
@Bozzo
The shopping side of things can be ignored altogether. Thus mechanically it’s a Ponzi scheme.
That never happened. Every regulatory agency always states they never endorse or approve any specific company.
Crapping on about “show me where the US govt. this and the US govt that” is just a strawman argument. I don’t need the US goverment to tell me something is mechanically a Ponzi scheme, a company’s business model tells me all I need to know.
I don’t really care what the US govt do and don’t get up to, their investigations are their business and BehindMLM is not a substitute for the US govt. All we do here is review and analyse MLM business models. If a company mechanically is operating as a Ponzi scheme, the US govt doesn’t even factor into the equation.
Clearly, you haven’t been paying attention, or you can only deal with bullet points, not completely sentences.
Can you pay Lyoness, then recruit people who also do the same, and thus, get paid for recruiting? Yes. Thus, Pyramid scheme.
What is inaccurate about this statement?
Ok, but this is the fundamental issue you’re stuck on. Yes I agree, left in isolation it can be perceived as a Ponzi scheme. ( please don’t tell me the one about if it looks like a pig, etc ).
But, one issue you’re stuck on, or refuse to accept – and I’m telling you from a position of actual knowledge – is the overwhelming generation of shopping activity and commission from Lyoness community.
And the money I have received has been commission from other shoppers in the community, i.e. from their shopping purchases. I’ve read your comment earlier about little or no shopping activity but this is factually inaccurate.
I’m being open and honest but your response has always been, nah you’re wrong, I know better.
Anyway, Lyoness is about creating a shopping community and the commission generation is the heart of the business model not what you perceive to be as a Ponzi scheme. Also Lyoness have altered the sign up process so new members cannot just become members and recruit others.
They are forced to use the system of purchasing goods and services which is the heart of the business. If they don’t shop nothing happens for them. And of course there is the accounting program which generates the units paid to members from their spending habits.
Thanks for the update Mat, appreciated.
I think you’re the first Lyoness member here who appreciates that going on and on about the shopping merchant side of things doesn’t negate the possibility to invest money, get others to do the same and earn a ROI, which is functionally a Ponzi.
@Bozzo
There’s no perceived, either it is or it isn’t.
If you join Lyoness, ignore the shopping side of things, invest and convince others to invest, you earn a cash ROI, paid out of invested money.
No products are purchased (gift cards paid to Lyoness are not product purchases) and you bypass the merchant system altogether.
Lyoness is a Ponzi scheme as long as this is possible.
Unless you work for Lyoness in an executive mangement position with access to the global reports of affiliate activity, you’re going to have to do better than that.
Your personal experience is irrelevant when analyzing the mechanics of the business model and compensation plan which, as above and by your own admission, are well defined mechanically as being a Ponzi scheme.
If a Ponzi scheme has $2 erasers attached to the business model, and a few members sell $2 erasers, you can say their income came from the sale of $2 erasers and they didn’t participate in the Ponzi scheme.
But that in no way negates the Ponzi scheme running or legitimises the business model.
You’ve always been able to convince existing members to make investments in ACs after yours, so I’ve never seen recruitment of new members as having any bearing on the Ponzi scheme side of things.
The problem has consistently always been the investment in ACs, with no products being purchased and a ROI being paid out once a set number of investments have been made after the initial one.
Where’s citable data that proves your point? That “majority” of people do NOT earn income based on other people purchasing accounting units?
Please don’t cite personal anecdotal evidence as if it’s universal truth.
Yes products are purchased. Gift card purchases are product purchases. Very simple. Every gift card you can buy is from a merchant.
I can go to Woolworths in Australia and stop at a rack where they sell gift cards of other organisations. Lyoness do the same.
Buying a gift card from Lyoness is another way of purchasing goods and services from other merchants. The merchant receives the money. You can then shop at their stores with the card. Is this bit not clear?
No. The money is handed over to Lyoness, not the merchants.
As far as the Ponzi scheme goes, you can toss your gift cards in the garbage and write them off as an admin fee to cover your AC investments.
The ROI pay out is still conditional only on a fixed number of AC investments being made after your own and is still paid out of the newly invested money, it has nothing to do with the giftcards.
Your handing money over to Woolworths, you don’t actually purchase anything from said “organisation” until you use the giftcard.
As above, you can toss the gift card in the bin and focus on the Ponzi scheme side of things, thus meaning it’s possible to get paid a ROI with nothing being purchased.
Oz, are you saying that the merchants don’t receive the funds for the gift cards purchased through Lyoness?
And why would I toss them away? 1) are you saying that the merchants don’t receive the money for the gift purchases?
Not until someone actually makes a purchase with the gift card. Up until that point money is simply deposited with Lyoness.
Thus if you toss the giftcards (or use them to recruit new investors) you don’t actually purchase anything, but you still get your cash ROI if you convince people to make a fixed amount of investments after your own.
Your ROI has nothing to do with giftcards or the merchant side of things, it’s still solely only paid out once a fixed amount of investments have been made after your own.
As you can see, it’s a bandaid solution to Lyoness’ Ponzi scheme problem and it doesn’t really solve anything because mechanically, they’ve still got a Ponzi scheme on their hands.
Until the gift cards are redeemed (i.e. used to make purchase) Merchants get nothing. Isn’t that so?
No guys. Please understand. I’m telling you from a position of knowledge. This is how it works. Lyoness have already paid for the gift cards. The merchants sell the gift cards to Lyoness. This is fact .
Now the deal is, say for a $500 gift is offered, Lyoness has actually paid only $470, by way of example. The card is like holding cash but you spend the card only at the particular merchant. Can you believe what I’m saying?
Given that Lyoness have no idea who I’m going to purchase with, that’s not going to fly without something better than “hay listen to me guys, I know stuff”.
And even if they did buy copious amounts of giftcards from every merchant under them (where does all that money come from??), it doesn’t change the fact that I’m handing the money over to Lyoness
As a member, I’m still directly bypassing the merchant side altogether and not purchasing products from the merchants themselves. My cash ROI is still solely paid out on the condition that a fixed amount of AC investments are made after my own.
Are you *sure*?
Given that there are dozens / hundreds of merchants, how would Lyones know which one to buy the appropriate value from?
And why is this never mentioned by the merchant members, or even on the Lyoness website?
Why do I have a feeling that you just made that up, that Lyoness “pre-purcahse the giftcards?
The gift card is designated as the merchants own gift cards. These gift cards can be bought from other brokers/stores/the merchant themselves. It’s not a blanket open gift card. It can only be used at the designated merchant.
It’s the same as buying goods from them because the merchant has already received money. Lyoness have a large membership base hence they buy the cards off the merchants at discount prices from its face value. There’s your exchange of goods.
Your last paragraph is grossly inaccurate. It’s simply incorrect.
K.Chang, merchants don’t just appear on Lyoness. Once agreed, the merchant and Lyoness agree on the gift cards sold and then Lyoness buy them at heavily discounted prices.
Yes I am sure as I know this be fact. Believe me I’m being straight with you.
By buying at heavily discounted prices that’s how they reimburse a percentage back to the member. It’s called purchasing power and the members benefit, Lyoness benefit as they keep 1% and the merchant benefits as they just sold another $500 worth of goods which they received payment weeks earlier because Lyoness bought them at a discount.
I’m not making this up guys. This is fact. Now are you learning something new?
Gift cards are not an exchange of goods, they’re an exchange of money and are most certainly not the equivalent of purchasing actual products.
No products are purchased until a Lyoness member uses a giftcard.
The use of said giftcard is entirely optional in regards to receiving an AC ROI. The fact remains that a ROI is only paid out once a specified number of new investments have been made following the original investment.
You continually fail to address the above point.
Of course they are. The merchant has already been paid. They wouldn’t give a toss if you went in the store thereafter to collect goods. They received payment for the exchange of the gift card. An exchange has occurred whether you wish to acknowledge it or not.
A product purchase is a purchase, a giftcard is a mere exchange of money.
What they give a toss about is irrelevant. You cannot redefine the meaning of a product purchase.
Bottom line is, your mate Chang and you didn’t understand even the method or the process of gift cards. You don’t understand or you choose to not understand.
So I say to myself, if they can’t understand this basic fundamental, and acknowledge they are wrong – you just have to read your earlier posts – why should I even touch on your accusations about “ROI”?
Until you can understand this basic of functions, which you’ve just had an epiphany, why go on to your pet subject of ROI? You know I have your answers for this but I’ll just bide my time…
that a gift card is not a product purchase. That only happens when the giftcard is used to purchase an actual product.
End of story, thanks for playing.
Then you can probably address the pyramid scheme issue?
To be more precise, I identified a part of Lyoness’ business model to be a promotional pyramid, the part where people are making down-payments for giftcards, and where they can earn financial gains based on the recruitment of others (making similar down-payments) rather than from the sale or consumption of goods.
The parts I identified in the compensation plan were:
* NOT point 1 and 2 (Cashback, Friendship Bonus)
* Partially point 3 and 4 (Loyalty Cash, Loyalty Credit)
* Point 5 and 6 (Loyalty Commission, Loyalty Partner Bonus)
* Partially point 7 and 8 (Accounting Unit Rebooking)
* Point 9 and 10 (Volume Commission, Volume Bonus)
NOTE 1:
“Partially” for point 3 and 4 was because it didn’t have the same qualifier as the other points, the “recruit 4 people in your lifeline” qualifier.
“Partially” for point 7 and 8 was because it was difficult to identify the effect of rebooking.
NOTE 2:
I have already read some arguments where people claim the giftcards are partially purchased by Lyoness from a merchant when each down-payment is made, e.g. the member makes a down-payment to Lyoness and Lyoness then pays the merchant for a part of a giftcard.
So I’m familiar with that theory, but it hasn’t been verified.
@Bozzo
The definition I use for promotional pyramid is relatively similar to this one (the bold part):
It was just a random example, since most states or countries use a relatively similar definition as the bolded part.
LOGIC:
Down-payments are neither sale nor consumption of goods, services or intangible property.
The compensation derives from other people being introduced to the plan (and making a similar down-payment), with the prospect of an opportunity to receive compensation if other people are being introduced to the plan.
Can we re-visit Matt’s comment #440? If this is true and Lyoness is preparing to close down the advance purchase of positioning units in the various levels..can anyone else confirm the same infomation?
In Austria, they did “close out” the Premium option. It’s gone. The levels are now earned only by shopping and the people who positioned as Premiums are doing quite well as the company promotes shopping.
With a NA ad campaign ready to roll out, it certainly suggests that Lyoness continues to follow its business model.
Pound the nitro-charged pyramid build, then make the appropriate changes. Ingenious business strategy, wonderful for the founding reps and early players… comments?
Until a regulator looks, that is.
I may be completely wrong, but I can’t see U.S. regulators agreeing with your description of “ingenious” and adopting a forgive and forget policy WRT starting off as a pyramid scheme then going “legit”
Hi,
At this point its all speculation. How they change the CP and GTA is unkown but every country changes will vary little. Just have to be patient and see how it all unfolds.
My understanding as well and this is fact. Lyoness has opened up a headquarters in Miami to look after all the America’s, North, Centeral, and South America. They have hired a Law firm Grimes & Reese who are MLM experts and I speculate here…They will be in charge of updating the CP and GTA.
At this stage the model is flawed and needs to be changed regarding purchasing units. The subtle changes Lyoness have made still are not enough. At this stage they almost must get rid of that part of CP, but who really knows what changes are in store. WE can only speculate.
Not all members of Lyoness members know this, thy actually shop and use all parts of the CP.
Bozzo is correct about the gift cards, and how they work.
This review narrowed the compensation plan down to one flaw the purchasing of units. All the other 9 ways to make money are there and for most part people use it, but the hard core MLMers in California are by passing it all and just recruiting members and are puttng downpayments…this is the true focus of the review.
Thanks for the clarification, but that in no way proves that “Lyoness pre-purchased” the card from the merchant. It could just as easily be that Lyoness negotiated a set discount rate (Buy $75 giftcard for $65) and sell gift cards to be used in the merchants name. When the gift card is SPENT at the store ($75 value), the merchant gets paid $65.
In fact, I dug up a little brochure from Lyoness that has a couple interesting caveats:
http://www.thecashbacktools.com/uploads/lyo-appendix-us.pdf
Thus you are HALF right. Yes, Lyoness gift cards are for individual merchants. However, your OTHER assertion, that Lyoness do NOT hold the value of the card, but had already paid it out to the merchants, is NOT proven.
Furthermore, note the part above that says “not redeemable for cash”. This is against gift card laws in SEVERAL states, esp. California.
http://www.ncsl.org/issues-research/banking/gift-cards-and-certificates-statutes-and-legis.aspx
Thus, your claim that “we don’t know gift cards” may be premature.
@K.Chang
California seems to be the exeption rather than the rule?
But it can also depend on vague rules / vague interpretation of the rules?
Includes giftcards
Does NOT include …
The exemption does not apply to …
——–
ALL 50 STATES
REDEEMABLE FOR CASH?
The average rule for all 50 states is that giftcards CAN’T be redeemed for cash, other than for the remaining $5 or $10 (or < 10%) face value of a used giftcard.
GIFTCARD VS DEBITCARD, DEFINITION
* Giftcard is preloaded, but NOT reloadable
* Debit card is preloaded AND reloadable (in general)
* Giftcard should usually NOT have any fees (inactivity fee, maintainace fees, transaction fees, post purchase fee)
* Debit card can have fees.
MULTIPLE STORES CARDS VS SINGLE STORE OR CHAIN CARDS;
Most states seems to separate between these two types of cards, e.g. a WalMart card that only can be used in Walmart stores, and cards that can be used in several different stores not affiliated to each other.
Oops, giftcards CAN be reloadable, e.g. prepaid cards for mobile phones and similar cards.
When comparing rules for several states, it’s almost impossible to avoid mis-interpretations of rules.
OTHER DEFINITIONS:
* “Prefunded payment device” (rather than product)
* “redeemable for goods or services” (rather than cash, but this rule is not absolute)
A gift certificate is
* a “record evidencing a promise”
* “made by the seller or issuer of the record”
* “that money, goods, or services will be provided to the holder of the record for the value shown in the record”
So like I said, an actual product purchase does not take place until someone actually buys something from the merchant.
A “promise” is not a product purchase.
Thus it’s still possible to invest in AC units and earn a ROI on your investment without any products being actually purchased from the merchant network.
Let’s clear another important thing here. You guys still haven’t got it right. You say that by only buying the $75 AU and bringing in more people to buy these AUs will generate money, so it is an illegal scheme. If, it was true, than it would be.
But, the $675 you get from an AU that you “purchase” (downpayment for future purchase) will have to be spent thru Lyoness. So, you have to buy Gift Cards.
So, the money spending at Lyoness Loyalty Merchants will take place. Gift Cards, not cash. You get cash, if your AU that you earned from spending money at Loyalty Merchants will mature (35/35). In that case money spending at Loyalty Merchant took place before. Makes sense?
You didn’t purchase anything. You gave money to Lyoness and after a fixed number of new investments are made with the company you get a ROI.
Giftcards are not a purchase.
Entirely optional (flush the giftcards down the toilet, use them to lure in new investors) and has nothing to do with the ROI paid out (which is sourced from investments made after the initial investment, hence the required amount needed to be made before a ROI is paid out).
This is just another reinvent of different Garage qualifying or pure ponzi scheme….. ROI and Investments again… SEC will start looking into them as well, Specially now since so many from Zeek, Jump on this…
Also with the Zeek scratch back, If the money was spent with Lyonness they will still have to return it. So what happens when the SEC goes to collect monies from Lynoness from those who could not pay back profits from Zeek… Do you not think once they seem terms like ROI. Investments.
RUN RUN RUN…. You are buying prepaid savings… really… So why have the ability to use them, why a maturity time… Why do you have to wait for others to pre purchase before you can use yours… Typlical ponzi talk to allow enough money to come in to pay out..
If there are no products and services being moved to offset the monies exchangind hands it is a ponzi…. RUN RUN RUN
@oz… giftcards are not a purchase? i just paid $20.00 for a giftcard at a department store, that is not a purchase?
Not within the context of MLM. And comparing department stores to MLM companies is a pointless excercise.
MLM wise you handed over money and recieved no product. A giftcard is not a product in MLM.
As far as the department store is concerned a 20.00 Gift card is no different than 20.00 purchase of product. The difference would be with inventory.
20.00 purchase of a product effects inventory,and is recorded as a sale. 20.00 purchase of gift card would not effect inventory till its used but it would still be recorded as a sale.
Once the 20.00 gift card is used it would taken out of inventory…and because a gift card was used it would not be considered a purchase anymore because it was entered as purchase when the gift card was bought.
as far as accounting purposes goes if the gift card is never used it would still be a sale but no product was given. the merchant would still pay taxes on the $20.00 as soon as the gift card is purchased. The gift card would go in as general revenue.
Absolute nonsense.
It’s not a “sale” it’s a liability.
The retailer undertakes at some time in the future to redeem the gift card for its’ face value.
It only becomes a completed transaction if it is redeemed or it expires.
Not really. If you had studied double-entry accounting you’d note that in a regular purchase, you’d have
A/R = 20
Assets (merchandise) = -20
-20 because $20 merchandise now belongs to the purchaser. (Technically the actual cost is a bit less as the company would have bought the stuff for wholesale price)
However, in terms of gift card, you’d have
A/R = 20
Liability = 20
When the purchaser redeem the card the liability would go to 0 (zero) and merchandise gets the -20, but until that happens, the net “gain” is ZERO, i.e. NO PROFIT. No merchandise had been moved.
I’ll have to agree with Peter Fehr here. Goods are paid for when the giftcard is sold, not when the giftcard is used. The transaction of money happens when the consumer is paying for the card (actually for its content rather than for the card itself).
Receiving payment for a giftcard is clearly a taxable event for the merchant, in a similar way as receiving payment for goods will be. The difference is that deductions will occur later when the giftcard is exchanged for goods.
MLM runs into huge problems if products are not purchased.
A “promise” is not a product purchase. Handing money over to a company is not a product purchase.
The only thing that is a product purchase is… the purchase of an actual product. Until that actually happens, no product has been purchased regardless of what money goes where.
That is key in analysising the legitimacy of a gift card based MLM business.
You can show off all your fancy accounting and law lingo, but what can you do with a company specific gift card other than spending it? If you get a $200 Exxon/Mobil gift card you can spend it at Exxon/Mobil. Bank won’t take it as a deposit.
The number of Gift Card Merchants are fairly limited. They only have around 15, I believe.
The $675 you get after the $75 AU can also spent as Phone purchase. At Loyalty Merchants you use your smartphone Lyoness app. You type in the total you need to pay. The app returns a 6 digit code. The clerk types it in and deal is done. The merchant gets the money from Lyoness.
I’m sure you will find something against this as well! 😉
In Lyoness? Throw it in the bin because it has nothing to do with you earning a ROI. That’s dependent on a fixed number of new investments being made after your own.
Or you could use the card to lure new investors into the scheme (“invest and I’ll give you a giftcard!”).
Can shman, the fact that you can sit back, do nothing and earn a ROI once a fixed number of people invest after you negates anything on the merchant side of things.
Only if you are not using double-entry accounting.
In terms of only A/R (accounts receivable) the two are the same: $20 received. However the corresponding liability you incur is completely different. One involves a product, the other does not.
Give it away at a recruitment meeting raffle, perhaps? I.e. come attend my recruitment meeting and get free gift card?
So those 675 is held by Lyoness, NOT by any specific merchant, correct?
It’s not about “against” or “for”. It’s whether it’s evidence of legitimacy… or its guilt.
The fact that you pay to join (buy AU) and you get paid for recruiting other people who pay into the system, would make the system suspiciously close to pyramid or ponzi scheme, no matter what you name the payout (gift card, rebate, ROI) or the payin (buy AU, investment, buy ad package) etc.
Double entry accounting is not a problem. I believed ALL modern accounting used the double entry system in most cases?
You will need to post it 2 times using double entry both times.
1. When the giftcard is sold.
* Debit the correct account where the money comes in (bank, cash or whatever). “Increase the money”.
* Credit an account where the liability is created (increase the liability, money you owe someone).
2. Whenever the giftcard is used (if it’s being used partially each time).
* Debit the liability account (reduce the liability)
* Credit the account for goods sold (reduce the amount of goods in stock, and also for the purpose of calculating the profitability of goods in / goods out)
The book keeping here shouldn’t be more difficult than any other Debitor / Creditor book keeping. Giftcards are just the opposite of selling something “for credit”.
* For giftcards, the money is being paid BEFORE the goods are delivered.
* In Credit Sales, the money is being paid AFTER the goods has been delivered.
Both methods can be a normal part of a business. Both methods needs other types of accounting than cash sales, but Debitors and Creditors are a normal part of business and accounting. Both of them should be reflected in the balance sheet.
The trouble starts when people are making down-payments on giftcard purchases, when the agreement states there is no liability connected to the down-payments from Lyoness’ side, other than when the giftcard has been paid for in full. That transaction is not a normal part of any trade business.
NOTE:
There’s more than 20 years since I have done any book keeping, so I will sometimes mix up Debit and Credit. But other than that, the logic should be correct for Debitors / Creditors and for sale of goods. Down-payments is an area I’m unfamiliar with.
You can do that with your own cash, if you wanted to. But, why would you give that away? Than what is the point of being a Lyoness member? Give away your Loyalty Bonus? Sounds really silly to me.
Yes, Lyoness gives it to you in form of company specific gift cards, or you can spend it at Loyalty Merchants using your smartphone.
You get cash wired to your bank account after AU that was created by spending money at Loyalty merchants. So, there is no put money down and wait for paycheck option available, sorry. You either misunderstood, or got wrong info from someone.
Ok, I was just kidding. I think you guys do a great job, but you need more info on this system before calling it falsely a ponzi.
Ok, you guys still having just partial knowledge of the whole system. I’m here to help! 🙂
You must make a purchase within 30 days after registering. You must use Lyoness as a shopping community to finalize your registration. If you don’t shop, your registration gets deleted. So, every registered member knows they have joined the greatest shopping community on Earth.
You can buy something online, or buy a Walmart Gift Card for example, up to you. Once you make a purchase you start getting money to your Loyalty Account. Once that reaches $75, that creates an AU. You don’t have to “buy” these units. You can, if you chose to.
There is low and upper limit on how many of these AU can be purchased. Again, you don’t have to.
Earlier someone stated falsely, that the AU of the members you registered will go under yours. True, if you have one. If, you don’t have one, their unit goes under to your sponsors AU.
The system works with only shopping. You don’t have to get members in who pre pay AUs.
You can not put gift cards in as AUs. Or what do you mean? Throw it in the trash? Why? It’s a shopping community! Spend the money or gift card at Loyalty merchants.
The smallest ones are $50 from Walmart, Exxon, CVS. Why in the world would you give these away?
No option for putting money into the system and collecting cash to your bank account. Period. If someone told you, than they had wrong info, or lied.
Linking everything to purchases at Loyalty merchants makes the system work. If, it was a ponzy where ppl throw in money to wait for return, it would stop at some point.
The system is geared and based on shopping, why? Because you’ll never stop shopping. Shopping creates new AUs.
Depends on what you are in for. Are you in for loyalty discounts/cashbacks/special offers, or are you in for “income opportunity”?
OR if the AU was purchased directly by the Lyoness member.
The very fact that you *can* do so is a problem… Because it proves that Lyoness *can* operate as a Ponzi/Pyramid hybrid scheme where you buy AU, then get paid by convincing other members to also buy AU.
Lyoness is rather vague on how you can use the Loyalty Credits, so I’ll guess you can use them on making down-payments too?
Please clarify that point, point #4 in the compensation plan? Are people being forced to spend the Loyalty Credits on giftcards, or can they spend them on further down-payments? “To be spent within the network” can have different meanings.
@vik
Because you don’t earn a ROI for shopping, just for getting other people to invest in AUs after you.
It seems once again we have a Lyoness member going on about the merchant shopping side of things. Look, the fact that you can invest in AUs and earn a ROI by getting other people to invest in them after you completely negates the rest of Lyoness’ compensation plan.
It’s not that we don’t “get” the rest of the compensation plan, it’s that the AU investment scheme (which functions as a Ponzi scheme) overshadows and negates the rest of it.
Considering the information was sourced directly from Lyoness, that is highly unlikely.
You sound like yet another member sold on the merchant shopping side of things who is unaware of the possibility of treating Lyoness like a Ponzi scheme by investing in AUs and convincing others to do the same.
So does directly investing in them, which has nothing to do with shopping and directly bypasses the merchant network in that money is directly handed over to Lyoness, who also pay you a ROI after enough new investments have been made after your own.
Exactly.
Well, technically, Oz, you *could* generate AU via shopping too. So theoretically you *can* generate ROI via shopping (and encourage others to shop), but it’ll be a MUCH MUCH slower process.
Here’s Gerald “Zeek is not a Ponzi” Nehra explaining why you can’t base a MLM on selling gift certificates.
http://www.mlmatty.com/2012/09/coupons-vouchers-gift-certificates-and-down-payments/
Thank you! You are getting the drift! Yes, that point specifies what I try to tell the gang with not much success. They don’t want to hear me for some reason. Seems they know it all better.
That point say it all.
I have already explained this, but I can do it again! The $ value you get after these pre payment AUs is the same as what you get after the AUs created by shopping.
The difference is that you get the $675 after the $75 AU in cash into your Cash Account in your Lyoness web office. That money will be wired the next coming Tuesday to your bank account you have specified in your personal settings.
The $675 after a pre payment AU will go to your Purchase account in your Lyoness web office. That $ amount can sit there, or spend it on pre payment AUs, or can purchase company specific gift cards, or spent at Loyalty merchant shops that accept pay by phone service.
These purchases (gift card or pay by smartphone) will generate Loyalty commission again, sou you are on your way to create a new AU by shopping that will mean cash.
In the matrix when you move the mouse over an AU, the details tell if that Unit type: Down Payment, or Unit type: Loyalty Benefit. You get cash after Loyalty Benefit units and money that must be spent in/through Lyoness for the Down Payment units.
Not when you’re focusing on Lyoness as a Ponzi, which is something these “but what about the merchant shopping” Lyoness members keep overlooking.
Anything to do with the loyalty credit is offset by the fact that Lyoness affiliates receive a cash component of the ROI paid out that is greater to the initial investment they made.
Credit can be ignored and you still have a Ponzi scheme paying out >100% ROIs in cash, dependent on a fixed number of new investments being made after the initial one.
Anything outside of this core mechanic in the compensation plan is irrelevant.
You didn’t mention that if you have 35 AU above and below, Lyoness pays “loyalty cash” instead loyalty credits. From the Appendix:
While it’s pretty obvious Loyalty Credit is only to be spent with the loyalty merchants (and maybe make more AUs), loyalty cash was not clearly defined in the appendix.
However, the only other place “cash” was mentioned is about “cash account” which can be withdrawn to bank account if it exceeds $15.
In other words, If you have enough AU, loyalty credit becomes loyalty CASH, that can be withdrawn.
Please answer the question in post #512. Can you use the Loyalty Credit to make down-payments?
If we use ACIII as an example, where the payout in Loyalty Credit will be $2,400 when the Above/Below is “filled” 25/25. Can you use $400 to pay for a giftcard (to qualify for a $2,000 down-payment), and use the remaining $2,000 on down-payments?
I described the reason for this question in post #512, “To be spent within the network” can have different meanings.
*******
I have also a question about the Accounting Unit Rebooking, point 8 in the CP.
“Will be rebooked into * AN * accounting unit within the next accounting category”.
Does that mean your 35/35 from ACI is being rebooked into 1/0 in ACII, or does it mean something else? The 1/0 example I used here was to make it understandable, assuming the next category is “empty” when the rebooking occurs.
@vic
You can ignore part of my post #520, since you already have answered the main part of one of the questions.
The question was about how you can use the Loyalty Credit, whether you had to use it on giftcards or if you could use it to make further down-payments.
You CAN use it to make further down-payments, e.g. to speed up the process of creating more accounting units.
I used ACIII as an example. Do I HAVE TO make a $400 giftcard purchase to “qualify” for a $2,000 down-payment, or is that rule only related to the first down-payments (e.g. the “buy a $600 giftcard, and make a $3,000 down-payment”)?
Let’s start with the basics. This above quote talks about loyalty account accumulates $75. You can not put money to your loyalty account.
Shop at loyalty merchants or buy gift cards. Depends on the merchant, you get a % of what you spent. Those cents and $s accumulate in your loyalty account.
The AU created from the accumulated $75 will result a Loyalty Benefit type unit. After 35/35 you get $675 into your Lyoness Cash account and next Tuesday will be wired to your bank account. Clear?
Yes, cash you receive on your Lyoness Cash Account will be transferred to your bank account.
On the other hand, once you have 35/35 after your Pre Payment units, you WILL NOT GET CASH!!!!! You get $675 in your Lyoness Purchase Account. That is not CASH. That is money to be spent at Lyoness Loyalty Merchants, or Gift Cards, or new Pre Payment AU.
But, once again, no cash. That means, if you put a lot of money into this system, you will end up a lot of money to be spent at Lyoness Loyalty Merchants.
Please, say you finally got it!
Check the Lyoness compensation plan material again, as according to it you most certainly do (along with your credit).
As per the Lyoness US compensation material (the following is my summary used in this review, taken directly from Lyoness compensation plan material hidden from the public):
Every Lyoness member harping on about the legitimacy of the program always and without fail conveniently ignores this cash payout, which is a >100% ROI (a 264% ROI to be exact) on the initial investment made ($75).
Yes, the money in your Lyoness Purchase Account can be spent on Gift Cards, on new Pre Payment AUs, or spent at Loyalty Merchants who are accepting smart phone purchases.
Yes, the gift card purchases are necessary, but not as you described. If you are a regular shopper, order your gift cards on the regular bases, you don’t have to worry about that.
Before a $3,000 down payment you need that amount in your shopping history (past 12 mths). So, if you already purchased $3,000 worth of Gift Cards you don’t have to buy $600, because you are making a down payment.
Yes, the matured unit moves to next level. But next level is not empty. All levels have thousands of units from your upline.
So, your own web office in Accounting Level II might be empty, but your first one will be placed right after your sponsors Account Level II units. And there is a chance that his next will be in front of yours.
That is how the whole up and down line is building the same matrix on all 5 Accounting Levels.
Loyalty Commission is paid in cash, you are right! This Commission only applies to those who have least 4 directs with units. These amounts are paid at these unit constellations
@ 3/3 $12
@ 5/5 $18
@ 10/10 $24
@ 15/15 $36
@ 20/20 $48
@ 25/25 $60
Thankyou, come again.
I have never said otherwise, but you kept telling that $675 commission is cash no matter what kind of unit it was.
This has never been the case.
As per the original review, written in May 2012:
This is what happens when people don’t read the reviews they are commenting on.
The issue has never been with loyalty credit, it’s with the cash payout. Every few weeks we have a Lyoness member coming here and going on and on about the merchant side of things, claiming I and everyone else just don’t get the compensation plan and arguing that the loyalty credit legitimises everything, whilst completely ignoring the >100% ROI cash payout they get once a fixed number of new investments have been made after their own.
I’ll say it again for the umpteenth time: This core cash ROI payout mechanic of the Lyoness compensation plan makes it a Ponzi scheme and overshadows everything else.
The original review on the top of this page has some misleading lines like this
Least? Not really.
In Lyones members web office, there is an option in personal settings where you can set that all cashback goes into Loyalty account.
That means, for example, I have to spend “only” $750 at a merchant that offers 10% Lyoness benefit. The 2% Cashback and the 8% Loyalty Benefit adds up to 10% total.
Your assumption that no money comes in to Lyoness is fals as well. 1% of all registered purchases goes to Lyoness. That was left out of the review, too. Than, you may start to think, these guys make a lot of money!
On average members spend $2 – 3,000 to create a Loyalty Benefit Accounting Unit. 1% of that is $20 – 30. Times 70? And they pay $675 to member, plus $198. There still a lot left.
Like I said, everything, including your nitpicking on random points (regardless of cashback, you still initially spend the specified amount), is irrelevant upon consideration of the Ponzi scheme that exists within the Lyoness compensation plan.
Sorry, I will never criticize, or point out errors! 😉
Like I said, cashback doesn’t change the initial amount payable. Feel free to point out errors but not at the expense of ignoring the glaring Ponzi scheme infront of you.
This blog is built on reader interaction with the reviews written and an open dialogue aimed at providing those searching for information with the most accurate and broadest of discussion possible.
You’re contradicting yourself. After you have 35/35 you get loyalty cash instead of loyalty credit, thus you definitely WILL GET CASH as you stated.
You are welcome to point out errors, but are they real errors that leads to error in analysis, or are they minor errors that does NOT affect the analysis?
Link to the compensation plan can be found in post #42.
Point 3 and 4 are using the same “Above/Below” payout model, but point 3 is about cash payouts and point 4 is about credit payouts.
The payout table is the “Above and Below” system for the accounting units, e.g. 35/35 for ACI, 30/30 for ACII, 25/25 for the others.
This thing was written so obtusely that it’s open to interpretation any which way. I suspect this is done deliberately to confuse people.
The way I interpreted it, if you don’t have 35/35 yet you get loyalty credit. If you do have 35/35 you get loyalty cash.
M_Norway, are you telling me it could be interpreted some other way?
You will earn cash under point 5 in the compensation plan – the Loyalty Commission (4 direct recruited is required). Payouts 3/3 5/5 10/10 15/15 20/20 25/25 — from $198 total to $19,800 total (AC1 to AC5).
Point 9 and 10 do also pay in cash, but those points are about Career Units (huge downlines).
You will also earn the cash bonus under point 6, a bonus from what your downline earns in commission from point 5 — 2 levels deep, 18.75% from directly recruited and 6.25% from indirectly recruited members.
@vik
How does point #9 in the compensation plan work, the Volume Commission / Career Units?
SOME DATA (from the CP)
Career Units per category (ACI – ACV): 1 3 8 24 80
8 different Career levels, 1-8
Total Career Units: 100 200 500 1,200 3,000 8,000 20,000 50,000
$ per Career unit: 1,875 2,437 2,813 3,187 3,563 3,937 4,313 4,687
THE QUESTIONS (in bold)
1.
1 career unit = same “value” as ONE $75 AU, e.g. you’ll earn 8 Career units for 1 AU in ACIII?
2.
It’s a Volume Commission, so I’ll guess the “Total Career units” (100, 200, etc.) is about how many units created per month in your entire lifeline?
* with a “max 50% from one line” rule
* 1st month = “qualify”, 2nd month = “confirm”
* and with a “perfect a level” rule, preventing you from dropping down one or more levels when you first have qualified and confirmed a level.
The points are only “additional info” from the compensation plan.
3.
The compensation plan says “$ per Career unit”. Does that description reflect the reality?
Example:
I have qualified for Career level 1, with 120 Career units created in my lifeline that month. All my directs are at level 0 (they haven’t qualified for the Career levels yet).
$1,875 * 120 units = $225,000
It doesn’t exactly sound very correct?
The coma is actually a decimal point. It is $1.875
That’s what I said. It didn’t make much sense. 🙂
This is the updated comp plan.
http://cdnlarge.lyoness.net/downloads/pdf/us/download/infos/lyo-compensation-plan-us.pdf
Thanks for the update. What has changed? 🙂
@Vik
The loyalty commissions is still a cash payment, dependent on new investments being made after the initial one, nothing more. Still an effective Ponzi scheme, yawn.
Unilevel, binary, lifeline, one up, upline, downline, don’t dare to crossline…all spell one thing-mlm pyramid scam.
Greed knows no limits!
If something sounds too good to be true, IT IS!
Get-rich-quick scams come and go all the time, yet SUCKERS keep falling for them!
Lyoness is just the recent or latest one, it too will fall like Zeek.
They had a $300 qualifier to activate the membership within 30 days. That has been changed to “NO minimum requirement”.
Other than that, the changes seems to be “cosmetical”, e.g. making things clearer by adding some DEFINITIONS
Some CORRECTIONS:
* The Bonus Units have some corrections in the “from top to bottom and left to right” system (section 7 in the CP).
* The decimal sign error has been corrected to U.S. format rather than European (Section 9 in the CP). “Carrer Units” has been renamed to “Career Points”.
CONCLUSION
The change are cosmetical, and will mostly affect the “consumer” type of users = people who are only interested in the cashbacks on their own purchases / NOT interested in the AC program.
I have only five words for you!
Beam me up, Scotty! Lyoness.
If I could weigh in on this ladies and gentlemen. I have recently started up my own business after having worked for over 25 years for a large corporation-a business unit of UTC no less, clawing myself up to the middle only to get thrown on proverbial scrap heap and given golden parachute that my wife has referred to as a led balloon. I digress.
My new business provides a value added basket of goods to some small and medium size vertical markets where I could provide digital signage, electronic security and A/V solutions to such niches as restaurants and small financial institutes etc.
Anyway I was introduced to Lyoness and have over the last few months looks at this opportunity every which way, including reading about these for the most part well researched dialogues (and diatribes) which that many of you readers have posted regarding the pros and cons of Lyoness.
I thought about purchasing a premium membership with the thought of making this available through my proverbial basket of goods.
I thought with this membership I could in turn successfully sell premium memberships to these small business as a way of possibly recovering the cost of my systems and rolling the $3 Grand plus cost into the cost of my electronic solutions and taking that gross total amount on their behalf to a third party leasing company.
I showing Lyoness blurbs in my media players when I was doing presentation! However I soon realized I could not see merit in the service. And with all due respect to all the time spent on this discussion board as to the legalities of the services offered, those issues to me are nothing more than minutia.
Let us first look at Lyoness at face value as a vehicle for merchants to increase business with the efficacy of their loyalty rewards program. And to do so let me examine as a member of the forever hollowed out middle class, my own buying habits.
Both my wife and I have our own companies operating out of our house. Most of my personal shopping is done @ Costco with their proprietary AMEX which provides me with a 2% discount-hello can anybody say Loyalty Rewards Program.
This is combined with the additional 2% discount with my Gold Membership Costco card (which I can deduct as a business expense). I have friends in the textile industry so I get my bedding and clothing in the form of samples and I shop at a few small specialty delicatessens and I buy my fresh food directly from the farmers and fisher who are domiciled here in Vancouver @ Granville Island.
I’m sorry to say I have no use for the card. But it also got me to thinking and I think you K Chang touched on this point recently, that Lyoness is functioning more and more like a credit card company. And their doing so because they see these credit card companies actually have many more bullets in their gun to dovetail a loyalty rewards program into their financial services they can offer merchants.
Making a long story short, I don’t see how Lyoness can compete. As opposed to putting my money or the debiting of my account up front to buy a gift certificate, I buy my purchases on credit interested free (at least the case of AMEX) for up to 51 days.
Without the revenue accruals from the Ponzi side of the business, I can’t see Lyoness as being viable. And when smart card technologies become the standard through which we buy our merchandise (and I assure you it will). Merchants can set up their own loyalty reward programs and it’s adios Lyoness!!
That’s pretty much the take home point here.
Smart card technology ALREADY setup their own plans… Square and Isis comes to mind immediately. Both already have loyalty programs and such.
Heck, Starbucks just teamed up with Square. There are also bazillion companies that’ll run your loyalty program for you… if you’re big enough.
Lyoness has legal parts. Those are NOT in doubt. The problem had always been the Ponzi-like aspects of “buying AUs”, and adding purchase requirements before you can buy AUs doesn’t change the fundamental nature of the Ponzi-likeness.
Hi, I’ve been reading this long email trail and I have to say that you are all correct. This Lyoness is a scam. I know I was a premium member but found this a dud. I had to recruit members and obtain $3000 from elderly people and others that really couldn’t afford it. They made no money so I felt guilty and cancelled my account. I could not believe I got suckered into this scam.
@Michelle,
Do not feel bad – WE (wife and I) were suckered into buying a set of pots and pans for $2100 and a high chair for $300 before. Both of them are long gone now.
Let the healing begin.
Yes thanks @James. I was however earning $50,000 a month but the fact that members in my lifeline were not earning anything just made me feel guilty for them so I asked Lyoness to stop my payments and cancel my account.
I just did not want to be part of this Ponzi. Was not right so I got out after 11 months.
SO…You had a crisis of concience all of the sudden. At risk of appearing a skeptic, I ask, ARE YOU KIDDING?
You gave up a half a million dollars and then posted here to ease your tortured soul? The wonders never cease in this forum. I say “Goose Gravy!”
No I took the money at the time and spent some but I felt guilty earning $50,000+ a month on the back of others so I quit Lyoness. Didn’t think it was fair on the retired folk and others that paid $3,000 that really were struggling.
Do you think I should have stayed on?
What??? Hmmm… if i was earning 50.000$ a month and i had a crisis of consience then i would do the following:
Each month i would give out 3.000$ to 15 people of my downline (who really needed it) and i would keep a decent amount of 5.000$/month for me.
Excuse me to ask… but from which payment of Lyoness did you managed to get this amount? Can you give me an estimate of your lifeline and your carreer level?
Mike, I had around 2600 in my lifeline but not precise as I no longer have access to my Lyoness account.
I was a confirmed Level 6. I was getting volume bonuses, loyalty bonuses, etc etc. Can’t recall exactly as I don’t have access although I still have the SMS messages received every week when money was being deposited into my account.
I was receiving a huge amount of bonus units and units from shoppers which looked legitimate but I know better. This scheme is not fair on those down the line so I got out.
My husband still loves me but thought I was mad to leave the scheme. It’s a Ponzi and I want to sleep well at night.
I have two questions Michelle:
1. You said: I was receiving a huge amount of bonus units and units from shoppers which “looked legitimate” but I know better. –> What exactly you mean by “looked legitimate” and you know better?
2. You said : This scheme is not fair on those down the line so I got out. Who exactly are the “those down the line” ? You mean Premium members down the line? You mean free card members down the line?
Who exactly is the victim here? Weren’t you in the past “down the line”? What changed your mind?
The only way to get kicked out of lyoness is your are personnel involved in pornography, violence, gambling internet sites, prostitution….or anything that seems to be breaking the law. They distance themselves from it.
Once your lifeline has started it and it is that large it grows on its own….and you cant stop it because there is people above you and below you…so your account will just continue to accumulate money…and at this point Lyoness is benefiting using your money to collect interest on it.
Lyoness web office has in the personal settings has an option to donate money to the Children foundation or Green Infinity, or give the money away to your own charities to remove the guilt that you feel, but to do nothing accomplishes nothing other than Lyoness holding your money.
Hi Mike, I was receiving grey units in my accounting program which they tell me are units from shoppers spending worldwide……?????
My downline was filled with premium members.
This is all Greek to me. Some of my friends in Europe are Lyoness members and they are making a small fortune every month with Lyoness. And they sleep well at night.
In fact, I’m one too and I use the system and I get paid for using the shopping system. Couldn’t be happier.
The problem is you are talking about two different things: being happy with the shopping, and making money.
The question is simple: are your friends making money because they recruited a lot of shoppers? Or are they making money because they recruited a lot of people who are buying AU’s?
Oh you mean premium members or ordinary shoppers? They have recruited free members and premium members. They are all shoppers though.
So they’re playing the Ponzi investment scheme, and as such that’s most likely where all the $$ is being made.
You seem to understand the concept of Premium members and buying account units. Funny, I thought this was all “Greek” to you?
Yep you might be right. By the way, are you talking from experience, i.e. are you a member, or are you second guessing or simply just know it to be true?
You don’t need to be a member to understand and analyse a compensation plan.
Interesting analysis. You sound like you know what you’re talking about.
Former or current members will usually fill in missing details if there is any, so you don’t need to become a member to understand the compensation plan.
To understand something, you’ll only need access to the correct information and to be able to understand and analyse it. I’ll guess we can agree on that? Becoming a member of something will NOT automatically improve how able you are to understand information, will it?
The correct method for defining something is to identify the primary function, not secondary functions. So your logic fails in your statement “They are all shoppers though”. If a premium member makes a $3,000 down-payment the primary motive is to participate in the compensation plan, making the member become an income opportunity seeker rather than a shopper.
Accounting Units are neither products nor services, so people don’t actually shop when they’re booking accounting units.
The cashback solutions are about shopping. Buying giftcards can qualify as shopping, i.e. as payment for future shopping. Down-payments do NOT qualify as shopping.
Recruiting people will usually have nothing to do with shopping.
It probably is. It seems like you’re operating from some kind of “world view” or “belief system”, with rather vague and misleading definitions.
And? I live in a capitalist society and last time I checked that was still legal unless you know otherwise.
By the way, if a premium member does not use their account for shopping they drop out. Gone. Comprende?
Never said seeking income is illegal. However, operating a Ponzi or pyramid selling scheme is, and so is participating in one.
If the amount of income they derive is vastly greater than any shopping, then this shopping requirement is rather irrelevant.
Also, can you please point out where is this mentioned in the Lyoness member agreement?
False. Invest in AC’s, buy the token amount of giftcards, throw giftcards in the bin, convince enough new or existing members to make a fixed number of new AC investments after you, earn a ROI.
There is no shopping involved.
Why would I throw a gift card in the bin? I can buy computers, gas, etc etc. I’ve paid for the gift card. Why would anyone throw cash in the bin? You’re not making sense Oz.
Why is it that…(Ozedit: removed offtopic spam)
To illustrate the fact that a purchase is not required to participate in the AU investment scheme.
Remember, you claimed that if Premium members do not shop they “drop out”, which is not the case.
What you can do is irrelevant when you are able to bypass shopping altogether, invest in AUs and earn a ROI once enough new investments have been made after your own.
Please read the 500+ comments for further discussion on this topic. You’re not the first Lyoness member to rock up here and start crapping on about how shopping supposedly legitimises the Ponzi scheme side of Lyoness.
Bypassing shopping is impossible. Of course you know this already. Any other questions you have about this scheme that might assist you better understand it?
Invest in AU’s, buy token giftcard, throw giftcard in bin, convince enough people to make a new investment in AUs after your own investment and earn a ROI.
With the above scenario being entirely possible and bypassing the purchase of an actual product (shopping) altogether, your statement is clearly false.
Comments such as “you are wrong” with no further explanation or facts backing up your assertion will continue to be suitably marked as spam.
You tell them Oz!
When i “invest” in AU in fact i buy a produc t but i recive product after i pay the rest of ammounts.
There are no buts, you either bought or didn’t buy a product. When you invest in an AU the fact of the matter is you didn’t buy a product, you invested in an AU.
Yep that’s right Oz. When will they learn??
With gift card you not buy a product? Then invest in gift card its a ponzi.
Are you *sure* you understand how Lyoness works?
So
a) buy accounting units
b) encourage “above and below” to also buy accounting units
c) PROFIT!
In fact, this member said so! (Let me guess, she “misunderstood”?)
http://www.getresponse.com/archive/interestedpeople/Interested-People-Lyoness-Simplified-9015355.html
When you see the word “cycle”, you should run, because that means the whole thing is a pyramid/matrix scheme.
You can, but a gift card in and of itself when paired with a MLM compensation plan is not a product.
Only if there’s a compensation plan attached that pays out a ROI the more you “invest” in cards.
Maybe I’m in the MLM parallel universe or something but I still wish to re-iterate what I have previously stated. The MLM Ponziesque aspect of the company not withstanding, to me the real issue is the viability of the product and/or service delivery model they are offering.
Why as a consumer (and Cardholder) would I want to pre-commit monies prior to my purchases (and go through a rather circuitous rigmorale to do it), rather than make my purchases on a credit card,(like the Bank of America Visa or the Costco AMEX) that gives me the same percentage discount with no interest charges for up to 51 days? Could a Lyonness Card holder please explain this?
Moreover, from the Merchants point of view, he/she can set up customized loyalty rewards programs through apps available with organizations such as SQAURE which incidentally unlike Lyoness gives their POS reader to Merchants free of charge,and again unlike Lyoness, performs the double duty of debiting the credit card purchase. Lyoness can’t even come close to competing with this.
So again, I implore an active Lyoness cardholder to make comment on these dynamics. What am I missing here?
Best Regards
AU represent a smal part of my purchase. AU is a small part from product that i buy. AU IS NOT AN INVESTMENT.If you see the Lyoness movie “All about LYoness”(full movie ~34 min) you understand that.
Whit AU I reserve a product and if I want I put the rest of the money and recive the product.
Irrelevant to the fact that you didn’t actually purchase a product.
An accounting unit is not a product.
Sure it is, you plonk money down for one, get enough people to invest after you and earn a ROI.
And if you don’t want to, you still get a ROI – after you convince enough people to invest after you.
MJW, what the lyoness members claim is this; they say add up all your shopping retailers you visited in the last month. Every single one. Forget about the amounts.
Then, pick out those you visited where you paid sticker price, for example where you didn’t negotiate anything but paid sticker price. And in fairness they’ll be plenty of them. Then they say well these vendors they’d like in Lyoness and therefore from now on you do get a benefit by shopping there when previously you paid sticker price without blinking.
And the savvy ones would pay with their credit cards at point of sale and still earn rewards points on their credit plus earn cash back from Lyoness where previously they didn’t. So that’s their argument and dare I say a pretty good one.
Here in Australia if the Lyoness members receive a product disclosure statement then it’s an investment but they don’t I’m told which therefore is a down payment for future spend.
This has been cleared by government regulators. So this means that either government regulators are incompetent – and many can successfully argue this to be true – and Oz is correct or put simply Oz is not correct and government regulators have all the facts before them.
But as this blog is about the US system, it may be different so maybe Oz might understand a few things that the majority is missing! Go Oz!
I make a comparations. When I buy a gift card(not product) somebody earn a.. watsis difrent?
Nelson yep you are correct. Just watch the spelling ok son?
Can you prove that? Or is that merely “implied” by the fact that no government agency, such as the ACCC, had gone after them… thus far?
Yes, I can prove it. I have a question for you. If I can prove it will you believe it?
Hassan: You wrote
That’s not my understanding about how it works.
I had originally thought about getting a card for the much vaunted 2% off all gas purchases through Petro Canada-our nation’s largest gas retailer. I phoned the Lyoness Corporate Offices in Toronto and they told me that with Loyalty Merchants that do not have Lyoness POS readers, you have to purchase gift cards.
Ad as we all know all Lyoness accepts is money orders-which to me is suspitious in an off itself. Again, if any one is out there using a Lyoness Card please fill us in.
…that a gift card is not a product purchase. Duh.
Depends on how well you prove it. 🙂
@Hassan
Given that no government agency (Australia or otherwise) will publicly sign off on the legality of a specific business (that’s for the courts to establish), I’m calling bullshit.
If I gave you the link to the state govt website or a letter from the MP concerned I’m calling it you still won’t believe it because you will most likely state that they don’t know what they are talking about as you know how it works as a non-member! I’ll still back you and your site though!
The gift cards have a value, so I am not sure what kind of person would through away money. So I think it is wrong of you to say “Just throw them away”.
They value in them is when they are used otherwise its like having $20.00 in your pocket until you need to purchase something. If you are going to review Lyoness you must review the whole package, and all it’s offerings.
It seems you have narrowed it down to Gift Card Downpayments.
A normal thinking person would not be involved in Lyoness just for the purchasing of units. Even though you suggest a person could.
Lyoness has been around for 9 years now and in the Americas for 2 years.
In Europe it seems to be operating fine, so if there where any series issues it would have been addressed by now.
The fact that it is tied in to shopping creates a legal environment.
Lyoness is total aware of keeping it legal, they are well aware of Zeek and its issues.
You put down an example of what can possible happen and how some people could try to build a business this way. U try to simplify it by purchase of units. But the cash generating by downpayments are credits which you must purchase gift cards with.
Since your of the opinion that gift cards are worthless than in your theory it is a useless model.
Now if you shop and create a cash unit than we are talking real cash can be created. Now this is the way to build your business. You need to create your own cash units in Lyoness.
Bravo Peter! Well said….. Now someone please close this crappy blog. I’m addicted!!!
@Peter
But are not a product, nor do they constitute a product purchase.
Nobody claimed they didn’t have value, so I’m not sure why you’re chiming in with that (an attempt to shift the goalposts?).
Whether you do or don’t and why is irrelevant, the point was you can. In doing so, no product purchase is made yet after convincing enough people to make new investments after your own, you still earn a ROI.
You seem to have (deliberately?) missed this point.
It’s not about a lack of value, it’s about illustrating the complete irrelevancy the giftcards when using Lyoness as a passive investment opportunity.
You mean accounting unit investment… and yes, ever since the review was first written and throughout the 500+ comments that followed, this one aspect of the compensation plan has been the focus because functionally, it operates as a Ponzi scheme.
Whether you think people who are interested in playing in Ponzi schemes are “normal” or not is irrelevant.
If it’s possible to treat the opportunity as a passive Ponzi scheme, then it is a Ponzi scheme.
Is an apple iTunes gift card a product??
No, what you purchase with the giftcard is the product. The card is just an exchange of money.
Note: We’re discussing products within the context of MLM business models here. Attempts to derail said discussion will be marked as spam.
What sort of nonsense conclusion is that to draw ??
From that you deduce because something hasn’t happened, it’s not going to happen ??
Just research “Madoff ponzi” and you’ll quickly see just how nonsensical your statement is.
Despite the attention this and other blogs may afford it, in the grand scheme of things Lyoness is just another one of millions of shady “opportunities” in existence today.
The fact the relevant authorities haven’t YET investigated Lyoness means nothing.
AU=Gift card (when i exchange money to AU some win = when I exchange money to gift card some win) . If gift card is legal then AU is legal.
What happen to Leslie ?? She is a feisty one. =)
@Nelson
An account unit is an account unit and nothing else. If it was a gift card, it’d have been named as such.
So why throw gift cards in the bin??
To illustrate the fact that Lyoness members are paid out a ROI on their investments solely once enough new investments have been made after their own.
Too many Lyoness members crap on about gift cards and purchases made with them, when in fact they have demonstratably nothing to do with the ROI paid out to members (as evidenced by the fact you can just throw them away and still earn a ROI).
I want to see the REASONING behind the pronouncement. After all, that’s why we all have opinions. We are allowed to change our minds if there’s sufficient evidence. If you have data, please share them.
@Kasey
Generally speaking people who have such proof are upfront with it.
In any case, Australian members of parliament signing off on anything is hardly a measure of legitimacy. Not to mention the fact that it’s the business model that defines the legitimacy of a company, not whether or not someone has signed off on it.
The fact of the matter is regulatory agencies don’t sign off on individual businesses, Lyoness or otherwise. Anyone else “signing off” on anything is just fluff.
Where are all the non-authorities who “signed off” on Zeek Rewards now?
Fallacy of composition. Just because AU is in some way like a giftcard, doesn’t mean both are legal.
http://yourlogicalfallacyis.com/composition-division
Besides, we never said AU’s illegal. It’s that you are PAID on purchase of AUs that makes it potentially illegal.
You’re answering the wrong question.
Try again.
Perhaps, but I’d still want to see them, if only to pick it apart.
After all, it can’t be worse than having an accupuncturist being a western nutritional company’s “medical director”. 🙂
… or a micropaleontologist claiming to be a anti-vaccine expert who insist on being called “Doctor”… 🙂
The fact the relevant authorities haven’t YET investigated Lyoness means nothing.
Actually they been looked at in Europe by courts. A disgruntled employee took them to court on various claims but it was regarding wording in advertising.
Other than that everything is on the table to examine…to bring in madoff, into the discussion is pointless what he did was fraud….there is a difference. it’s only about lyoness and creating units.
Everyone on the site is clear with it and Lyoness opening advertises it, there is nothing to hide…..I think we can agree to disagree, until the courts make them change it..it is what it is…just another mlm like or not.
I am currently at 37 members and have only 1 premium member that is a fact and I wish I could sign up more premium members……
In a ponzi scheme when the pyramid gets to big, eventually the people in the end will end up holding the bag.
So they can not recoup there investment.
this is not the case here. The only purchase is the AU one time 3000.00 payment and as long as your sign up a few members and you shop you will get your money back, it is a matter of time.
So really nobody is getting hurt in the process. Ponzi scheme is fraud…lyoness in not fraudulent…there advertised claims are all true.
So to be illegal somebody must be ripped off in Lyoness….who is getting ripped off??????
And what happens when you re-invest? And how many members do those new members need to recruit and convince to invest to earn their ROI? And how many members do those new members need to find?
Over time this shares the exact same sustainability issues inherent in all Ponzi schemes.
You and I both know if everyone solely relied on “shopping units” and they abolished the direct investment into units the business would be dead (the maturity period would blow out into years).
You said it yourself, you wish you recruit new premium investors. Why? Getting people to invest is where the money is for affiliates. Just like in a Ponzi scheme.
The take your date of birth and in Canada we have a social security number for the government and you can only register once with Lyoness.
There is no reason to reinvest in Lyoness you have achieved the highest entry level.
Recruit as many premium members as you can, I am trying to do it. and the plan is for members down your line to get members to join Lyoness…..nothing wrong here so far.
No they don’t have and sustainability issues because even the last person to join Lyoness can still recoup his money just by shopping himself, it would take a while but it is possible.
Yes it would slow things down for sure, but you can still recoup your money back, so who gets hurt and what can you complain about….maybe you complain you are not getting your money back fast enough…but this is not illegal.
I repeat a Ponzi scheme is fraud recruiting members is not fraud if the compensation plan is laid out for them clearly. because you know what your getting into.
Now if a person with lyoness was to make some false statement or projections yes this is wrong and that individual person should be sued for misrepresenting Lyoness. Lyoness is creating a brand that is social acceptable and there is a lot of rules on how to represent Lyoness.
Ponzi scheme is fraudulent, just because you have to wait a number of years to get your money back….this is perfectly legal.
Lyoness advertises in its video it’s not a matter of if you get your money back it’s a matter of when you get it.
What does that have to do with anything? You don’t need to sign up again to re-invest in account units.
and invest in account units so you can earn your ROI.
Ponzi scheme ahoy!
Such that nobody would participate as an MLM business opportunity.
Telling people they are participating in a Ponzi scheme does not change the fact that it’s still a Ponzi scheme. Fraud doesn’t even factor into it, it’s a legal concern and is not a consideration when analysing the business model.
investing your own money and earning a ROI off of other people’s investments, who in turn need to convince others to invest (or re-invest) for them to earn their ROI.
Or in other words… the Account Unit component of the Lyoness business model.
I put this to clarify you can only invest once into Lyoness.
Which is not illegal.
you dont know this, you can assume this…dont need to speculate here.
Of course fraud is relevant in a ponzi scheme. Lyoness is not tricking or misleading people. WE are not analysing a business model here only the AU component…
The other part of the model is very relevant here. It helps generate you some money so if you can not find premium members you can still recoup your orginal investment, by recruiting shoppers.
so no fraud here …no ponzi here.buying units in itself is fine. one time investment recruiting other to do the same is okay because no matter what you can recoup your money back.
Let me ask a question here. If this is all illegal who gets hurt how do they get hurt, and will actually file a formal complaint.
One big differenct between zeek and lyoness is, there is no ongoing monthly fees, you don’t have to buy motivational tapes, you dont have to pay for books, you dont have to buy products that are over priced. you dont have to pay 100’s of dollars to go to meetings.
all you have to do in lyoness is go buy some gas which you need, go buy some groceries which you need, go to the drug store and buy some medicine which you need. Thats what I do once a week and I save and I get other people to repeat the process.
Any minute now, Mr Bryant is going to come out with the old “ponzi or pyramid” deflection so popular with online get-rich-quickers
In BRYANTworld all a fraud operator has to do is use elements of both ponzi and pyramid in his/her plan to become legit.
Who cares if a scheme is a pyramid or a ponzi or both??
Any business in which it’s possible for members to make money based on recruiting people who recruit people and in which “product” and “sales” are of secondary consideration is a business to be avoided by all those looking for a legitimate MLM based income.
Get-rich-quickers on the other hand, find such recruitment oriented “opportunities” attractive.
I am not deflecting anything, Its in the compensation plan. You either like it or you don’t. Nobody is getting hurt in it, or being ripped off, but at the same time it’s not for everybody.
But not relevant to participation and re-investment, so irrelevant.
Nope, because it can be bypassed altogether when participating in the Ponzi scheme business model.
Fail.
Zeek and Lyoness comparisons are irrelevant. What Zeek did or didn’t do has no bearing on Lyoness’ Ponzi scheme business model, other than the fact both pay out a ROI primarily sourced from member investment.
Sign up, invest in AU’s, earn ROI, invest again yada yada yada.
Legality is for the courts to establish. Earning a ROI made up of fellow member investments with no products being purchased is most certainly a Ponzi scheme however.
invest money your self, convince others to invest and earn a ROI. Ponzi scheme.
You say disgruntled employee, I say whistleblower. It’ll all in perspective. 🙂
And you are indeed correct, it’s NOT about the business model, so that didn’t help.
You’re arguing against yourself here. If the member cannot recruit additional shoppers or purchasers of AU then s/he’s left “holding the bag” without a way to recoup the losses.
Lyoness more closely resembles a pyramid scheme as it requires recruiting additional members (and have them generate AUs, and shortcut, as you say, is to BUY the AUs outright) thus arguing it’s not a Ponzi is irrelevant. It’s “answering the wrong question”.
Technically, Oz, it’s more of a pyramid selling scheme, as per Aussie law or American law. Ponzi scheme does not require participant to recruit in order to earn. Pyramid scheme does require recruitment of members who also pay into the system. But we’re spliting hair. Both are illegal.
AU is not an investment . AU is shopping . When you decide to put your money in AU you decide to shopping with Lyoness, because AU is a part of your future shoping.
You convince to other to shop with Lyoness and is normal do earn for this.
FUTURE shopping… investment. You can’t spend AU, remember. Getting AU simply qualifies you for some loyalty dollars further down the line… if “above and below” cooperates. Again, you defeated your own argument.
The problem here is your definition of “shopping”, since shopping should mean buying stuff, not AUs.
I CAN SPEND AU.
Handing money over to Lyoness with the expectation of earning a >100% ROI after enough people have generated AUs after you is not shopping it’s an investment.
No you can’t. An account unit is nothing more than a future liability Lyoness records owed you confirming you’ve made an investment with them.
The concept of “future shopping” is just bullshit Ponzi scheme speak.
What is the point of it, to invest more money they you have to, is just plain dumb. why invest 3000.00 to extract 75.00. idiotic.
Each AU generates a >100% ROI after enough people have invested after your own investment. Of course people are going to reinvest their ROI, do you even know how a Ponzi scheme works?
Given that this is not one of the AC Ponzi scheme ROIs paid out in cash (AC1 to 5), I have no idea what you’re talking about.
Quoting from OFFICIAL Lyoness literature:
http://cdnlarge.lyoness.net/downloads/pdf/us/download/infos/lyo-compensation-plan-us.pdf
You cannot spend AU. You can spend loyalty credit generated from AU.
Please study your Lyoness literature before making assertions you cannot support.
If I read the requirements correctly, you need a LOT of units (35 above and 35 below, if I read it right), but EACH unit generates 75, so theoretically, if you can get lots of people to join in, I believe one of their brochures says 75 will become 675. You can imagine what 3000 will become.
I tell you again I can spend AU and all can do. Example: I buy one AU 75$ . I want to spend that AU at one company with 10% discount for example. The product cost 750 $ .
For receive that product I put only 675$ and product is my. (this is one example how to use AU) . Other posiblity is “recash”
Ponzi scheme i clarify is illegal because there is more money paid out then is coming in so it will end, WITHOUT NEW MONEY COMING IN. Lyoness AU purchases have nothing to do with it.
@nelson
You didn’t spend your AU. You deposited money with Lyoness, not the merchant.
The AU itself is just a recording of a future ROI owed you under certain conditions.
As the actual Lyoness compensation plan material differs to your interpretation of an AU, I suggest you stop trying to play wordsmith games.
As per the Lyoness US material, it is only once a fixed number of new investments have been made that you get to spend your loyalty credit (and also get your cash ROI, which is the Ponzi part).
Lyoness specify they only pay out if a fixed new number of investments are made. They shift the liability of Ponzi collapse onto their members, rather than the scheme itself. If no new investments are made, the system stalls (shopping AUs can’t sustain the scheme as an income opportunity).
Lyoness forcing members to find new or existing members to invest and re-invest does not make it any less a Ponzi scheme mechanically. It’s still just member money being shuffled around.
AU purchases are new money coming in…
That’s not what Lyoness membership agreement says.
You pay Lyoness $75. That 75 is “partial” payment toward giftcard. As that giftcard is not paid in full you can’t use it.
That purchase generates 1 AU.
You can’t spend the AU. If you think you can, whoever explained it to you is wrong.
Yes, I have mostly narrowed it down to the down-payments and the recruitment.
A “normal thinking person” would not be involved in Lyoness, OTHER THAN for making the required down-payments and recruiting others to do the same. The main motive for participating is the income opportunity, where the income will increase the more accounting units you’re able to generate in your lifeline, e.g. within 2 months (to meet career level requirements).
So you will eventually make more money if you
* make the required down-payments
* recruit others, making down-payments
* teach your direct members how to recruit
* make additional down-payments when you’re receiving Loyalty Credits and other non-cash benefits
* encourage people in your downline to reinvest non-cash
In addition, you will also find a few real consumers, primarily interested in the cashback solutions rather thsn the compensation plan.
This thread has more than 600 comments. Less than 5-10 of them are from real shoppers. The statistics clearly reflects whether people are joining Lyoness as an income opportunity or as a shopping community. Nearly all comments from Lyoness members have been from income opportunity seekers rather then shoppers.
I’ll believe Michelle painted a correct picture of it in post #562, when she was asked about her downline:
“Filled with premium members”. I haven’t read one single comment where people are claiming the opposite, e.g. “My downline is filled with cashback users”. 🙂
Mel Bryant
I find it interesting that while you vigerous defend the legitimate right to market their services in the fashion they do, you haven’t come to the defense of the services you claim to so effectively be providing. Several days ago I wrote:
So again I ask you anD any one else who uses Lyoness. WHY ON EARTH WOULD I USED LYONESS IN LIGHT OF THESE COMPETITIVE REALITIES?
The discussion has never been about the legality of living in a capitalist society, so I’ll guess you’re referring to the legality of participating in income opportunities?
The answer: Many of them are illegal.
A typical example for an illegal income opportunity is the “promotional pyramid” business model.
But I’m seriously NOT very interested in discussing other people’s different “belief systems” or “world views”.
Actually I will explain how you can use the gift card, not to many people do it but in is possible.
If I shop at a Loyalty member that offers a 10% cash back. I would make a a top up payment of $675.00, and would receive $750.00 in gift cards for that merchant.
$75.00(Gift Card Down payment) + $675.00(top up payment) = $750.00 in gift cards. If you repeated this with all your units you would be able to get $3000.00 back over time. Which means you would be a premium member and would have invested $0.00 into Lyoness.
You make a very good point.
“It is possible” is the very thing which makes Lyoness a business to avoid.
That would be as in: “It is possible” to join Lyoness and profit largely from recruiting others who recruit others”
The fact Lyoness has taken no measures to ensure such recruitment only based memberships don’t and can’t exist is what makes it a get-rich-quick scheme rather than a legitimate MLM.
I have never seen any where and heard of any one say Lyoness is a get rich quick scheme.
Also might I add, I have 36 shoppers in my life line and 1 premium member. This is how most Lyoness members start. They want to try it out for free, and take advantage of the immediate savings.
I am having a hard time finding premium members. I would like to see at least one lyoness member just recruit premium it is possible but unlikely. Like most mlm’s it is hard to recruit people, because of the pyramid mystique around it.
I have been in sales for years when I was younger, and most people can’t stand sales because it seems like to much effort is required to convince people to by your product. I enjoyed my time in sales.
The two have one thing in common though, you must keep pushing and signing people up and eventually you will get your premium members…it is only a matter of time
See, this is where the problem lies.
Not only are your responses peppered with words such as I and MOST and YOU, they are not backed up with anything but anecdotal observations.
The fact remains, it is entirely possible for people to join Lyoness and profit largely from the recruitment of others who do the same.
This makes Lyoness an illegal enterprise, but, more importantly to potential members, an endless chain recruiting system which is mathematically guaranteed to fail, leaving the majority of late joiners out of pocket.
Until Lyoness introduces policies to prevent the possibility of “endless chain recruiting” it will remain the domain of get-rich-quickers and those more intent on making quick easy money rather than serious marketers.
That’s the reason the industry is known as multi level MARKETING and not multi level RECRUITING
Then you ran into an honest upline, a rarity indeed.
Any one has the recording of Laggos pushing Lyoness WHILE he’s getting 40K a month from Zeek? It’s over in one of the Zeek topics…
I cannot be like Hassan, sailing on the yatch while suckering others. For some, that may be the last $3,000 they have.
I have been a top seller before, but I was selling telecom products without any schemes. I was good at convincing people to buy with needs-based selling, but I cannot ignore my own conscience.
It’s unfortunate – that’s why I support federal consumer protection agency rather than gutting them.
Here you go Chang:
Mat Bryant
You wrote:
Sqeeze me!. It’s not done very often? Funny, when my Lyoness Premium Member was cajoling me into getting a card I was told that I needed to open up an account by contributing $400.00 if memory serves.
Up in Canada, the only thing I could immediately use to draw down that amount and enjoy the cash back would be to purchase Gas @ Petro Canada-our Nations Largest Gas Retailer. I was further told that because Chains don’t (and never will) have Lyoness POS readers, the only way I could do this was through the purchase of a you guessed card.
I think this circuitous methodology underscores my general problem with Lyoness. So Mr. Bryant I will once again repeat what is asked you to respond to when I wrote.
1. Maybe I’m in the MLM parallel universe or something but I still wish to re-iterate what I have previously stated. The MLM Ponziesque aspect of the company notwithstanding, to me the real issue is the viability of the product and/or service delivery model they are offering.
Why as a consumer (and Cardholder) would I want to pre-commit monies prior to my purchases (and go through a rather circuitous rig morale to do it), rather than make my purchases on a credit card, (like the Bank of America Visa or the Costco AMEX) that gives me the same percentage discount with no interest charges for up to 51 days? Could a Lyonness Card holder please explain this?
Moreover, from the Merchants point of view, he/she can set up customized loyalty rewards programs through apps available with organizations such as SQAURE which incidentally unlike Lyoness gives their POS reader to Merchants free of charge, and again unlike Lyoness, performs the double duty of debiting the credit card purchase.
Lyoness can’t even come close to competing with this.
Furthermore unlike Lyoness, these Merchant Managed Loyalty Rewards programs could give purchasers the added benefit of “double dipping” by making these purchases with the aforementioned discount CC’s.
So again I ask you and anyone else who uses Lyoness. WHY ON EARTH WOULD I USE LYONESS IN LIGHT OF THESE COMPETITIVE REALITIES?
I know mat your probably won’t answer this question because you know the only real value added benefit with the Using Lyoness is apportioned to YOU who gets .5% kicked back to you via purchases from all your soon to be ex friends who you cajole to make purchases through the Lyoness route.
Or even more ominous it benefits the person to whom you sell a premium membership so that they may inflict that same agony on their friends.
Listen Mat when it comes to Lyoness as the Loyalty Rewards Program provider, POS should stand for something completely different. Do yourself and your friends and family a favor young man. Get a real Job.
I started reading all the comments but it seems to go on and on – it’s almost as long as “war and Peace”!!!! LOL.
I am a Lyoness member and very happy about it. On everything I buy I get real money coming back to me and I work very long hours to help my group benefit from all the discounts and help them to build their team. As a result I receive bonuses and am well on the way to developing a passive income – let’s face it most mlm’s promise this but it never happens does it?
I have joined a number of them and always been out of pocket cos I have never been a big recruiter. This is the first one that has worked for me – thank goodness. I have gone from being financially embarrassed to someone who now loves to shop – cos every time I shop I make more money – what’s not to like about that?
Quit griping folks if you don’t like the program – just don’t join.
^^ Yet another “what about the shopping?” Lyoness member ignoring the Ponzi scheme completely.
Le sigh.
Carolyn You miss the point. You’re selling a completely inferior loyalty rewards program.The only value added benefited is from kick backs you get. Just read my posts.
@Caroline- So you’re well on your way to passive income hey? Just like everyone else in mlm schemes. Fake it ’til you make it.
I have to agree with Caroline. There is a fundamental lack of understanding on this forum regarding what a Ponzi actually is.
@Oz, please explain what a Ponzi is in your eyes and where the similarities with Lyoness begin? You sound like a Ponzi expert so I’m keen to hear your explanation.
Once you have explained it let Lyoness members explain why it’s not a Ponzi because they are the experts as they are members. You are not a member so I don’t expect you to know the answer that so leave it to the experts.
By the way, Lyoness shopping turnover last year was in excess of 3 billon dollars just in case you throw in the ‘the shopping doesn’t matter” line.
Ponzi scheme = You invest money, you earn a ROI based on how much you invested with this money paid out of newly invested money.
Lyoness = you invest money in accounting units, you are paid out a ROI once a set number of people invest after you. ROIs are paid out of investments made after your own.
Please do not waste mine and everybody else’s time crapping on about the irrelevant merchant network or how I “just don’t get it”.
A compensation plan is a compensation plan, whether I’m a member or not is irrelevant. And as for “experts”, half you don’t even seem clued up to the Ponzi scheme possibilities and have solely been sold on the shopping network.
Given the absurd complexity of the Lyoness compensation plan, I’m not surprised.
Irrelevant statements @Oz. Your statement is incorrect about Lyoness. But gauging your earlier comments I doubt whether my explanation will impact your set views. The proof is in the pudding as the down under. When you see the collapse of Lyoness or the authorities step in then I will congratulate you but the facts are reality is against your argument.
Also, the fact that you find the compensation plan absurd and complex is revealing in itself. There are 10 forms of income streams for Premium Members and three for free shopping members. There is some minor detail in between but I’ll keep that to myself for selfish reasons. There’s not much complexity in the income streams on offer.
What you can’t fathom or understand is the turnover generated from over 40 countries from the shopping alone. The commissions generated sustain the program. You may choose not to believe it but that’s a fact that cannot be disputed by knowledgable individuals.
Your sole focus on the ROI from down payments has clouded your view of the world and that is the 3Billion in revenue generated from shopping worldwide through Lyoness.
The bulk of my money from Lyoness, now at 17k per week and growing, is solely from shopping worldwide. Nothing to do with recruitment of new members other than they are shopping and using Lyoness. If you want me to feel guilty about my 17k per week please give me a valid reason?
@ Sean,
Clearly, YOU are the one lacking understanding and making irrelevant statements.
Why don’t you go back to post #1 and read all the way down here before arguing? Then you will understand and be more able to write logical statements.
James you are right. By the way, should I feel guilty receiving 17k per week from Lyoness.
@Sean
No it isn’t, at least not according to their US compensation plan.
Whether that happens or not is irrelevant to analysis of the business model.
Yes, revealing in that it is indeed absurdly complex.
You don’t have to, we’ve already busted open the whole account unit investment scheme here. It’s ok, you can talk about the Ponzi scheme side of things openly here.
Oh I can fathom it, it’s just irrelevant and overshadowed by the Ponzi scheme account unit investment scheme.
If I may use an analogy, in analysing John’s life we concluded that John is great guy. He held down a stable job for most of his life, had lots of friends, paid his taxes, donated to charity etc… and he also murdered 18 people with a chainsaw in cold blood.
Despite that last thing though, he’s still a great guy and anything who focuses on his murders has a “clouded view of the world”.
This is an absurd conclusion to draw given the facts, yet apparently according to Lyoness members it’s perfectly normal to ignore, overlook and/or justify a Ponzi scheme, simply because of what else is happening.
Not in my book. I don’t care what you’ve attached it to, a Ponzi scheme is still a Ponzi scheme and needs to be called out. Your guilt in associating with and participating in a Ponzi scheme is an irrelevant factor in analysis of the business model.
Why?
Lyoness is a great opportunity for small businesses. They can register their customers to become members. Those new members will most likely to spent their money when they gas up, or buy anything at other Loyalty Merchants.
The 0.5% friendship bonus goes back to the person who registered them in two levels deep. So, the small business owner registers 20 new members for $1.50 each and he/she gets probably ten times that every month after the new members spending money at other Loyalty Merchants.
These new members will keep coming back to their sponsor’s shop, because they want to keep enjoying the Lyoness loyalty cashback and benefits. This system is a whole lot more than the few percentage you get through some bank cards.
Oh, and you can actually use them both!. Shop at any online loyalty merchants or shop at cashback card stores and use your credit card you get benefit from.
So it was NOT an income opportunity. Is that what you’re saying?
Why should any one use Lyoness instead of a regular “VISA Rewards Card” that offers up to 3% back available at your current bank?
Or Square, Paypal, and those online payment processors that has their own loyalty plan? They have MUCH better reach than Lyoness in the US.
And why would any one want to join an opportunity touted by folks (not you) who has a history of touting HYIP and Ponzi schemes?
Vik:
You wrote:
Lyoness is a great opportunity for small businesses. They can register their customers to become members.
I own a small business I don’t think it is best business practice to suggest (or cajole) a customer into using an inferior loyalty rewards program (vis a vis the competitive products out there). I and my friends who also own small business have no interest in giving loyal customers discounts only to have money given back to us. Moreover, I would not want an unknown amount of not yet redeemed gift cards out there that could have the net effect of misrepresenting my income statements. I haven’t looked at this but at best it would mean manually imputing the outstanding amounts onto the books and quite frankly why push this option to customers when they have at their disposal a credit card (or a loyalty rewards program such as square which accept credit cards) which apportions discounts that is completely transparent and non-labor intensive to me.
Those new members will most likely to spend their money when they gas up, or buy anything at other Loyalty Merchants.
No they won’t. A value savvy consumer would use a credit card that rewards all purchases without going through that circuitous rig morale of an upfront commitment of hard earned dollars to individual loyalty merchants (as determined by Lyoness). As opposed to getting the same discount from any merchant through a loyalty reward s credit card which I have (in the case of my AMEX) up to 51 days to reimburse without interest charges.
“This system is a whole lot more than the few percentage you get through some bank cards.”
Only if you factor in the dubious MLM aspect to the equation-which means to realize this “a whole lot more” you have to be a premium member-with no friends.
“Oh, and you can actually use them both!. Shop at any online loyalty merchants or shop at cash back card stores and use your credit card you get benefit from.”
I don’t know how you can do that actually. if you apportion monies for gift cards it is done through your AU’s or the cash you put into the system. That can only be accomplished through money orders-someone out there corrects me if I’m wrong.
Irrespective of this. You Lyoness supporters will not and cannot address the fact that all other issues aside, the Product-as utilized through the customer-not the premium members- not the merchants, but to the customer, as an unwieldy, difficult to manage, and cumbersome method of applying Loyalty Rewards. Hopefully that’s all I’m ever going to say on the issue.
(Ozedit: removed spam about merchant network already discussed)
As for the so-called Ponzi-like unit generation, yes agree. To the uninitiated this appears like a Ponzi however if you’re in the system and SEE how the accounting program ACTUALLY works you will begrudgingly see the light.
But as a mere spectator you are commenting from the sidelines without any facts to back up your claims except your perceptions about the accounting program. And they are simply perceptions. Sometimes it takes genius to understand genius and unfortunately there are not many geniuses about.
Please, please speak to a member to obtain the facts. Your cynicism and plain wrong understanding of the accounting/unit program is simply not funny anymore. Really.
@Jan
1. Invest money in accounting units.
2. Receive >100% cash ROI once a fixed number of new member investments have been made after your own.
Please explain how the above is not accurate. You don’t have to be a member to understand how a Ponzi scheme works.
One does not need to shoot one in the head to know it’s a bad idea. Furthermore, you have thus far failed to explain how our “perceptions” are not accurate, only that “once you join you’ll see the light”. Sorry, that looks like a train coming toward me. 😀
Hi, receiving > 100% ROI after signing up a certain number of new premium members is not correct. Show me a premium member this has occurred to and then I will retract my statements and crown you geniuses.
Now I’m guessing you have evidence and not speculating. Which member did this occur for and what is their member ID? I ask this question with absolute confidence…. Note, if you cannot produce the evidence your argument falls in a heap.
Your readers are waiting… If you have the courage to publish my response…
Sounds like Jan knows what she’s talking about. I mean ROI aside for a moment, Kmart, Walmart, American Airlines and many more surely have their own legal teams and they conduct their thorough due diligence before joining Lyoness.
Surely you’re not suggesting that they don’t understand there is a Ponzi element and they’ve missed this? Can you explain this point?
@Jan
What you just mentioned is not correct sure. Using at an argument is kind of stupid seeing as I never mentioned anything about recruitment.
I clearly stated once a certain amount of new investments have ben made after your inition one, you get your ROI. This is per the US Lyoness compensation plan.
Better luck next time.
@Alpine
The Ponzi element bypasses the merchant network altogether. You invest the money with Lyoness and they pay you the ROI.
They use the term “downpayment” but all it is is you giving them money with the expectation of a >100% ROI after a fixed number of new investments have been made after your own.
@Alpine,
The K-Mart, W-Mart, AAirlines, and whatever are NOT joining Lyoness. Lyoness simply buys their bulk rate, gets about 4% off the gift cards, then resells them to YOU!
You can get your own merchant account at W-Mart and negotiate a 4% discount if you buy enough W-Mart cards in bulk. Go to the W-Mart site and research yourself if this is true…I did. So Lyoness claiming to be partners with other big retailers is just another lie.
Alpine and Jan, go back to the beginning and read down to here and you will open your eyes. Oz and K Chang should not have to keep educating these greedy but blind individuals over 670 posts.
It can happen in theory is Oz point, just because nobody has done it is irrelevant. I agree with you Jan that it is unrealistic though.
My point which seems to get ignored is.
In a Ponzi scheme in the end somebody is left holding the bag. I argue that the Lyoness in the end can sustain itself, and nobody is left holding the bag. I would like to argue and prove this point in the discussion because this is point of OZ’s review…purchasing units = ponzi
Another point I what to argue is Ponzi scheme is illegal because people are being hurt usually financially. I argue nobody does get hurt, nobody is getting hurt. There is a one time DPayment and no other monies need to be spent other than purchasing of gas and other Lyoness products. You get your money back over time which is the way an investment works.
I’m sorry what, nobody has done it?
Yeah… nobody has invested in account units in Lyoness. Never happened.
Riiiiiiiight.
You can try to justify Ponzi schemes all you want. In the end they’re all unsustainable and whoever invests last loses. More to the point though, they are a blight on the MLM industry.
So you are telling me losing $3k does not hurt? Sure, it may be chunk change for a few people but not for most.
I can afford to shed $3k, but I would rather donate it to charity or someother worthwhile cause rather than to become a “premium” member and then try to sucker others into doing the same – it’s more than my conscience can tolerate.
I used to beat people regularly at poker, but then end up losing on purpose so I don’t rip my friends off, and that’s only a few hundred dollars. I just cannot stand to sucker them for $3k so I can benefit.
I did not state that nobody has done that. Of course to become a premium member you must buy 3k worth of units….but I was commenting on the fact Oz states in the review that 1 part of the compensation plan is flawed. The recruiting of people to by units only..this part is not a Ponzi scheme so lets stick to this point please….when in theory I have signed up everyone in the USA to be premium members..and I can not sell anyone else..in your argument you state the people in the end will lose there 3k because there is nobody left to recruit…
at this stage you can only recruit people that turn 18 years old, so this is a slow process, you can shop and receive cashback on purchases, so again it is a slow process….so the worst case is your 3k will take a little longer than most to get back….so this is not illegal……nothing wrong nobody hurt..so where is the ponzi scheme..using my argument.
There is nothing greedy here at all…just become a shopper and dont worry about purchasing units..Lyoness brings the merchants to its members and Customers to the merchants..pretty simple…
If you want it do it more for a career than put 3k …and work it….see what happens….or don’t risk it put into the market ……hummmmm……or buy property….hummmmm..or buy a dominos franchise for 300k…and see if you like that risk…lol..
And I quote…
And seriously again with the recruiting?
An investment is not recruitment!
Existing members can re-invest back into the system and upline spillover investments count too I believe. Why do you guys get so hung up on recruitment?
That is the flimsiest argument for a Ponzi scheme yet.
The mechanics of the investment and where your ROI comes from makes it a Ponzi. Not people getting hurt.
Trying to justify Ponzi schemes… good grief.
I am a premium member and and I am merchant as well…..I don’t see the point of this..to purchase more units????…please explain…
Each investment pays out a >100% ROI, once enough new member-funded investments have been made after your own.
Think about it.
Thats incorrect Oz after you have reached level 8 and you create a unit you will bet 4.87 per unit times 40 units which is 3600.00 put in and 194.80 take out…so how do you get the 2805.20 out ….
think about it…put in 3.6k and get 194.80…hummm
I’m certainly not the sharpest tool in the shed, and am a little fuzzy on this, but if you put in 3.6k and only pull out 194.80, why bother?
IN MY EXAMPLE I assuming everyone in the USA is registered as lyoness premium members…no more people to recruit…so oz is saying you can reinvest in yourself ……there is no point to it..you dont have to buy units once your a premium member …
Gotcha. Makes sense from that point of view. Since in that hypothetical situation the program would get no cash infused from new members and no reinvestment from current members, where does the money come from to pay a ROI?
@Mat
I have no idea what you’re talking about. As per the US Lyoness compensation plan there are five levels of AU investment to participate in. Each pays a >100% ROI upon a fixed number of new investments being made after your own.
The five levels of investment and their appropriate cash ROIs are reproduced in the review twice. I’m citing the actual Lyoness compensation plan, please cite what you are talking about.
New or existing member, the Lyoness US compensation plan treats AU investments the same. You don’t think the top earners just keep relying on their own personal recruitment do you? They make their money when their downline gets new people to invest and make re-investments themselves.
Hi Oz,
Well there are 8 levels in lyoness. When AU in your down lines are created you get paid per unit as well as creating units in your accounting program. This part of the compensation plan would be considered would be volume bonus. I am not sure where but I can post the career level chart somewhere if you like. It is kind of irrelevant anyways to my point.
I am just trying to prove a point that LYoness is not a ponzi scheme, by my previous posts.
If everyone in USA over the age of 18 was registered member, and you could not recruit anymore would Lyoness survive and would the last registered people be able to recoup there monies???
What you actually did is you proved ONE PART of Lyoness is not a Ponzi scheme… you didn’t prove the whole thing is not.
Ponzi / pyramid / endless chain recruiting or a combination of all of the above, who cares on the definition ??
Get-rich-quickers will get in while ethical MLMers will stay right away.
Paying the returns it guarantees to the tune of >200%+
No.
If all those premium members continued to invest in the AC’s (as described in the US compensation plan), there’s no way known shopping revenue would be able to deliver the returns specified.
Mathematically given that the number of new investments required is fixed before a payout happens, it could be sustainable but practically no. What would happen is the ROI time would blow out with less and less people investing over time.
As opposed to the catastrophic Ponzi implosion, this would be the long drawn out painful Ponzi death.
Money doesn’t come from thin air and the merchants certainly aren’t paying Lyoness a >200+% dollar for dollar on money spent through the scheme. That money is coming from new ivnestments/investors.
Once a accounting level is reached you must maintain it for a certain time frame…otherwise you drop a level…so using my example if everyone ins USA was registered. And there was no units created from down payments you could in theory go from level 8 down to level 1 in very quick fashion. To maintain a level 8 your lifeline must create 50,000 units per month. level 7 is 20k, lvl 6 is 8k, lvl 5 3k units per month.
The merchant is paying the cash back and the bonus. As a unit is created from shopping you must spend anywhere from $1.5k -$3.0k…the merchant will pay 1% fee directly to Lyoness, .5% will go to the direct and indirect 2% will go to cash back and finally 6% will go into loyalty account for a total of 10% will go back to Lyoness. SO if everyone in the USA over the age of 18 years old was registered, no more new more monies for units so this is how units are created, and where people can get there investment back…its slow but they get there money back. Career levels are not fixed for ever. You will lose levels if the min accounting units are not created in your lifeline.
and your units are decreased over time you will drop Accounting levels as well. Your career level is not fixed once you reach the higher level you must maintain that level of units for a 2nd month and then you will get paid out that level, if you don’t maintain the level you will drop to the lower level.
What does that have to do with the price of butter in spain?
You invest at any level and get a >100% ROI once a set number of new investments have been after yours.
Theory schmeory, you and I both know that ain’t happening in the real world. It’s all about the investment.
Nowhere near enough to cover a >200% ROI. All that money comes from new members.
I here trying to explain why it is not a ponzi scheme and arguing this point not ROI, I here to prove Lyoness is not a scam.
I know the the real world very well just like you do, But this review seemed to narrow it down to this fine points of accounting units and recruiting just for accounting units.(Just like you say my theory is impossible, your point about just recruiting is impossible as well. because you must shop)
I explained in an earlier post how much money you can possible make from new a new down payments of 3.6k all i would get is 75.00 in career level 1 and the most I can get is 187.50 in career level 8. This is a set income not a fixed income.
That’s great and all, but as per the Lyoness compensation plan you invest $x and after new or existing members invest a fixed number of new investments, you earn a >100% ROI.
That’s how the compensation plan works.
That’s where the Ponzi scheme is and it’s the big red flag that overshadows the rest of the business.
Yes, yes blah blah blah. The US compensation plan clearly defines 5 AU’s, each paying out a >100% ROI after a fixed number of new investments have been made.
your are not totally correct because fixed to me means you get it ROI every month the correct term would be set amount, which means you get paid out once.
and this is my point that I am trying to make…if every 18yo person in the USA was registered with Lyoness and no more to sign up your set income would stop..now the only way for the members in the last line to recoup there monies would be to shop and create units this way…it would take a long time, there is no ponzi scheme here at all…just a slow return on investment.
If you where able to get premium members signed up for $3600.00 each you, that is a total of $36000.00. you will get your shopping credit of $675.00 your bonus of $198.00 for a total of $873.00 at AC1.
AC 2 you would $108.00 because this you need to have 30/30 and at this point all you have 15/15 so the payout is $108.00. AC3 you need 25/25 you have only 15/15 so you get a payout of $360.00.
You would have also generated 400 units which has a value of $1.875 = $750.00. after this you would be career level 3 member in the next month.
So at his point you would made..873.00+108.00+360.00+750.00= $2091.00 in your first month.keep in mind though Lyoness just received $36000.00 from all the new members and you where the only paid out at this point.
So on your investment you got back 2091.00 so far, the total volume of sales is 36000.00 which 5.8 % lyoness is paying out to you
Look if you’re going to make up stuff that’s great, but don’t claim I’m wrong because of it.
I clearly stated (as does the Lyoness compensation plan) a fixed number of new investments. Fixed number.
Well you’re point fails on two counts. The first is absurdity and the second is that existing members can re-invest per the compensation plan (yet to see any citation for all this member level mumbo jumbo (which was not in the compensation plan material I cited)), thus continuing to earn their ROIs.
The shopping side of things is once again, irrelevant.
As per the Lyoness compensation plan, if you invested in any of the AC levels, you’d earn a 264%-330% ROI.
Stop crapping on about $3600 blah blah blah. There’s 5 AU investment levels, each pays out a >100% ROI once a fixed number of new investments have been made after your own.
(Ozedit: uncited numbers removed)
Mate go read the US compensation plan. I’m sick of discussing this over and over again.
I have no idea where you’re pulling your numbers from, nor do I care at this point.
The AC investment levels in the original review were pulled from the US Lyoness compensation plan. End of story.
(future replies with made up numbers will be marked as spam for wasting mine and everybody elses time).
AC2 your 1 unit will mature when you have created 60 units which is $13,500.00 and you will get 1869..
AC3 your 1 unit will mature when you have created 50 units which is $30,000.00 and you will get 4380.
AC4 your 1 unit will mature when you have created 50 units which is $90,000.00 and you will get 13,140.
hummmm looks like more money coming in then going out.
fair enough…I seem to pull in other parts of the compensation plan into the discussion and I should not but some of the other parts of Compensation plan are directly tied into the AC 1-5.
Your not taking into account the fallacy of
1. All ROIs are paid out of new investment money with no products being purchased or sold.
2. Each of those new investments carries with it a >100% ROI liability.
It’s not sustainable and once new investment stops the scheme crashes.
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
It has since changed a little with the down payment being $3600.00 to get all these benefits you would have to recruit at least 20 premium members…who will all have to put in 3600.00 each which is 72,000.00 in cash given to lyoness and lyoness giving you 24858 in benefits…lyoness holds the difference 47,142.00…..it seems sustainable so far.
Don’t care about business members. Invest $x, once a fixed amount of new investments have been made, get a ROI >$x.
Where does that money come from? The new investments.
Everything is is utterly irrelevant and quite obviously not sustainable once outside money stops being invested. Furthermore Lyoness haven’t made any money, they just continue to create a never ending but always increasing liability in that they have to continue to pay out >100% ROIs without any external revenue.
Why do I have to constantly explain and re-explain Ponzi 101 to you?
Let me highlight a few important parts from your missive
Put that all together, and you get
Fastest way (to gain benefit of 24858) but only pay in $3600 is convince 20 premium members to put in 3600 themselves
Why, thank you, you just proved Lyoness is an illegal pyramid scheme!
I think Mat does raise some important points and I’m starting to wonder of some of the recent argument might be over nomenclature.
There are subtle and sometimes pointless differences between ponzi and pyramid schemes. US federal law prosecuted Ad Surf Daily as a ponzi scheme but if it would have been tried in their home state of Florida it would have been under Florida’s endless chain statute.
Mat points out as Oz will admit that the cash back portion of Lyoness does pay out a very small amount of money. So in Mat’s “every 18 year old American” scenario the last people in could make their money back but it would take a very very long time.
So long in fact that if they were given an honest assessment of their prospects they would probably never invest. And it’s important to point out that given the math involved, if every 18 year old in America joined the majority of them would find themselves in this position.
Oz is correct to separate the portion of the program that depends on new investors and new investments from the cash back rewards and Mat is correct in pointing out that if no new investors or investments are made, the “units decrease over time” and revenue the people high up in the lifelines would collapse.
Now from a strictly semantic perspective I can see where this might prove that Lyoness is not so much a ponzi scheme but may be more accurately described as a pyramid.
The >100% ROI is common to both but as long as the payout per AC is less than the total amount of cash inflow required to generate them then that is not where the plan is unsustainable. It becomes unsustainable when you figure out how many new investors are required to qualify for the ROI and therefore realize how many people will not be in profit when recruiting stops.
it is a not illegal, because the people on the bottom will risk 3600.00 and will be able to get there money back by shopping and creating there own units and collecting on the cashback..slow but not illegal
it wont collapse it will only slow down, because the units being created during the process slows down, as the units slow so does the income.
And as the income slows down even fewer people invest and the process slows even further. To claim this wont lead to a collapse would be arguing Zeno’s paradox.
No, Lyoness is attracting fresh investments because people are getting paid. People are being paid because fresh investors are being recruited.
When anything interrupts that cycle that cycle ends. Once the bloom is off the Lyoness rose some other easy fast money game will attract enough promoters and take Lyoness’s place in the sun. And then that one will fail being replaced by another, and so on.
So you accept that Lyoness *can* operate both legally and illegally, depending on how it’s used, i.e. generating AU’s via regular purchases at participating stores, vs. buying the AU outright?
I went to a presentation myself, and the shopping scheme seems to be fairly attractive…until the presenter came up with the AU’s.
If Lyoness comes up with a higher % on shopping without the AU component, I’ll join. Otherwise, I have cards that pay 1, 3, and 5% – better than what Lyoness has to offer and without buying the annoying gift cards.
GlimDropper is right – there are no shortage of suckers. First Zeek collapsed, then soon it will be Lyoness. Then another one will pop up to suck in more suckers.
Rule #14 in the EU UCP Blacklist:
* “Where a consumer gives consideration” = where a consumer makes any kind of payment, whether it is directly or indirectly.
* “for the opportunity to receive compensation”
* “that is derived primarily from the introduction of other consumers into the scheme rather than from the sale or consumption of products (or services)”.
So your logic here is flawed? You’re referring to an imaginary rule from your own fantasy? Please keep it closer to reality?
The smaller business has a swipe system and no gift cards the big chain offer gift cards.
Using Austria and many other European countries …the bigger chains now offer a swipe and you do not need to order anything just shop show your card and save immediatly.
The big chains in USA Canada will eventually be able to swipe lyoness cards and save the hassle of ordering gift cards.
You should join then…
The compensation plan is has 10 ways to generate revenue and is all inter connected and has checks and balances in it.
It seems this site is focused on part and ignoring the rest of it. WHich is fine, but in the end nobody is going to complain about it. Nobody is going to call police and have lyoness arrested…people are curious about it.some will like it, and some wont.
Zeek was brain washing people into spending 10,000 every year charging for meetings books, motivational tapes..lyoness has a one time fee u have 10 ways to make money so as a whole it is a business. just like any other mlm…
@Mat
Or this money could come from new investments, which is a Ponzi scheme and illegal.
I don’t really care for discussing this from a legal perspective though. As with Zeek Rewards, identifying the Ponzi component so people are aware of it is sufficient.
That’s still a collapse, it’s a slow death Ponzi collapse. Ponzis can explode (Zeek Rewards) or die a slow death, with the root cause being the same (and no products being sold to generate revenue).
Whether they complain or not is irrelevant, this site is about analysis of the MLM industry. If a MLM company has a Ponzi scheme element to it, it’s going to get discussed (in the review when it’s identified and subsequent comment discussion).
Try telling the SEC that Zeek Rewards’ Ponzi was ok “because they had other “ways to generate revenue” for affiliates.
Oh please, being able to invest and earn a ROI solely on the investing efforts of your downline is not “any other MLM“.
Why have an illegal portion at all? Seems like you admit part of Lyoness is illegal, you just don’t feel it’s “important”.
1. My comment to Mat Bryant was about the use of imaginary rules. He has probably made up a rule in his own fantasy, and is using that rule to defend the legality of Lyoness.
2. Lyoness is already under investigation by consumer protection authorities in Europe, but they haven’t made any conclusions yet. So the current status of Lyoness is “in the grey area”. “The grey area” is usually closer to illegal than to legal.
Any conclusion about the legality of Lyoness based on imaginary rules will only be misleading. And so was your statement about “nobody is going to call police”.
3. I have analysed all the 10 parts of the compensation plan, and I have asked several questions about details. The main part of the compensation plan is NOT the cashback solutions.
If you feel some parts of the compensation plan deserves more attention, then add something about it yourself?
Hi everyone, I have to say that I disagree with my wife Jan about Lyoness. I see it as a very simple yet effective awards program but what concerns me is the initial deposits new premium members make and the unit accounting program.
What I don’t understand is the concept of down payments for future expenditure. Jan has yet to convince me about this part of the program. If anyone can successfully explain this to me that would be a good start.
Thanks. John.
It’s an investment you make with Lyoness on the expectation of a >100% ROI paid out when a specified number of new investments have been made after your own.
Or in other words, a Ponzi scheme. Nobody is investing money with Lyoness without the expectation of a ROI so the intent is clear.
Hmm, like I tell her, the money doesn’t appear out of thin air. The new investors are bank rolling this scheme it would appear to me. If it’s a Ponzi they’re not doing a good job of disguising it.
The sad thing is, they don’t want to disguise it.
They’re not interested in those who don’t jump at the opportunity.
The people they’re interested are those who believe it IS possible for “money to appear out of thin air”
From the recently released Microsoft white paper:
http://research.microsoft.com/apps/pubs/default.aspx?id=167713
“By sending an email that repels all but the most gullible the scammer gets the most promising marks to self-select, and tilts the true to false positive ratio in his favor
The same applies to many/most victims of online pyramid/ponzi schemes.
They really DO believe it’s possible to make a ROI of 1% per day or it IS possible to make money by selling “gift cards” or “ad packages” or “penny auction bids”
That is false, because that is not my intent or people in lifeline or people the people that introduced me into Lyoness.
My vision when I joined Lyoness is to get people shopping in my life line. It is not easy finding all these investors….This is the reality of Lyoness not the hypothetical situation that goes on this review…..(remember this is a review not a actually situation)
I have 50 people in my life line with 1 premium member, and have been in Lyoness for about 6 months….I have made down payment. of $3k.
I have recouped about 450.00 so far but the income is kind of steady and people are shopping in my life. I am making about $40-60 per month and I try to take advantage of the 10 different ways to make money.
I am trying to recruit premium members, but it is not easy as these comments on the site make it seem, to extract $3k. This is the reality of Lyoness.
There is no quick get rich ponzi scheme.
I actually tell my lifeline to go come to this site and read the review, and discussion and make an informed decision pros and cons.
And in the end that is the purpose here to make an informed choice, I and nobody in my lifeline believe we are going to be rich and 2 or 3 years. The goal is in 5 years to have a few 1000 people in my lifeline, shopping and saving. and i would like to be making 10k a month.
Your intent is irrelevant. The mechanics of the compensation plan dictate what the business is.
‘I didn’t intend to kill 50 people, I just went out to buy a newspaper, ‘onest…’
Remember the compensation plan is irrelevant here only the one part we are focusing on, the AU. The rest of the plan is not a discussion here.
The true intent is in what the person does with the compensation plan so it is very relevant, but as far as this review goes it is not.
I will not kill 50 people because I wont do it, But if I know a hurricane is coming and it will kill if I dont say anything I will tell the people to evacuate and you must trust me. They can decide whether they want to leave or not. It is there choice.
I can only control myself not what others do.
The AU investment scheme is part of the compensation plan.
…I can’t believe I just had to type that.
As far as Ponzi schemes go, your intent is utterly irrelevant. A Ponzi is a Ponzi and it’s got nothing to do with your personal intent.
Like debates there 2 sides it seems the board and I agree to disagree.
So the only way this will be decided is if over time it goes to court and they decide that it is illegal and Lyoness members all must go to jail, for making a bad investment.
The good thing is you are not the judge….lol..
We would have some qualified person making a judgement.
No. A Ponzi scheme is a Ponzi scheme based on the mechanics of a compensation plan and your intent is utterly irrelevant.
End of story (further discussion on this will be marked as spam).
I’ve said time and time again I’m not interested in the legal side of things, only that Lyoness functions as a Ponzi scheme mechanically in its current format. Courts don’t decide whether something is a Ponzi scheme mechanically, a company’s compensation plan does. Courts deal with the legalities.
Peter Fehr:
You said:
Not true: I took the trouble of talking to a Lyoness Employee @ their Canadian H.O. in Toronto and was told they will never install Point of sale readers in their large accounts. You guys are still in the MLM paralell uni there good buddy. There is probably 4000 Petro Canada Stations alone all across our great nation you are dreaming if you think they are going to put a POS (which in the Lyoness Case should stand for Piece of Sh*t)in each of those locations The Hudson Bay in one store alone here in Downtown Vancouver according to my friend who is a supervisor there, has atleast 22 purchasing tills-Dream on.
Let talk about the small business merchants shall we? As a small business merchant Why would I possibly, not with standing the MLM Ponzi-esque aspect of Lyoness, put in a proprietary point of sale reader that cannot even accept debit or credit cards with a miniscule share of the Loyalty Rewards Program market? I don’t want to rehash all that I’ve said about the inferiority of the product but please feel free to respond to my previous posts (which none of you have)and defend the efficacy of the product.
And finally we ought not be holding up an Austrian Model for anything. Remember, this is nation with a collective case of Waldheimers-you know when they got old the all forgot they were once Nazis.
Again, you are arguing for the merit for the side of Lyoness that you have seen, NOT the potentially illegal side.
Remember the story about three blind men went to touch an elephant and was asked to describe what it’s like? One got the leg and said it’s like a tree. One got the tail and said it’s like a snake. One got the trunk and said it’s like a tree branch.
YOU are like one of those blind men, arguing that your perception is the “correct” version, when there’s a larger picture that you are ignoring, whether intentionally or out of ignorance.
http://en.wikipedia.org/wiki/Blind_men_and_an_elephant
Then your own vision is self-conflicting, because investors don’t shop. They put in money and expect a return.
Doing “hard work” recruiting has nothing to do with how legal the business is.
SEC sued Glenn Turner out of business when he tried to argue that his pyramid scheme is legal because people have to recruit to get paid back in the 1970’s. Turner lost in a Federal Court when he tried to raise this ridiculous defense.
Seems 40 years later, people still don’t have a clue on what’s legal vs. not legal.
THE OFFICIAL EXPLANATION
THE REALITY?
The down-payment system doesn’t make much sense from a consumer viewpoint, so it’s probably a method to try to bend the rules, e.g. pyramid scheme rules or investment rules.
With the $3,600 initial investment, $600 goes to purchase of a $600 giftcard. $3,000 goes to down-payments on 3 different giftcards:
* 7 down-payments in ACI. 7 * $75 = $525
* 3 down-payments in ACII. 3 * $225 = $675
* 3 down-payments in ACIII. 3 * $600 = $1,800
A SIDENOTE
The system reminds me of some gambling theories rather than shopping theories. You will always have more money invested in the system than you’re able to get out (if you’re acting as a single gambler).
You can “win” against “the house” if you recruit other investors, making additional investments in your lifeline (making THEM lose money rather than you).
If you don’t recruit, you’re almost guaranteed to lose (in reality), but you CAN recover your initial investment (as giftcards) by putting more money in through shopping.
From a consumer viewpoint, most parts of Lyoness is absolutely meaningless. It makes more sense if people are interested in chain recruiting opportunities.
I wonder how many “giftcard” sales are factored into the calculations of the average new Lyoness “member” when deciding whether he/she should join.
IOW, without the ability to profit from recruiting, how much product, needs to be sold to make Lyoness a genuine income opportunity ??
Perhaps we need to create another category.
That of M.L.R. as in: Multi Level RECRUITING rather than the traditional M.L.M. as in: Multi Level MARKETING
Any one hear that Lyoness US is being marketed as “Cashback Living”? It’s on MMG
http://www.moneymakergroup.com/Lyoness-America-Lyoness-t407378.html
Talk about deceptive practice!
In their own words:
I wonder how Lyoness is solving TAXES for their members?
Point 1 and 2 in the compensation plan:
Discounts / cashbacks (or similar benefits) on personal purchases are normally NOT taxable events, and the same goes for discounts on personal purchases made by family members (in the same household). Friendship bonus from family members should normally not be taxable.
Friendship bonuses derived from people outside your own family should normally be taxable events, subject to income taxes. Recruiting people is some type of WORK, even if the work is done indirectly by others and you are indirectly paid from their recruitment efforts.
Point 3 – 10 in the compensation plan:
It will be almost impossible for a member to keep track of whether something is taxable or not?
Lyoness doesn’t offer much information about that topic. Maybe some of the members can provide us with some more information here?
NOTE:
The expression “normally” is related to several tax cases against “World Leaders” in Norway, and the logics used by the tax authorities in those cases.
One of the issues was about whether income from a pyramid scheme was taxable as “Ordinary income” (from work, etc.) or taxable as “Financial income” (any income derived from investments).
From a tax viewpoint, recruitment is considered to be some type of WORK, and any income derived from it directly or indirectly will be subject to ordinary income taxes.
Ok so I just went to a meeting and I tend to agree with most of what you guys have said about the how the units work. However I think it is a brilliant cash back program.
You see I can go to a local business offer them the ability to have a loyalty card linked to a location app at a very low cost. Now my friend is a manager for a local high profile surf shop and if he sets up his store on this system he can make his boss and as well as himself a lot of money.
This is the scenario customer comes in wants to buy a $1000 snowboard out fit (this happens a few times a day). My buddy signs him up for the cash back card gives him the 5% off. The shop gains the customers loyalty and also a half percent on what ever purchases that customer makes.
This happens with 200 people over the next year and suddenly you are earning 100% of the average one person spends a week. So with very little work you have a cash back loyalty card that brings people into your store and you get paid to use it.
Not to mention that my buddy gets paid the same half percent on those 200 customers purchase’s. Lets say the average amount they spend a month is $100 then in 30 months you have that initial 3000 paid off. But in my area the average people spend a week on Gas food music electronics and services is much more than 100.
One guy I know set up a limo company that buys gas cards and in 3 months paid off his initial “down payment” and earned over 18,000 grand. I see this as very low risk to try out and as a great opportunity for businesses to offer a great rewards card at low low cost.
There is no however. It’s a Ponzi scheme and whether you think it’s brilliant or not is irrelevant.
It’s BOTH a Ponzi scheme AND a cashback program.
As it’s no better than any cashback program offered by VISA or Mastercard (available at your local bank, which works at far more merchants)
Thus, your enthusiasm may be misplaced.
If you want to talk about the cashback part there is a HUGE!!!! Difference.
While you do get cash back from the credit cards( because of Lyoness by the way), the difference is if a sign up a direct member shopper I get .05 from them when they shop, and when the direct signs up a indirect shopper i would also get .05%.
This only goes on for 2 levels (Direct and Indirect). you can sign up as many shoppers as you want. I have 10 direct and 18 indirect shoppers who make me money.
With the Visa all you do save what ever you purchase.
*sigh*
First, it’s 0.5%, not 0.05%. (I’m HELPING you here)
Second, Lyoness credit is not money. It’s just gift certificates (to be spent at Lyoness “loyalty” merchants). The real “rewards” program gives you CASH back into your real bank account.
MAT MAT MAT MAT MAT MAT MAT MAT. Now I know how Tom Cruise felt! You continue to delude yourself young man.
Your comment would be laughable were it not for the gross misrepresentation you Lyoness people doubtless make hundreds of times a day when you speak about the efficacy of this Loyalty rewards program you endlessly push for the sole purpose of enhancing your revenue streams.
You said:
There’s nothing huge about it. Let me once again re-iterate how a real loyalty rewards programs should work.
I do most of my shopping at Costco with my AMEX okay? I get two percent off my purchases by virtue of my Corporate membership. (the cost of which I can write off as a business expense) then I get an additional 2$ off any and all purchases when using their AMEX.
Mat that’s 4% which I need not pay for up to 51 days!!!!! The only thing “HUGE” about the difference is the value added benefit you get from skimming money from the Lyoness Cardholder you had signed up.
Just yesterday P+G and Costco (partnered) by sending me a free Gillette Razor in the mail. I canvassed some of my neighbors-two of which were Costco members-none of whom received this freebee.
Why you ask? Well six months ago I was mailed a coupon only given to Gold Costco Members-(can anyone say loyalty rewards program?) Obviously the quid pro quo for P+G was to make my personal information available to them when I redeemed the $8 off coupon. To wit my new razor.
And as an added bonus I gave it to my wife who is now also going to be using it which means to P+G and Costco that they now have increased their sales by virtue of the added demand on the blades.
Furthermore she shaved her bush for me and made a design of an arrow out of her pubic hair pointing right down to old glory (as if I didn’t know where it was in the first place) and we subsequently had rousing sex thanks to this awesome loyalty rewards program. So put that in your Lyoness pipe and smoke it.
Lyoness has no interest in doing any of this stuff. Again Mat I ask you to read and respond to my previous posts in which I have hi-lighted the short comings of the product which you people seem to lose sight of. . THE LYONESS LOYALTY REWARDS PROGRAM IS INFERIOR.
End of Story
It seems you are very short sighted. The long term of this is 1000’s of people in your lifeline…producing .5%..making hundreds or even thousands of $ every week….
So while you get your free razor. i will just to personal barber and get my feet rubbed and my back massaged….and have a prefect shave and haircut..
lol
SORRY TO GET OFF TOPIC..
Lets just stick to AU please…
MJW
Let’s say you get $1000 a week.
That would require $200000 shopping PER WEEK (0.5%) done by others.
AT a participating Lyoness merchant.
Are you *sure* that’s a realistic scenario, given the limited number of Lyoness merchants in the US?
Well if Lyoness lasts 10 years I am sure it would be close to that…like any mlm dream… residual income….
But as you said, you only get paid through 2 levels. Let’s say you got 10, and somehow they each got 10. So that’s 100 people. That means they have to do $2000 shopping PER WEEK EACH.
Are you STILL sure it’s a realistic scenario?
How about you tell what will happen to Lyoness in 5 Years will they gone, stagnant, or will it grow ever year?
I have been in Lyoness for 7 months, I have 40 people in my lifeline, 1 direct member. Where do you think I will be next year at this time?
My conservative estimate is I will have 100 people in my lifeline, with maybe 2 directs…
How much much will I make, to be honest I dont know. I can speculate it will be between $300.00-$400.00 per month….If I go ahead do it for 5 years down the road I hope to be making $2000.00/month.
I am curious to know though, how do you think Lyoness will go down in the next 2 years ?
It will go down in a heap. Actually I shouldn’t talk. My wife has meetings with her lifeline and a few are earning 10k plus a month. Maybe there is something in it! Ponzi!!
If you can tell me how the accounting program is not a Ponzi set up then I’ll be interested to hear it.
Interesting derail. Let me try it on you. In your opinion, how many people do you think you can sign up in the next year? And how many people will THEY sign up, and how much do you think they’ll shop at a Lyoness loyalty merchant? Be realistic now. To be fair, let’s say it’s a whole year (instead of the overly optimisitic “a week”)
One thing I will say is that their membership has grown to over 2.5m so it’s climbing. I also did my own due diligence with the authorities. I’m advised that their program is not a Ponzi because the shopping side of it supports the accounting program.
Without the shopping turnover then yes it could be viewed as a Ponzi scheme but their’s does not follow this. So there you have it folks. Straight from the horse’s mouth.
If anyone wishes to dispute this they are welcome to submit a complaint to authorities. Well looks like my wife was right all along.
Thanks for the air time. Don’t bother responding. Thanks. JL.
I don’t think he tried to derail you at all. All the people here are so against lyoness that the general opinion here is a collapse of lyoness. K.Chang you are the outside looking in, so I assume that you think it will implode at some point.
I think lyoness is here to stay. I am as merchant like it, and a member though it is going slow for me, but at the same time it does not regress. I just keep adding members to it every month.
Make no mistake, all Ponzi schemes eventually collapse. Lyoness is no different.
We’ve already covered this but again, rather than the catastrophic implosion, the Lyoness Ponzi will die a slow death as new investors eventually run out (let’s not pretend the merchant side of things alone is what attracted the top earners, who all made/make their big money in the Ponzi side of things).
I’m calling bullshit on that. First and foremost “the authorities” never give a business the all clear or endorsement, nor do they share the results of any investigation they conduct unless it is through disciplinary or legal action.
Secondly the merchant side of things most certainly does not support the Ponzi side of things. The Ponzi side of things could run entirely without the merchant side of things. You give Lyoness $x and after >x people have invested $x each, you get >$x back as a ROI.
The merchant network has nothing to do with the investment scheme.
Your assumption is a derail in itself.
As a critic, I point out shortfalls in the business model and potential conflict with the law. I don’t “predict” success or failure of the company, but then it doesn’t take imagination to see that illegal businesses don’t last very long.
What most defenders of a scheme (Lyoness in this case) fail to see is a business cannot be “a little bit illegal”. And buying AU and inducing others to buy AU is illegal by every legal definition of pyramid scheme you can find.
We can also go around the other way and ask WHERE is the extra money coming from, but then I’m not sure if you’re in the mood. 🙂
Then why have the option to buy an AU at all? Take it out and our objection goes away.
Why are the affiliates marketing this as an income opportunity, not a frequent shopper’s program? Or to put it more plainly, WHERE IS THE MONEY COMING FROM?
Okay you Lyoness Supporters I’ve been listening to this banter for about a month now. As I see this, we have two issues that while intrinsic to each other are somewhat mutually exclusive.
The Ponzi/MLM aspect of things is obviously something to decide by the Courts. But let us once again for the moment look at the actually loyalty rewards program. I try to have an open mind on everything but at the end of the day, from my prospective, I see little or no value benefit to the product.
I went to one Lyoness meeting and the other “guests” to I spoke-most of who were mostly Asian incidentally were, like me, only interested in saving money.
Okay so I say to you Mat and Peter et al, I think I am the prototypical prospective Lyoness Card user who has little or no interest in the punting the use of the product to friends and family-I couldn’t do that with anything-having been in some form of marketing and sales for over 35 years-unless I was passionate about its relative value.
Furthermore as a small business merchant, I would be far too busy doing that which in my core competency, to represent what I consider to be a very difficult to explain financial arrangement. Sooo here we are.
Given this dynamic, and as I say I think I am fairly prototypical, SELL ME ON COMPETITIVE AND VALUE ADDED BENEFITS OF YOUR PRODUCT.
Convince that I could save money vs my Costco AMEX vs my Bank of America VISA. Furthermore as merchant indisposed to the MLM style of business models, Show me the relative benefits of utilizing Lyoness vis a vis a Company such as Square, which gives me free readers., utilizes all credit cards and enables my to self-administer my loyalty rewards program as I see fit. Sell me on it.
Perhaps somewhat out there will admit that given the dynamic I provided Lyoness is just not for me. While I can understand that why don’t you Lyoness supporters be honest with us and admit that in the absence of the MLM kick back aspect that apportions monies from card holders that you signed up, there is a zero competitive advantage in shopping through Lyoness
I’m betting the silence will be defining.
MJW, I will try and simplify it for you and here it is in a nutshell.
You go to Costco and save 10% on all your shopping there. Your neighbours also go to shop at Costco and also receive 10% off all their shopping.
Now Lyoness world. You go to shop at Costco as they are with Lyoness. You save 5% due to Costco being a Lyoness merchant. Your 12 neighbours who you’ve previously signed up also go to Costco and save and you receive a kickback on their spending of 0.5%.
Further, when your neighbours shop at other Lyoness merchants you keep receiving 0.5% from their spending, and it goes on and on. Further, if your neighbours introduce anyone as well, you benefit from their spending also of 0.5% whenever they shop at Lyoness merchants.
Now if you don’t want to keep on receiving money from THEIR spending then fine. But many others do and hence why they join Lyoness. A simplistic analogy but that’s what’s occurring.
And I say to you, be honest, have a look at all the merchants you visited in the last month. Any store. List them on paper. Honestly, how many of these stores did you pay sticker price? Countthem and add the total value. Extrapolate that over a year.
Now would you be better off if they were with Lyoness? Eventually over time these merchants will sign up. Ask any merchant that is a Lyoness member whether they are better off associated with Lyoness or worse off.
If there’s any of the above you don’t understand please feel free to ask. Nobody is being silent.
Jan Husband:
What a load of buono. you said:
Now Lyoness world. You go to shop at Costco as they are with Lyoness. You save 5% due to Costco being a Lyoness merchant. Your 12 neighbours who you’ve previously signed up also go to Costco and save and you receive a kickback on their spending of 0.5%.
Nothing Jan’s husband can be farther from the truth. And by the way that moniker “Jan’s husband” has “pussy whipped” written all over it.
Regardless, Costco have never been, are not now, and never will be a Lyoness Loyalty reward partners as they have partnered with American Express for their program thank you very much. I would think the relative benefits of their partnership would be self evident so you know what? I’m not going to dignify your “simplistic” explanation with a response.
Oh and by the way AMEX just sent me an email informing me I also get Aeroplan miles as a result of my credit card purchases. When are ypu Lyoness supporters going to stop styming on all the kick backs you get from card holders you sign up and realize just how inherently inferior Lyoness is to the competitive dynamic.
Lets look for a moment the dining and dancing aspect of the competitive loyalty rewards programs between Lyoness and AMEX shall we. I get 3% off all restaurant purchases with American Express. Rather than pounding a square peg into the entertainment round whole, I get my discount from any I repeat any restaurant that accepts AMEX- which I can purchase on credit interest free for up the 51 days.
Lyoness can only provide comparative discounts on restaurants that have been signed up, are net saavy enough to created on line accounts and/or gift cards-for which I have to pay upfront from whatever, and/or are gullible enough to pay for a proprietary reader that does nothing else than debit your card @ time or purchase. NOW I ASK YOU WHICH IS THE MOST LOGICAL WAY TO SPEND YOUR HARD EARNED ENTERTAINMENT DOLLAR.
I’m going to Paul McCartney tomorrow-they say Bruce Springstein might show up as he is in town right now for his Monday concert! I bought my ticket on AMEX and I am going to my favourite brew pub-which will never fall for this Lyoness clap trap, and get my 3%off the meal I will be purchasing.
If I wished to use my Lyoness card and give my overlings that .5% I would have to endure eating an $8.00 steak special @ The Hungry Hefer. I gotta a great slogan for Lyoness –The luddites of Loyalty Reward Programs.
A guess missing the word ‘analogy’ makes no difference? By the way, I liked the quip about the “pussy whipped”…at least you’re funny. Lol.
Maybe you should have just picked a better analogy.
To All,
Tx to Oz and K.Chang for the true analysis of this MLM. I got involved when my mother joined and I found that she “invested” thousands of dollars.
Her friends had a party and told her it was a “rewards card” that was paying huge rewards every Tuesday. All she had to do was get more friends to join and shop. She did and called me after she got confused and “invested in the company” by making downpayments to get more “rewards”.
I did a quick internet review and found this site. I also found that the CEO and four Executives are based in Switzerland in a tiny warehouse district. The address they use in the US is the 27th floor of the Empire State Building. They deal on the internet and have their US holdings in Chase Bank.
The “red flags” jumped out that promising such high returns for “investing in the company” with down payments spells “PONZI”. My mother was paying a processing fee to sign up her friends. Lyoness required her social security number, bank account number, address and had her wire money into the Chase bank.
I have requested the California Attorney General to get involved. I also have requested the FBI (wiring funds across state lines) and notified the New York Attorney General regarding using the Empire State Building as their US headquarters.
I sent a letter to Lyoness to immediately refund my mother’s investments. To those of you who get in quick, make money and then get out, there are laws that will require you to pay back the eventual losers in this scheme when it collapses.
If you think you can hide, Lyoness has all your information in their data bases. I hope anyone making a lot of money will report their non-taxed earning to the IRS or you will be hearing from them when this thing goes bust.
The fee is $1.50
SSN is not required.
Bank is not required.
There is a 30 day trial period in Lyoness.
Jan’s Husband:
If you want to make business decisions based on analogies rather than working business models be my guest. My anology though still holds-Lyoness are Loyalty Rewards Program Luddites.
As for your handle-that’s okay. Even when I use my own name-I’m pussy whipped too.
Who needs enemies when you have friends like that….
Who was promising high returns? Lyoness or her friends?
Will you be kind enough to advise the response of the Californian Attorney General, FBI and the NY Attorney General exactly the response/advice they offer you. That’s three responses we are all expecting to hear so please share with us in due course otherwise we will follow up with you.
“1000 people in your lifeline, producing 0.5%” equals more than 30 directly recruited members in 2 levels?
* you will recruit 32 direct members = 32
* and they will recruit 30 direct members each = 960
My example counted for 992 members, but your plan mentioned “1000’s of members” = 2,000 members or more in your first two levels. Please correct me if I have misunderstood something?
So, currently you’re only 1,982 members short? 🙂
With the current 10:18 ratio, you’ll need to recruit more than 700 additional direct members, and they will need to recruit 1.8 members each?
Actually, a better question to ask is… WHERE is Lyoness getting the money to pay its members, who had accumulated so many “accounting units” (whether through shopping or through “pre-purchase” of AU) all those extra shopping dollars?
According to Lyoness’s website, merchant only pay Lyoness like 790 for setup, and 26 a month. Furthermore, if they don’t get at least 10 Lyoness shoppers, no monthly charge.
http://www.lyoness.net/us/kosten.aspx
So, *where* is Lyoness getting all that extra shopping dollars, if NOT from the merchants?
Clearly, it’s from the shoppers themselves.
Both. The high returns was in the Lyoness brochure, though somehow absent from the website.
Why, you think the affiliates are bold enough to make up **** like that? They just repeat what they’ve been told by their referer/sponsor, which came from Lyoness (albeit indirectly).
The one thing annoying about this review is people put up uniformed voment and start a rant on it.
This is for online shops only. The also must pay the cashback and loyalty benefit as well as the direct and indirect and also the 1% lyoness fee.
For examply my shop gives 2% cash back 4% LB .5 direct and indirect and 1% to lyoness. The total is 7% goes to the customer 1% goes to lyoness.
Thats where the fees come from…I repeat myself for 100th time. Read the compensation plan please
And where is this comp plan available for public viewing?
According to Lyoness US application, you actually pay $1999 (non-premium) or $570 premium to setup the “V-Term”, and each of their “friendship flyers” cost $3 (and you have to buy 20 at a time)
http://www.cashback10.com/uploads/6/3/8/6/6386326/sme_application_only.pdf
And there’s nothing in the info sheet either.
https://docs.google.com/viewer?a=v&q=cache:Much0hmjCdMJ:renegadedogs.com/pdfs/Loyalty-Merchant-Program.pdf+&hl=en&gl=us&pid=bl&srcid=ADGEESjtRtk6B7q6APOTEMNBIrlfu-WyW1IwZDEjvSazxZDm6IESEA72GKbHxlScJCTNDKU0jhi3I7-V_20GD95z2bib0xPnXDzk00kJmeMe2OTx4dy4FgZDNfWRkf22tW3xfONYeuJc&sig=AHIEtbQRvfcCBfN1Gl5yeXMOpf1O_JzZYA
There’s NOTHING in either document about how much fees you need to pay PER TRANSACTION.
So you, as a merchant, ended up losing 7% out of every purchase? Is that what you’re saying?
So why use Lyoness at all, when credit card’s fees is only what? 3% or so?
Why does it seem like I am repeating myself. The merchant fee is whatever you want it to be the minimum is 1%cashback1%LB.5% indirect and direct and Lyoness gets 1%.
for a total of 4%.
It is a marketing tool, I pay 4% and I get Lyoness customers coming to my place. credit cards are not a marketing tool.
Why does it seem that you’re repeating yourself? Because you don’t. You say slight different things each time, laced with jargon instead of explanation.
Previously you wrote:
Then you wrote:
So the cashback, and “LB” is variable, so your loss per sale can vary from 4% (minimum, as you said), to a more TYPICAL 8% (7% to shopper and 1% to Lyoness), depending on what sort of offer you want listed on Lyoness, right? What’s “LB” any way? Loyalty Bonus?
You said you paid 7%, not 4%. Please don’t change your own story.
Mat Bryant:
Then you replied>
Can I get a point of clarification here Mat? If a Loyalty Merchant chooses not purchase one of those marvels of 90’s technology AKA the Lyoness Proprietary POS Reader, Would on line purchases of giftcards therefore be the only way a card holder could enjoy get the cashback from that particular merchant.
I know for instance up here because Petro Canada does not have readers you have to go on line to purchase the gift cards. Please clarify if you can.
I am not changing my story, I felt you could fiqure it out without making the message longer..on well it seems I will have to explain it after all.
I do not mind paying it because other forms of marketing are not as guaranteed to bring in customers. Example when I do a flyer drop, 10,000 homes after paying for printing and distribution and of course you must offer some sort of discount (Just the discount alone would be at least 10%) or give away to bring them into your business.
From this you hope to get some redemption of coupons and if I get a total of 30 for the month I am lucky.
This could cost from $3000-$5000 to do the one drop.
Or I could advertise on the radio or television for X amount of dollars and there i really would not know whether they came into the business because of the media add.
This would cost between $1500.00-$2500.00
I pay 8%, for a customer that will be in at my business it is a pretty good trade off imo….btw …i have had my business for 22 years and doing well at.
Actually Petro Canada are the only gift card merchant that have reloadable gift cards so you only order them once and just keep reloading them from your lyoness account.
Lyoness distinguishes what type of business you are and applies the appropriate method of operation. Big chains sell gift cards only or they can do card swipe if they choose. Small merchants can not sell gift cards but use the swipe feature, or/and online shop.
First you wrote
Then you wrote:
And you still insist that you did not change your story? Oh, sure, you’re just speaking metaphorically that you *could* have offered only 4% instead of 7% loss. 🙂
So what exactly does your $2000 (or $700) get you? A listing online, and some brochures that costs $3 each. That 8% or whatever you only pay when you actually get customers through the door. So it’s not really comparable to direct mail / radio / TV.
In any case, the question is never about the viability of Lyoness as a merchant or discount shopping club. It has always been about the legality of BUY AUs instead of actually shopping to create them.
Right, now that you’re clear on the purchasing side and confirm the viability of the shopping side of Lyoness, where in the GTC does it state you can buy units?
I have no idea what you’re talking about but I suggest you read the Lyoness compensation plan before you waste everybody’s time.
Whether or not you can invest in AUs in Lyoness is not up for discussion, it’s a fact as per the Lyoness US compensation plan.
Show us the link?
Read the review you’re commenting on. All information was sourced directly from the Lyoness US compensation plan.
@Speculator
Links to Compensation Plan and General Terms and Conditions can be found in post #42 in this thread, and also in more recent comments.
You can “buy” Accounting Units directly by making down-payments on giftcards, either as initial down-payment(s) or as subsequent down-payments on the same giftcard(s).
A $3,000 standard down-payment will generate units in 3 different Accounting Cathegories:
* 7 AU in AC1 = 7 * $75 = $525
* 3 AU in AC2 = 3 * $225 = $675
* 3 AU in AC3 = 3 * $600 = $1,800
“Buying units” is the same as “booking units”.
A down-payment can be defined to be an agreement about future purchase(s). It’s not a normal part of TRADE or CONSUMER BEHAVIOUR, other than in very specific situations.
In Lyoness, the down-payments are used as some type of “vehicle” designed to allow payments to the company, more similar to fraudulent investments than to TRADE, e.g. in that trade doesn’t offer commissions derived from recruitment.
The discussions here have never been about the cashback solutions. People in general are familiar with different cashback solutions and different loyalty cards. But in Lyoness, the “main engine” seems to be the income opportunity rather than the consumer solutions.
“Seems” to be? Classic…
Well, to be honest… these times when Lyoness members were purchasing AU and the referees above had profit is long time gone…
Yes… in 2005-2009 I had profits from this AU units… this was like depositing credits for future… That’s time is long gone… In 2008 there were about 10 shops accepting Lyoness in my country. So ofcourse members were earning benefits from recruiting and depositing new AU for FUTURE.
Now 2012 different situation… I getting my money from Lyoness (over 200 eur every week) just purely from shopping. No AU deposits into what you call this “pyramid scheme”.
All the money are legit and they they are from savings of purchases done at Lyoness partners stores. And there are over 2500 Lyoness partners stores just in my country.
The last AU prepaid credit I got was in summer 2011. Now I have over 300 members in my lifeline and the profit I generate is only from shopping. SO NO PONZI/PYRAMID scheme.
Anyway Lyoness got the ISO certificate and the business is LEGIT and CLEAN. If it’s sound unbelievable to you that you can make money from shopping then the problem is in your brain.
Refreshing…
Not it wasn’t. It was a straight up Ponzi scheme.
The thing is, it’s still a Ponzi scheme. All that changed is your local (non-US) market dried up and it’s now funded by new investment in other regions. Ponzi schemes spread from area to area to keep going.
Once they run out of areas kaboom!
See above. Once a Ponzi, always a Ponzi (unless they change the business model, which they haven’t).
Oz, if you’ve seen the accounting program from fero1 then I’m with you. But if fero1s program clearly shows income from shopping would you suggest this is a fraud and a cover-up and funds are actually provided from new entrants?
I don’t need to, fero1 already admitted that:
That’s how Ponzi schemes work, those at the bottom invest and those at the top (earlier) sit back and earn money via investments of others.
You can’t look at Lyoness on an individual basis, the scheme as a whole is only kept afloat by continious new investment at the bottom level.
As per fero1’s own admission, without the Ponzi scheme to kick things off there is no Lyoness (what you have to keep in mind is the Ponzi is fluid and ever present in the bottom rung of new recruits).
Which country are you talking about here?
In most countries, the shopping seems to be REDUCED when people can’t recruit new “investors” and earn commissions on the recruitment.
ADDITIONAL QUESTION
* How does Lyoness solve TAXES for their members? Do you receive a “yearly report” from Lyoness or something, clearly showing taxable payouts?
Recruitment is normally considered to be some type of “work” when it comes to tax doctrines. Receiving payouts from other people’s investments or purchases should normally be “taxable events”, if the total amount per year is more than a certain minimum amount (e.g. minimum $600 per year in the U.S.).
Payouts derived from your own purchases or family members’ purchases are normally not taxable, it’s counted as “discount” rather than as “income”.
Since you have been a Lyoness member since 2005 you should probably be the right person to answer the question.
Your answer will probably tell us more than your statements, and show us where the problem is located. 🙂
LEGIT and CLEAN means my question about taxes should be relatively easy to answer.
It’s not if you get in for free in the later stages of Lyoness.
When I were on a meeting I was told that the investments is used to “simulate” real shopping to get the system rolling. So if Lyoness is running a ponzi scheme by design or if its just a side effect is hard to know, but it’s still illegal.
I agree with most of you. The cashback part and retailer part is nice and all but Lyoness has built a huge capital with a ponzi scheme that is used to lure more retailers in. “Hey! We have X customers with Y million dollars tied to our system. Want in?”
I think this company is morally wrong to support.
Again, you have to look at the business as a whole. Regardless of when you get in, somewhere around the world people are investing in AUs and keeping things afloat.
Furthermore “getting in late” doesn’t negate the Ponzi scheme nature of the business. If you have to start off with a Ponzi to raise funds, it’s not legit.
Exactly what I said. But I can see legit reasons/reasoning behind the compensation plan and why it is the way it is. But that doesn’t make it legal, just that the intent might not be a ponzi.
The start up of Lyoness in a country functions as ponzi, and should according to my friends upline, disappear in the later stages of “Lyonessisaion” when more retailers are connected. But that sounds like BS to me. My friend haven’t stop investing although his Lyoness market is saturated, he has invested in Spain, USA, Asia etc… he tells me that’s where the money is.
I actually got a copy of the agreements for “other contry investments” from him some time ago. Your position in the new country is base on how long you’ve been in Lyoness. So it will always be the same elite(read Hubert Freidl with friends) that will get the top of the pyramid, no matter what.
First sorry, for my english, its not my natural language.
Well, reading this website its looks like that many people did not understand the system and my posting. In countries where Lyoness is just starting now, members needs to put money in.
Why? Because system works this way – a Lyoness member on high level will meet a company owner and ask him Do you want to have new customers? Company owner ask: How many customers? Lyoness members answers: Just about 300.
Business owner response: Hahaha. Not interested. Lyoness member: Well together we have 1 000 000 EUR in cash and these money can be spend only at Lyoness partners stores. Do you want to be one? Store owner: YES I WANT SIGN ME IN!
That’s phase 1 in countries where Lyoness is NEW.
In countries like Austria, Hungary, Romania, Slovakia… Lyoness is working there like for 10 years. Its PHASE 3.
So people here did not need to put money to be members.
MEMBERSHIP IS FREE. People here just shop and making money back from shoping. In these countries are over 10 000 shops where you can use Lyoness card and make money back!
One problem is that the “simulation” can last for several years, and the system will slow down without the “simulation”. Most of the shopping derives from the simulation itself, e.g. from the purchase requirements and from the payouts in “Credits”.
Michelle, post #562:
Her 2,600 people lifeline was filled with premium members who all had made down-payments. This is the most typical way to join Lyoness, i.e. joining the opportunity.
@fero1, post #782:
You’re describing a situation where the pyramid scheme has collapsed completely, not generating more accounting units?
According to your description, the system seems to have worked well for 4 years (2005-2009), then it must have slowed down (2009-2011), and then it collapsed completely in summer 2011?
So the 300 people in your lifeline have money invested in the different accounting cathegories, with no chance of getting their investments refunded? The only chance for getting their money back is to “top up” the investment with additional money and buy the giftcard(s)?
Incorrect.
Shopping creates AU as well, these units are the ones that turn into cash as opposed to downpayments AU which produce gift cards.
@fero1
Not good enough. There is no justification for a Ponzi scheme.
Oh please, this is just a smokescreen. Lyoness in these countries is just funded by member investments in “new” countries… or as a Lyoness member recently put it “where the money is”.
Without continiuous AU investment there is no Lyoness.
In a saturated market, people will be less interested in “booking” more accounting units into the program. Many people will probably prefer to get some money (or giftcards) OUT of the program rather than reinvesting member benefits.
In fero1’s explanation, he received the last accounting unit in Summer 2011. Do you believe his explanation was incorrect?
fero1’s description was relatively similar to other descriptions I have read. The system will generate very few accounting units when the investment slows down or stops.
@fero1
I have asked you a couple of questions in post 786 / 791.
1. Which country were you talking about?
2. How does Lyoness solve TAXES for members? Does the company send monthly / quarterly / yearly income reports where taxable income is specified?
3. Tell us more about the members in your lifeline, e.g. if they are premium members and have invested in accounting units, or if they are free members?
I can create about 2 units a year myself min….that is not a lot of shopping btw. He must have onbody in his lifeline I assume.
All your income is reported in your weboffice. Just print that off and give it to your accountant….DONE
As a strategy you can have your own purchases cashback redirected into units..this will create units faster in your accounting program.
Two units a year, I can believe… If you’re talking AC1. Which is what you are talking about right? Not AC3 or even AC5? But then, that’s not an income opportunity.
Then it’s no longer a shopping thing, is it? You’re plowing the “rebate” (okay, “loyalty dollars” or “loyalty bonus”) right back into units, which now becomes an investment. This doesn’t smell “fishy” to you? That’s what all the Ponzis say: do the rollover, let it grow and compound and so on.
I see. fero1 was talking about PREPAID accounting units, not accounting units in general?
When you’re talking about “2 units a year min”, are those units from a minimum yearly purchase or something similar?
Do you mean that Lyoness is leaving it up to the members themselves how they will solve their own taxes?
Legit companies will usually send detailed reports, and specify each TYPE of income. Minimum requirement is a yearly report, e.g. a 1099-MISC tax form at the end of the tax year.
Companies registered in the same country as the taxpayer will usually have to send a copy of the yearly report to tax authorities.
Lyoness has very little information about taxes on its website, so I was asking fero1 about it.
BTW, consumers do not use accountants. You identified the question from a very onesided viewpoint.
I knew about that strategy. For people joining at an early stage, it can be wise to reinvest as much as possible and generate as many units as possible, and encourage people in their lifelines to do the same. I have asked a few questions about reinvestment strategies earlier in this thread.
An opposite strategy can probably be useful too, e.g. reinvesting as little as possible when the market becomes saturated. “Invest in one of the new markets instead”, e.g. post #789:
Who is Rod Cook and should we take any notice of him, re. His Lyoness views?
Rod Cook runs MLM Watchdog, he’s been around the industry for years. Mind you, that isn’t why you should take notice of him.
As with the information here, verify Cook’s information yourself and go from there. Blindly following people because of their reputation (purported or otherwise) is what gets a lot of people into MLM messes in the first place.
I first heard of Lyoness when I went over to an old university friend’s place for dinner one night. Her and her mother enthusiastically marketed it to me as a ‘shopping community’ as other loyal supporters have called it. That sounds all good, fine.
Then they told me about the business and premium membership in which you have to pay fees (1.5K (I think) and 3K respectively here in Australia). As soon as I heard that an alarm went off in my head and the first thing I thought was “This is a pyramid scheme”.
I didn’t consider that it was a Ponzi scheme ’til later when I spoke to some other friends who work in financial services who basically the same things as Oz and Chang have been saying.
I joined as a basic member, and bought something cheap to activate my account. (If you have to know, they got me by saying I could use the card in the US when I travel there). After more research though, I have no intention of using it any further, as MJW points out, even the shopping side of Lyoness is not viable.
Anyway I’m glad I came across this blog as I was looking for some recourse to bolster my arguments when I talk to these friends. It’s sad really, as I know the mother was part of Monavi and other marketing schemes and my friend just seems to get involved because she has ‘a vision’ as the Lyoness lovers call it.
Seriously, some of the things they told me when I questioned them about it being a scheme and not being viable/ collapsing once it reaches saturation have been the exact things Lyoness lovers have posted in these comments.
How funny, it’s as if they give out a handbook on how to deal with skeptical people.
My favourite response from the friend and her mother is: “Oh it will never happen [reaching saturation/ collapse] because they are only targeting 5% of the world population”. Okay. Then why bother with Australia where consumer confidence is at an all-time low?
It’s been a week since I got the last email notice about a new comment.
I guess the Lyoness supporters got tired of trying to defend it. Whatever little logic they offer is no match for Oz, Chang, and company.
They do. It’s called a “script”. Every salespeople has one, sometimes provided by the company itself, sometimes provided by their upline, sometimes purchased through “additional training” (that the rep paid for him or herself)
Nothing wrong with a script as it’s more of an FAQ. However, when the script itself contains logical fallacies, appeal to emotions, and sometimes, outright lies, derails, and omitting facts, then things may get very ugly indeed.
Penn and Teller, magicians in the US, has a show called “Bullsh**!” that makes fun of certain topics that they consider to be, well bullsh**. And one of the topics they covered was MLM. One of them even shows one such guy pushing some energy drink and calling people up based on this script on his computer screen. You may be able to find a link to it here on BehindMLM.
They’re a little hard on the whole industry, but they do raise quite a few good points to think about.
The problem with such proponents of suspect schemes is when they ran out of crap to spread (by crap, I mean crap info, i.e. bad info, which is a term invented by Ernest Hemmingway, honest) they either act petulant, or they go find a different place that’s a bit more… receptive to their crap.
Why, last week we had a self-proclaimed 19-year soon-to-be-success-story that basically told us “you ask too many questions, this is obviously not for you”. (not for Lyoness though, some other suspect scheme)
In a way, scams are self-selecting. You have to actively LIKE crap to keep getting them. A couple months back, Microsoft funded research earlier explained why are all those “Nigerian scam emails”, riddled with grammar errors and impossibilities, so bad? The researcher’s theory: it’s written so smart people won’t give it a second glance, but naive and gullible people, who do NOT ask questions, would.
http://research.microsoft.com/apps/pubs/default.aspx?id=167713
In other words, people who don’t ask questions are perfect scam targets.
So why do some MLMers keep looking for people who don’t ask questions? Hmmm?
So it seems. Thanks I will check out the Penn & Teller MLM bit. Those guys are awesome.
By the way, Lyoness have over 1B in US dollars in their bank account with the Bank of Scotland. Did someone say collapse?
I’m in Lyoness, I buy my gift card to Sears, Home Depot, etc and get cash back on my purchase, just like Costco. The difference is Lyoness pays you more back than Costco and has friendship benefits with it for sharing.
I respect Oz, Chang and the rest of the Gang here who are against ponzi schemes like bidify and all the othere crap thats on the Internet, but I love Lyoness and hope you guys can respect that.
-Cheers
Nothing wrong with Lyoness as a pure cashback company. I think we said that OVER AND OVER.
It’s the part about “down payment to future giftcard”, i.e. buying an accounting unit instead of shopping to generate them, that lands it in that gray and murky area called “suspect Ponzi scheme”. I think we said that over and over too.
Just remember, all those extra shopping dollars have to come from somewhere, and from what’s described, it all came from the merchants.
Two words: so what?
Interesting, some merchants have joined the merchant program but do not allow their cards/products to be used with down payments, only straight out purchases. You might be onto something Chang.
In the context where we use expressions like “pyramid scheme” or “Ponzi scheme” here, we use them as “identifiers” rather than as “precise descriptions”.
“Identifiers” = “This is how we have analysed it so far, based on the information available”. There are still some vague areas, but we have identified potential problems people should be aware of.
People working in financial services will probably identify it to be “some type of investment contracts” or other vague descriptions.
Down-payments for future purchases are not a normal part of TRADE, but it’s not a normal part of INVESTMENTS either. That makes it more difficult to identify the business model precisely.
Accounting Units are not tradeable products, but they are not true “investment products” either. The most precise description is probably “virtual investment system, designed for temporarily storage of virtual values”. The virtual values can later be converted into CASH, CREDITS or GIFTCARDS when additional money has been invested by a GROUP OF PEOPLE.
Identifiers like “Ponzi” and “pyramid scheme” are used for communication purposes, i.e. simplifying and making something become more understandable for a non-professional audience.
Tell me, “Louie” have you actually seen the Lyoness BoS accounts or are you going on what someone told you ???
Not that I am in any way suggesting you would be lying, but, it would be pretty remarkable if an MLM or it’s representatives said anything other than they were cashed up, wouldn’t it ???
If I tell you how I know you would not believe it. And it might reveal who I am…
What a charmingly circuitously way to save money! It’s nothing like Costco. Costco, in conjunction with American Express have a customer (or member) loyalty reward partnership. I’m not going to spew that comparative benefits if you don’t already recognize them. (perhaps you might have a credit worthyness issue that prevents you from realizing these benefits.)
Look I’ll say it again the only competitive benefit in the Lyoness Gun is the ability of a card holder, due to it’s rather seeding MLM structure, to realize additional cash back buy getting the card holders you sign up with similar credit problems, to realize a cash back from their spending.
There I said it I mean someone had to say it right. Lyoness may be a good way for people to realize a savings in some Slavakian backwater town.
And hey I love slovaks don’t get me wrong although like the Austrians they did support Hitler. Great Hockey Players and they even have Satan on their team-you gotta be a hockey fan to get that one. But when people in Developed Countries have innumerably more options, they will be more inclined to utilize cash back credit cards then buying gift certificate via money orders-or through proprietary pos readers.
Wait where’s my sony walkmen I need to listen to some more Soundgarden as I’m re growing my hockey player Mullet.
Now add to this the cloak and dagger aspect to this mystery man here with his inside knowledge of a Lyoness Bank Account, its starting to get real fun. Maybe this has something to do with the mayan calendar.
Regardless we’ll commiserate on the 22nd shall be-or not???????????????!!!!!!!!!!!!!!!!
There are literally dozens of legitimate cash back sites, that work with reputable affiliate marketers.
The first to come to mind is eBates.com another is bigbrandsmall.com, no fees no investments, no accounting units just cash back that you can take and spend anywhere you like or deposit in your bank.
Why would anyone even consider a scam like this.
Just want to add my own note to this. Based on their accounting units where you need to accumulate 70 accounting units of $75 each to get the $675 pay out. That would mean you and your directs(sign ups) would need to spend $509,250 to get those 70 accounting units of $75 each.
Do the math.. the accounting units of $75 each is the 2%-3% of the discount the vendor gives that goes into account. So $75 x 70= $5250. if that $5250 represents the 2-3% of the total sale price that would mean $509,250 would need to be spent to get that $675 bonus.
That is a lot of money spent (even though its including your sign ups) to get $675. No one is getting rich of this idea.
Well, not unless you just invest the money yourself in AUs directly with Lyoness (bypass the shopping) and then convince others to do the same.
Behind every top earner in Lyoness is a long downline of “premium” AU investors.
Apologies for the handle.
Actually, for every $2,500 spent through Lyoness a new unit is created. It pays out $873 in AC1. That’s a minimum return of 35% and the unit has not even gone through AC2 to AC5 yet. The math is simple but simple minds don’t get it…
Gee, this post has gone quiet. Where are all the Lyoness dooms-dayers gone? Nothing like reading a comment on the so-called Ponzi.
Who said anything about doomsday? Big difference between doomsayer and doomsday, dude.
Sure. Anything new unearthed about Lyoness?
Lyoness functions as a Ponzi investment scheme, paying out existing investors a fixed ROI once a fixed number of new investments have been made by their recruited downline via the Accounting Unit component of their compensation plan.
What else do you need to know?
Is this a good thing or not?
Obvious troll is obvious?
Ok, maybe I’m unclear Oz. Is what you’re saying illegal or legal?
Legal and illegal are for courts to decide and rule on. Functionally the Accounting Unit scheme operates as a Ponzi, as demonstrated by practical analysis of the Lyoness compensation plan.
If you can’t commit to state that this is illegal or legal from your wealth of knowledge, then your argument is that a Ponzi is neither illegal or legal. Am I reading this correctly?
Also, when you say “practical analysis” do you mean via the back-office accounting program as a member or what you have read on the Lyoness site as a non-member?
Nope. Ponzi schemes are most definitely illegal in the US.
The legal side of things is handled by the authorities and courts of law. You don’t need to be the authorities or a court of law to analyse a business model from a practical sense though.
That’s the point of view all reviews on BehindMLM are drafted from and usually the resulting discussion. Sometimes legalities enter into it but I personally approach busness models and how they operate from a practical standpoint.
A Ponzi scheme is both a legal term and practical one. I use it in the latter sense.
You don’t need backoffice access to analyse a MLM business model, only the compensation plan. This review and ensuing discussion are solely based on the Lyoness US compensation plan, as it was/is written at the time of publication.
It is based on the good faith that Lyoness are not misrepresenting their business model in their compensation plan and not displaying one compensation plan publicly whilst using another privately.
Having membership or non-membership to the company is irrelevant.
A very well written response.
Tell me, do offshore companies such as the Lyonesses of this world wishing to set up business in the United States have to jump through some kind of regulatory hoops of sorts?
How can a company that displays Ponzi-like functionality within their own program, especially considering the history of shams in the United States, be permitted to set up shop so to speak?
Incorrect.
Ponzi schemes are fraudulent representations of a fraudulent business model as legitimate. It is fraud, and thus, illegal under commercial law. That’s in the laws of every nation, certainly the US.
As Oz is not a part of law enforcement, or even a lawyer (and certainly not in the US jurisdiction), he would never say something is legal, or illegal, in the LEGAL sense. THAT, as he said, would be up to the real people who work for the law enforcement or the various lawyers and whatnot.
What you’re asking is trying to combine multiple questions into a single yes/no question.
Is Lyoness a Ponzi? Pyramid? Hybrid of both?
Is Lyoness illegal in the LEGAL sense? Why?
The former was answered in the various comments above.
The latter I already gave you the answer.
The laws and the authorities are reactive, rather than proactive.
Shooting someone in the head is illegal but there’s nothing actually stopping you from going and doing it.
Similarly despite Ponzi schemes being illegal they still exist and operate in the US. The most recent high-profile MLM example is of course Zeek Rewards. They were based in the US and still ran a $600M Ponzi for nearly two years before getting busted by the SEC.
I think it’s due to the sheer number of these things floating about and a lack of resources that more aren’t taken down swiftly (or at least investigated).
They are SUPPOSED TO, but very few do, thanks to relaxed international commerce of the Internet age.
TVI Express, which never existed in the US, EVER, recruited what’s believed to be tens of thousands of people in the US, often with bogus promises… as long as you feed its pyramid scheme with more members paying in $250 each.
When state of Georgia kicked it out, which basically killed it in the US, it took it a few months to die, but then it simply moved to some other countries.
Do US members *care* whether a company complies with US laws? Nope! They simply *assume* that it’s done.
Lyoness is no different (in the “who cares” sense, not necessarily in the pyramid scheme sense)
Yes you both make sense (Oz and K. Chang). I just find it fascinating that these still go under the radar.
Now I’m trying to do some research via the internet – for better or worse – and I find articles like this one (http://www.areadevelopment.com/newsItems/5-22-2012/lyoness-management-miami-florida-operations-26282622.shtml#.UOUzlmdBiYA.email).
What do you make of this?
I have no problem with them opening up US operations, but remember, US operations could be as simple as a mailbox (just look at Frode’s Bidify) to a whole office full of people, all of which could be quite fake or fraudulent. Don’t forget Enron or Madoff Securities…
Hmmm… why would they be looking for a CFO?
http://cleojobs.com/jobs-lyoness-america-chief-financial-officer-brickell-on-dec-27-2012/73e33e4b2ecc5e78.html
Exactly, hence don’t you believe the authorities have taken a stronger stance with regulation of these industries since these fall-outs like the Madoff affair?
Also, back to an earlier point, could it be possible that Oz has misinterpreted the function of the accounting program after all he is reading it? He could simply be misinterpreting Lyoness jargon?
It may not be as stated but simply he’s personal interpretation? An interpretation does not automatically follow a thorough analysis? It’s simply his opinion based on his mental capacity and/or personal biases. Do yo get my drift?
Lyoness has always been very careful in presenting itself in the public eye as a store loyalty program. The “accounting units” thing was buried in the fine print and only heavily mentioned by the people promoting it as income opportunity.
As more and more people promote Lyoness, authorities may (or may not) give a closer look.
I’ve read the points and I don’t see where it was misconstrued by Oz. I’ve dug up the PDFs of the various agreements, brochures, and such for Lyoness and you can indeed create accounting units through buying stuff in participating merchants… or paying for an AU directly out of your own pocket “as a down payment”.
So your “drift” seem to be way off target, IMHO of course.
How do YOU interpret it, any way? The part about “down payment” by buying accounting units?
The way I read it, and I can be wrong of course, is that buying a unit can only be done in concert with purchasing a gift voucher. In other words forcing you to buy a product in effect with a selected merchant, forcing you to participate in shopping.
Further, and I may be incorrect, buying a unit within a program only ends up giving you your money back but only quicker. This is what is confusing me reading all these posts about buying a unit and I think Oz is confused.
Sure you can buy a unit. A straight Ponzi would be a unit purchase only. Lyoness skate around this with the linkage to a product or service from the gift card purchase. Hence why it does not qualify as a Ponzi IMHO.
After 837 comments you’d have think somebody would have pointed out a flaw in the Accounting Unit analysis if there was one.
I’m not perfect and I’ve never claimed to be anything but just a guy with a keyboard. That said, the Account Unit scheme as written about here is wholly accurate.
You put $x into the scheme and earn a >$x ROI after a fixed number of new $x investments have been made after your own.
If you disagree with the above breakdown feel free to explain precisely why it’s inaccurate, but to date nobody has succesfully challenged it. Bit hard to when it’s taken directly from Lyoness’ compensation plan itself.
As for personal bias there is none. I have no personal interest or investment in the MLM industry and the companies that populate it (other than the industry itself providing ongoing source material for this blog).
We’ve been over this, gift vouchers are not products. You can toss your gift voucher in the bin and you’ll still get your ROI once a fixed number of new investments have been made.
Aside from this not being the case when the initial review was written, ultimately it doesn’t change the fact that you invest $x and earn a >$x ROI after a certain number of new $x investments have been made – all without the single purchase of a product or service.
Also note that the above happens entirely with affiliate money, there’s no outside money going into the scheme. All monies are also paid to and paid out by Lyoness themselves. This component of the compensation plan bypasses the merchant network altogether, it’s just affiliates paying affiliates.
The time it takes for an affiliate to get their ROI was never the issue, it’s how they get it that matters. Once a fixed number of newly recruited or existing affiliates in your downline make an investment, you get a ROI.
Straight Ponzi, partial Ponzi – it’s obvious due to the length of time it takes for shopping to create units and the fact that the AU “Premium member” scheme is heavily promoted by Lyoness affiliates that this is where the money is at.
Whatever a Ponzi is attached to or however you try to mask it, at the end of the day it’s still a Ponzi scheme.
When this discussion was started, there was no purchase of gift cards required to purchase units.
Since July they have made it mandatory, when purchasing Units…your are forced to buy the gift cards. So it would be a money losing proposition to purchase units because you must purchase gift cards….
The new strategy is to purchase just 3 units at level 1 and the cost will be $225.00 + gift card purchases of $300.00 =$525.00.
If you see that someone in your upline is going to buy 3k worth of units, at this point you would buy 2 units at level 2 amd 1 unit at level 3.
Buy doing this you can receive all the benefits of a premium member at a cheaper cost.
There is no point to being a premium member and investing $3000.00. You can get all the benefits with out doing it.
So they are discouraging clients to just purchase units.
Uh, the cost of the giftcards is less than the total cash ROI paid out (at least from ACII onwards). If you include the shopping credit, it’s less at all AC levels.
Premium pidgeonholes you into a certain purchase setup but as you note you don’t have to go this route to participate in the AU scheme.
Whatever “the strategy” is today, it’s still investing in AUs and getting a cash ROI greater than your investment once a fixed number of new investments have been made by new and existing affiliates.
they are not a product but they still have a cost on them…so to get 3k worth of units u must spend $3,600.00.
They taken the word premium member out of the compensation plan as well…they also took out the need to purchase 3k worth of units. this is as of July 12/12.
The new term is IBR, to be IBR all you have to do is make a purchase of Gift Cards in 30 days. Sign up 4 direct members ( there is no need to purchase 3k worth of units). and you get all 10 of the lyoness benefits.
@Mat
Sorry no buts. In MLM you’re either selling products to retail customers or you’re doing something you probably shouldn’t be.
Same shit different smell. As long as you can invest directly in AUs, not actually buy (or sell) anything, and then earn a ROI after a fixed number of new investments have been made after your own it’s still functioning as a Ponzi.
first thing is math does not work.
2nd there is not logic to people just throwing money away…
Sure it does.
Invest $x, get your downline to make a fixed number of $x investments and earn a >$x ROI.
If you really want to get technical you can compare the loyalty component of the ROI to the forced re-investment schemes many Ponzi schemes have.
Loyalty cash generates new AUs thus keeping the Ponzi ROIs rolling, so in a way it’s a forced re-investment of the ROI Lyoness pay out.
That’s if you want to get technical though, on it’s own the cash ROI paid out is evidence enough.
No there isn’t but the point about throwing the giftcards away is to demonstrate the irrelevancy of them (incase the fact that giftcards not being an actual product wasn’t enough).
AGAIN I POINT OUT THE MATH DOES NOT WORK….
Sure it does.
Invest $x, get your downline to make a fixed number of $x investments and earn a >$x ROI.
Scream all you want, it doesn’t change the compensation plan.
Paid out is not cash it is credit to buy more gift cards.
As per the Lyoness compensation plan, there most definitely is a cash ROI paid out on every AU investment level (AC I to V).
your logic does not make any sense. put in 3000 in cash and take out gift cards in return…how do u get rich doing that.
You’re stuck on the whole Premium member thing. The Lyoness US compensation plan clearly contains five investment levels AC I-V.
Each has it’s own cash ROI, paid out once a fixed number of new investments have been made by new and existing affiliates at any level.
As I understand it the whole Premium member thing was just a convenient way for Lyoness affiliates to bundle an investment package to prospective affiliates neatly. There’s nothing stopping them joining and investing manually in the five levels as they see fit.
This is straight out of the Lyoness US compensation plan. Canada might be different, I don’t care. I clearly stated at the start of this review it deals with Lyoness US.
There is 2 different kind of units created. When downpayments are made to purchase units, and follow the unit with 35/35 you get a credit.
the second way to create a unit is by shopping, lets say you shop and create a unit this way, and over time you create 35/35 units, well this unit will can turn into actually cash in your bank account.
Yes, yes we know.
The downpayment (investment) side of the scheme has always been the problem as if effectively functions as a Ponzi scheme. The rest of it is irrelevant.
According to the Lyoness US compensation plan, each of the five AC levels pays out a cash ROI along with the credit (I’m sure we’ve gone over this before with you).
Oz, you really surprise me. A gift card purchase is a product pure and simple. Go into Walmart and have a look at their gift card section. Go into Apple and buy an iTunes gift card. Are these not products? Don’t make laugh.
Your argument on the gift card is simply wrong. No ifs no buts. And you use the same illogical argument on the purchase of units.
(Ozedit: removed unnecessary adhominem attacks)
No, it isn’t. A product or service is only purchased when a giftcard is redeemed. Until then it’s just the mere transfer of funds from one medium (cash) to another (card).
Compare it to ZeekRewards, when Rex Venture Group bought the warehouse in Lexington? Lyoness has bought a $4.5 million / 15,000 sqft (1,400 square meters) office building, to use as a local U.S. headquarter.
It’s a relatively normal business decision, and it doesn’t tell us anything about the legality of the business. Did you expect them to STEAL the building? 🙂
This thread has gone quiet because discussions started to go in circles, repeating “the same old stuff” over and over again.
Whether something is illegal or legal will be up to the correct authorities to decide, and most people already know that. The investment parts of Lyoness are probably illegal, but people have always been willing to join illegal investment schemes.
I will consider it to be an INVESTMENT when
* you pay money to someone, and let them manage the money
* you’re not getting an equal amount of goods or services in return (like you do in TRADE)
* you’re expecting to earn ROI, financial gains greater than your own principal investment.
* your MAIN motive for paying is the expected financial gains
I will consider the Accounting Unit system in Lyoness to be an investment scheme, with the down-payments as investments and some other parts as reinvestments.
As an investment scheme, I will consider it to be more similar to a promotional pyramid than to a Ponzi scheme. If you don’t recruit more investors, your ROI will be less than your principal investment. You’ll need to recruit minimum 4 new investors to make it work properly as an investment scheme.
The individual investment will eventually turn into purchase of a giftcard. That makes it more difficult to identify Lyoness CLEARLY as an investment scheme, and to CLEARLY identify which laws to apply.
People researching Lyoness as an opportunity should probably avoid analysing it in more details than that. I don’t think they will get more CLEAR answers by analysing the legal aspects any further.
Deciding whether or not to join an income opportunity is usually about other factors than the legality of the opportunity, e.g. about feeling comfortable with what we’re doing.
People should probably avoid it if they don’t feel comfortable with recruiting friends or other people as investors. We don’t have to make it more difficult than that to decide whether or not to join it.
Giftcard has been identified as a “tradeable product” earlier in this thread, by linking to laws and regulations in different states in the U.S., e.g. about expiring dates, fees and other regulations.
I didn’t find that post now. I believe it was K. Chang linking to some official material about laws and regulations.
It’s possible to SELL and BUY a giftcard as a product in retail, so it’s clearly tradeable. Giftcards have also been commonly traded for many years as GIFTS.
“Tradeable” is about exchange of values, not about whether you have received the “end product” or not.
Down-payments on the other hand are not tradeable. There’s no product or service being traded before the giftcard has been fully paid and received.
Post #515:
I don’t think tradeable has any relevance to the MLM business model, it’s all about the end-product.
If you’re not selling end-products to retail customers in MLM, you’re probably doing something you shouldn’t be.
Whatever you want to classify them as, giftcards are not products within the context of an MLM business model. If you’re going to suggest they are, then what on Earth is the actual product purchased when a gift card is redeemed classified as?
A “free” gift?
The product is the end-product, only sold once a giftcard is redeemed. Till then all you’re doing is transferring money from cash to card.
Why not skip it altogether?
It’s SUPPOSED TO BE a SHOPPING LOYALTY program. Why encourage people to put money directly into Lyoness, instead of spending it ALL at the participating merchants?
It seems to be a partial attempt to allay the critics / placate the regulators, but does not address the fundamental nature of the program. WHY HAVE THIS SUSPECT PONZI ELEMENT AT ALL?
Classify them as “substitutes for real products”? Just like an airline ticket is a substitute for the actual product, a giftcard has a similar function. Substitutes are commonly used in trade as temporarily solutions.
“Within the context of an MLM business model” should probably be replaced by “within the context of TRADE and COMMERCIAL LAWS”. The discussion isn’t about MLM business models, it’s about whether or not something qualifies as tradeable products.
If an airline ticket qualifies as a substitute for the real service, then a giftcard will most likely qualify for a similar function. We don’t have to apply any specialied MLM-logics to it.
The downpayment is more like a future purchase that you will make. I am telling lyoness that if I pay upfront for some purchases, and I will spend the purchases at Lyoness merchants I will get a cashback discout.
The downpayment can be shopped off and you would get your original downpayment back. and have zero risk…this is why it is not a ponzi scheme.
this whole review is on assumption you can profit from buying units and also you would buy more units for yourself and than get paid out a ROI, which nobody does cause your paying $3600.00 for $3000.00 in units…
An episode of marry with children was when peggy sell cosmetics and receives commission cheques and was making more money than al bundy. as it turns out peggy was buying the cosmetics for herself…well the obvious here is al is going to go broke doing this because the cosmetics cost more than what the commission cheques are…..
Here Oz is saying well the commission cheques will cover the cosmetics cheques, so in this case it would be a ponzi scheme because al would be loser and go broke.
and besides the $3k put in can be shopped off and you would get your money out. nothing illegal about it.
all you are doing is asking other people in your lifeline to commit to Lyoness merchants and if they comment to future purchases an they will be rewarded as well.
The more people that shop at lyoness merchants the more residual income you can make. I am helping bring more people to lyoness merchants and getting paid for it, is what it comes down to.
I am going to give you an example how lyoness model is being used by other businesses. A friend of mine works for a casino and he is strictly on commission. He makes between 4000.00-6000.00 per month.
His job is to bring clients to the casino. He makes commissions off how much the client loses in the casino. and if that client happened to bring some clients in my friend will make a commission off them as well.
I do gamble a little myself, but if i bring customers to the casino i would get a small commission as well, and if recruited 1000 people to the casino i would receive commissions as well. The idea here is that you are creating a loyal customer base for the casino and be reward for you efforts….similar to LYoness.
Because this letter is to long I will give some more examples of other business models using the referral side to reward people. in other posts
@M_Norway
But they’re not, it’s just a transfer of money with nothing bought or sold until the card is redeemed.
An airline ticket is the purchase of an actual service (the airfare is the end-product) – the money is spent and not just loaded onto the ticket. A giftcard is money on a card, yet to be actually spent on a good or service (end-product).
As demonstrated by the fact that you can simply toss the card and still earn your ROI in the AU investment scheme, this is not the case.
The calculated total ROI far exceeds $3600 once each of the purchased AU positions matures (once enough new investments have been made).
As I’ve stated multiple times before, each AU level (AC I-V) pays out a sizeable cash ROI. Having to spend money on a giftcard slightly lessens the ROI, but it’s still greater than the money invested.
Again I point out that you’re stuck on the Premium membership option, when a Lyoness member can simply join the company and invest in AUs as they see fit.
If you take AC III as an example, you invest $600 (plus whatever the giftcard requirement is at this level) and after 25 new $600 investments have been made by your downline, Lyoness pay you $1980. No shopping and still a >100% ROI including the mandatory giftcard spend.
Increasing your membership rank (by maturing investments) also increases the cash component of the ROI paid out.
This is still a Ponzi scheme.
Nobody has ever claimed that the shopping network is not legit, so you’re wasting your time waffling on about it. It is however completely irrelevant to the whole Ponzi investment side of things though, and no amount of waffling is going to change that.
of course the gift cards are used with in days of receiving them so it has a value…first thing i do is fill up my gas tank.
of course people spend the gift cards…i by groceries and gas every week. In europe they have airline with lyoness as well as all inclusive boats or hotels..whatever you want to spend your money on….the key to lyoness is people shopping and creating units this way the long term growth.
not one time purchase of units, all you get is credits with it…you can not investment credits in the stock market or buy a home with it, but the cash units created yields actually monies for you…
people are not just going to plop $3600.00 down to get credits to spend, they have to look at the whole package and it functions together and the business will run it self over time….nothing illegal, nobody is ripped off, no body is murdered, and nobody has been stolen from…everything is on the table..full disclosure.
thats all i will add to the blog..
Again, you’re hung up on the use of the cards. Those participating in the Account Unit scheme are not paid on the use or non-use of giftcards, which is solely why I continue to bring up the point that the giftcards can be tossed in the bin and ROIs are still paid out.
Lyoness affiliates participating in the AU investment scheme are paid a ROI on one criteria only, and that is a fixed amount of new investments being made after their own. A Ponzi scheme shares this characteristic.
Furthermore the value of the cards was never in question, so you can stop trying to twist the discussion. I clearly stated that a giftcard is merely the transfer of money from cash to card. The problem is that in this process no end-product is actually purchased.
A moot point overall considering that ROIs are not paid out on the purchase of products by affiliates in anycase – only new investments by recruited affiliates.
Or moving into a country, getting as much new investors onboard as they can find and then moving onto another country. I believe the latest market is Asia? Dunno what happens after that.
Looking at the top earners income breakups it’s clear that without the AU investment scheme Lyoness wouldn’t exist.
As per the Lyoness US compensation plan, each AC investment level carries with it a cash ROI paid out upon maturity.
Yes, yes however you want to justify your participation in a Ponzi scheme is up to you. Fact remains that the AU investment scheme Lyoness are running functions as a Ponzi scheme.
In participation in the AU investment scheme, all monies are invested directly with Lyoness themselves. No products are sold to retail customers. Affiliates are paid based on how much they themselves invest into the scheme with ROIs paid out only once a fixed number of new investments have been made by affiliates after them.
The above facts are all and will continue to be all that is relevant to this discussion.
Perhaps Oz is correct after all and all the legal teams in the large corporations who’ve become merchants within the Lyoness system have got it wrong. The big names that have joined the growing number of large companies all have their own legal departments.
Many are smart enough to review the workings of Lyoness and conduct their own due diligence so as not to tarnish their brand if something goes wrong or is found to be in contravention of US Law.
They are bound by company rules and regulation and obligated to their shareholders in the first instance. But perhaps they are not as clever as Oz and have missed the issue around the compensation plan and unit purchases.
The merchant side of things has nothing to do with the AU investment scheme. When affiliates invest in AUs the money is invested directly with Lyoness and bypasses the merchant network altogether.
On the books they are two different schemes.
I believe you have a too narrow definition for giftcards? It’s easier to identify something if you use a wider range of different giftcard / gift certificate types.
“Money on a card” is a DEBIT CARD (“general use prepaid card”), not a giftcard. A debit card is a substitute for money, and can be used to pay for almost anything anywhere, including withdrawing cash from an ATM.
Arkansas (most states have relatively similar definition):
A giftcard / gift certificate is a substitute for real products or services, not a substitute for money. You CAN redeem it for products, but you CAN’T redeem it for money.
Arkansas (other states have other definitions):
Source for the definitions was found in post #490.
http://www.ncsl.org/issues-research/banking/gift-cards-and-certificates-statutes-and-legis.aspx
Or you can view it as investment:
if I pay Lyoness amount X (for an AU) and I convince enough others to create AU (either by purchase or by shopping), I get 2-300% ROI of X in return…
The question you need to ask is… whose money am I really spending?
Without the ability to purchase AU at all, the answer is “100% from the merchant”, and that’s great!
With the ability to purchase AU, the answer is “I don’t know”, which is an answer you’re avoiding.
I’ve asked MANY times… WHY have the ability to buy AU at all, which bypasses the merchants and feeds money directly to Lyoness? No one yet has a logical answer.
@M_Norway
I think within the context of MLM there’s no way known a giftcard without an end-product purchase constitutes a product purchase.
Otherwise what is the actual end-product purchase defined as?
In a general business sense you can broaden your definitions but in MLM things are pretty narrow and predefined. A tangible product “substitute” gives way too much leeway for the Ponzi / trying to skirt around the laws crowd.
Like I’ve said multiple times in this discussion, in MLM you’re either selling an actual end-product to retail customers or you’re probably doing something you shouldn’t be.
Giftcards, AU investments schemes – where is the retail?
Even if you take giftcards to be a product purchase (which I don’t), the system is still an effective Ponzi. The giftcards become no more relevant than ebook libraries, penny auction bids or advertising credits.
It’s all just a front to cover the core mechanic of investing $x with Lyoness, getting your downline to deposit a fixed number of new investments and getting a >$x cash ROI.
Perhaps ignorance is bliss, and the merchant participation agreement, which makes no mention of this ability to purchase AU, look squeaky clean to the lawyer types.
Perhaps some people are looking for “validation by association” by dragging the merchants’ names into the discussion about Lyoness business model, using the “they wouldn’t associate with a scam so this can’t be a scam” faulty logic.
It’s easy.
Just show the “legal team” the comp plan, get their approval, then do what the heck you like.
Who cares if the victims read something into the statement that the “legal team” have approved the plan.
I mentioned it earlier and I will do it again.
When Lyoness starts up in a country there are only investors and no products are sold. The investors are premium members from other countries who put in the money in the new AU pyramid and earn a ROI. This ROI is derived solely from invested money, aka Ponzi.
Anyone not agreeing with that?
Absolutely wrong. This kind of inaccurate, misinformation and ignorance is simply breathtaking. Your statement is 100% wrong. Nobody can buy units without a purchase. End of story.
Second, if someone wants to keep buying units (with purchases) good luck to them. The unit purchase is no different than taking money from a cash machine and then walking back into the bank and depositing your money to the same account, then walking back out and taking your cash out again.
The only benefit in doing this is pushing through an accounting unit for payout but its your money coming back to you not new money or ROI crap.
I don’t. I bought gift cards and Gift cards are not an investment Jack.
@Craig
Sure you can. Invest in an AU and toss your giftcard. Nothing was purchased.
Oh well that’s reassuring. Good luck with your Ponzi scheme guys!
And here’s me thinking Lyoness was an MLM company. Do they have all the appropriate licenses, registrations and what not to operate as a bank?
You invest, you convince others to invest and then you get a >100% ROI paid out of their investments.
The money you invest is paid out to people who invested in AUs before you (otherwise where do you think that money comes from?).
It makes very little sense for a single consumer to invest or reinvest anything. It makes more sense if you have a downline doing the same.
Investing and reinvesting will help you move FASTER through the first accounting cathegories, and you will eventually get higher payouts. Of course you’ll need a downline to help you and pay for your payouts.
Anton gave a relatively accurate description, except that some giftcards actually are sold:
The down-payments are absolutely needed to kickstart the program when it’s being introduced in a new market. Without investments like that, accounting units and payouts will only be generated very SLOWLY, too slowly to be of any interest for most people.
You can try to calculate that yourself, e.g. how much you’ll have to spend on gasoline or food to generate ONE $75 AU?
I haven’t checked the details, but I can guess the typical cashback for gasoline is 1-2%, plus 1-2% “member benefits” (the part of the benefits that is used to generate AU). You’ll have to spend $3,750-$7,500 on gasoline to generate 1 AU in AC1.
From a single consumer viewpoint, the down-payments makes very little sense. Why would a consumer hand over $3,000 to a company, and commit himself to pay tens of thousands so he eventually can get his own money back as gift cards? 🙂
It makes more sense if you consider the down-payment to be an investment or a “pay to play”, and you already HAVE some people in your downline.
Your own investments and reinvestments works as “seeding money”, generating AUs FAST. It will encourage people in your downline to make similar investments, and eventually generate higher payouts for you.
Why allow buying AUs at all then? Why not make it ALL through shopping? It’s supposed to be a shopping loyalty program, isn’t it?
Without touching a merchant, which completely defeats the purpose of a (customer) loyalty program. WHY?
It’s your money coming back to you… IF you can get units above and below to follow you… i.e. have OTHER people also generate AU, whether through direct purchase or shopping.
So in the meanwhile, YOUR money actually went to someone else, and when you got enough units, other people’s money goes to you. Now do you see why it resembles a Ponzi?
That is not an option during phase 1 and the beginning of phase 2 because there are no retailers yet…
How can you get giftcards if there are no retailers in a country?
Answer for M_Norway:
1. Slovakia. 300 000 members here. Over 30 shops using Lyoness in every major city.
2. There are no Taxes for members. You pay taxes only if you are premium member with level 2 or higher.
3. I have just 4 premium members. All others (100 people) are ordinary shoppers = free members.
@fero1
How much money have you earnt on your Premium member’s investments vs. shoppers?
Thank you for so interesting discutions. But i don’t have time to read it all.
I need to find more information about this. Because tomorrow i will go to presentation. It will be third my presentation. in the firts one i has caught lecturer lying it was fun. in second presentation,i give few question about units and i didn’t get any answer because they change topic, don’t let me to say something and etc., just ignoring. And i what to prepare for tomorrow to kick them ass 🙂
and for Norway:
Yes you right every member write they documents with Switzerland company. But all documents are processed by your country branch. Your country branch are just representative for Switzerland company. You can see this on an official documents.
There is written like this:
Lyoness Europe Ag, bahnhofstrasse 7, ch 9470 Buchs,Switerland ect…
than there is line:
Lyoness Europe AG Authorizes the Lyoness Lithuania or US, or Norway and etc.
I have o interesting story about it. every one around me say that i am stupid and that Lyoness are the best. I always trying to improve that this is Ponzi scheme, than Lyoness lying , but they don’t believe in me.
So i was working in one company which according to Lyoness are they partner. Call this company A. But it’s isn’t true. They are just are A company client who buy check with discount and then sell to customers.
But interesting is that. Lyoness give to customers 3 pro cent discount. 1% to cash account+2% to loyal. But in contract with company there is mentioned that they give 5 % discount. so what Lyoness do with extra 2%? I think they keep to themselfs And i think situation like this are everywhere.
According to Lyoness’s explanation, the additional discount are given to the upper and lower following units (i.e. downlines). So merchants give 5.5%, 3% goes to you and 1% goes above and 1% goes below. And Lyoness has 0.5% for its margins (and the annual processing fee terminal fee and such)
uh..yes it is. Walmart is a retailer. Were you born yesterday?
I’m not talking now, I’m talking 3-4 years ago when there where no retailers in the US…
Things probably changed from 3-4 years ago.
Thats exactly what I said. Lyoness has build a company from a ponzi and is now trying to hide it. Even though Lyoness today might be legal, Lyoness 3-4 years ago surely wasn’t.
Today, i was in presentation. With Lyoness head in Lithuania. And I can say. Totally brain wash.
In there you feeling like in sect. lecture say, that we are shopping community, every one start to shout and applaud, She said that with every purchase you get more money into your account, every one start to shout and applaud, she said that today we have few new members, every one start to shout and applaud.
The lecturer stat to talk and in her speech there wasn’t any facts, she was speaking about abstract things. She said that all members are signed contracts with headquarter in Switzerland. That not all companies can’t estable they headqueters in Switzerland. (this “fact” was really funny) That we are lucky to be there and so on.
After her come other lecturer. He start to talk that this company are reliable. That they have ISO and etc. that this thing is the best thing in the world. That I said that is Ponzi scheme and he replay any Ponzi scheme can’t survive more than 10 years. Then I remind about Mudoff Ponzi scheme – en.wikipedia.org/wiki/Madoff_investment_scandal. Lecturer was shocked and after one minute said: we don’t care.
And after this and other few question the main lecturer said. Why you what to know everything? It’s not important. What is important is that you will get your money. And the she give me an example that when you are buying a hammer you don’t look at its pars, do don’t care from which material it’s made.
I think it’s very stupid example. Because you need to know how everything are working. All business man, and other who work with money, they all know from where they get them money, and how money makes money. I will give you and very simple example how to understand that lyoness are pinzi scheme.
Imagine that in lyoness are 10 people who all buy business packs and each pay 2000e. Total we have 20 000e. According to lyoness each of them will earn about 15000e. In total 150 000e. If you can see in all system isn’t such amount. So if they what to get paid they need to add more people into the system who will invest the same sum 2000e.
So you can count, that if those 10 people what to get paid they need to invite 60 peoples. It’s like that? Or not? How you think? In real economic system money are earned by creating value, but where you can find a value in lyoness?
And other think I explain about ISO, about why lioness headquarter are in Switzerland. Said that everything is all right when we are talking about discounts, but there are some issue whit units and business packs. Why you need to buy them. She screams to me: what? You don’t need to buy nothing we are shopping community and so on.
She starts explain to me about everything. But het tall was too hard to understand, she was talking that she are layer and that she are smart, but there was any facts. Just we a big, we have a lot of people, 3 milions can’t be wrong and so on.
I really believe that she is smart, because stupid people can’t wash brains like that. You need to know what to answer to peoples who raise an awkward questions.
@Lithuanian
An interesting paralell to Anton and NHRA’s discussion. Here we appear to be witnessing the birthing of a new Lyoness market, which by all accounts appears to be marketed as a Ponzi scheme (join as a premium member and invest in AUs).
Out of curiosity was shopping even mentioned as an option or was the sell “get in as a premium member”?
Later on shopping might be a factor but the fact remains that without the Ponzi investment element the business wouldn’t be able to expand and it remains a signiciant source of revenue for Lyoness globally. Undermining of course the legitimacy of the unrelated merchant shopping network.
I would disagree. They can be following a script. If objection raised about A deflect with excuse X. If objection B deflect with excuse Y, so on and so forth.
One more reason my blog was created… to document such excuses. amlmskeptic.blogspot.com So far from your narrative I spotted the following fallacies:
— appeal to age (“ponzi schemes don’t last more than 10 years”)
— appeal to bandwagon (“3 million members can’t be wrong”)
— appeal to association (“we have ISO we must be legit”)
— appeal to ignorance (“why must you ask so many questions?”)
— and probably a few more. 🙂
Yes, it was mentioned, but one of lecturer said if you what to get money back faster than you can buy units or business packs.
Just for the record, I wasn’t told to come in as a “premium member” I was asked if I wanted cash back on purchases like Wal-Mart, Gas and clothing.
I was never told to buy AU’s even though some “above in a meeting” will recommend it to get cash back faster”, It’s not necessary or a requirement. IF it was a requirement then I wouldn’t have joined in the first place.
Hello, first I will apologize for my English, since it is not my native language.
I read most of the comments, about 80%. Topic and discussion is very interesting.
Let me try to explain couple of things. As previously was mentioned, introduction of the Lyoness card is divided into several phases. In this kind of marketing everyone has it’s role.
1. Lyoness task is to provide large number of dealers/merchants. Mission is to get dealers from various economic sectors, mainly from the sectors that we use everyday. Such as fuel, food, telecommunications, electricity…
Small entrepreneurs are not a problem, but the problem is to attract large companies. How to accomplish this task?
You can’t just walk in to the manager office and say “hello we’re Lyoness, give us some discount & we will get you new buyers”. Response will be “We have already our own card”, “How can you guarantee that these are a new buyers”…
The answer to this questions is… guess what. “We will prepay for your services/products & you give us discount”. It’s like Groupon, we will get you 1000 new buyers and you give us 40% discount. Of course discounts here are much smaller.
Once that Lyoness provide you many new customers they are ready to move to another phase & replace vouchers with cashback card.
There are many big companies that started with vouchers & now moved to the cashback card.
2. Members. Their mission is to spread the network & to buy vouchers (first phase). Why would anyone spread the network?
Well this one is easy, because you will get 0,5% from your direct & 0,5% from your indirect recommended member. In numbers. Let’s say that you have “recruited” 500 people & each of them “recruited” 5 of their friends. That is 3000 people. Now let’s say that each of them spend 500$ a month, that is 1.500.000,00$. Your part is 7500$ in cash. Not bad.
Maybe this was too optimistic, let’s say that they spend only 100$. You earning is 1500$. Still not too bad.
But in this phase Lyoness needs vouchers to get big partners/dealers. And why the hell will someone buy vouchers to get some 1-2% discount??? I mean this is ok if you are planning to spend 5000$, but for everyday shopping this is just stupid.
But wait, here comes the new idea.
What if Lyoness gives you aditional bonus. Ok, but where will Lyoness find money for something like this? This must be another Ponzi scum s*it. Actually it’s very simple.
Discount that Lyoness arrange with dealers is not 2%, it’s bigger. Discounts are 10-20%. This is the part that many didn’t get.
Let’s say that big food dealer gives 15% discount.
Lyoness will split this discount in the following order:
2% cashback (this is members money)
1% (0,5% + 0,5%) cashback for direct & indirect recommended members (upline)
12% for your loyalty account (for bonus & Lyoness)
WTF is loyalty account???
Well, loyalty account will create your UNITS. Each 75$ in your loyalty account will get you 1 UNIT. The rest you know, when you fill your empty unit places you will receive bonus.
Now we understand that everything is connected. You can’t get big dealers to accept your discount card if you don’t have many members & you can’t have many members if you don’t offer them places where they can use card & earn some money.
This system looks very nice, cause it creates “Perpetuum Mobile” effect.
I can see that ppl are using “gift cards” term, but this are actually “vouchers” not “gift cards”. You can donate them to someone, but they are connected to the specific dealer & you can use them only there. That’s why they are called “original vouchers”.
This part is also simple, if you want to buy some vouchers (to get 2% discount & loyalty bonus) you will make payment to the Lyoness. Lyoness will then contact selected dealer & pay them vouchers minus arranged discount.
From the money that you have paid Lyoness will pay vouchers, give you 2% cashback, 1% friendship bonus, XY% for your loyalty account (bonus & Lyoness earnings).
In my next post I will try to explain premium membership & voucher downpayment, this is where the things get interesting. 🙂
@mzopg
If by “interesting” you mean “Ponzi scheme” then sure.
You kind of wasted your time typing all that out, the legitimacy of the merchant network has never come under question. There is however a strong argument that without the AU investment Ponzi scheme, the merchant network wouldn’t exist due to the length of time it takes to generate units.
This is evidenced by the initial focus on AU investment when Lyoness enter a new territory.
You can try to spin it any way you want, it’s still just members investing and earning an investment once a fixed number of new investments have been made after their own.
What is different if I pay a small amount of my gift card or i pay integral gift card? I think is only my choice.
What is different if I pay today a product and i recive in a future that product? I think is only my choice.
There is no Ponzi because, there is no investment is only “buy something “. AU is small amount of my gift card.
Either way, outside of Lyoness you don’t earn a >100% ROI, paid once a fixed amount of new investments have been made by people in your downline.
Outside of Lyoness the difference is that you don’t earn a >100 ROI, paid once a fixed amount of new investments have been made by people in your downline.
Referred to as “downpayments” by Lyoness, AUs are obviously not gift cards. They’re investments made with the expectation that a >100% ROI will be paid once a fixed number of new investments have been made by people in your downline.
I invested $300. and basically gave up as a lesson learned. I do know a number of people who have put in much much more, one person put in 30,000. To really make her money back she would need to recruit many people who also want to invest.
Not too sure how this passes the legal tests but the government usually doesn’t step in until they get lots of complaints. By then the founders have made their fortune and the victims wonder what happened.
Too bad these schemes get to go on for so long, but as long as people aren’t going to jail for it, they will continue to flourish
@K.Chang: I would disagree. They can be following a script. If objection raised about A deflect with excuse X. If objection B deflect with excuse Y, so on and so forth.
Here is a link with a video which is very impressive too, I need opinions from K.Chang, OZ and M-Norway, please advise, thanks!
(Ozedit: removed video link, Costco is not MLM so any comparison is a complete waste of time)
Are the compensation plan of US and Canada the same? Is it true that Lyoness deleted/cancelled Premium Member in US/Canada? Why?
When will be your next post? I’m so anxious to read them! Because I want to understang Lyoness more for me to decide if I will go for it! Time is money! 🙂
Hi,
here in Romania the ideea for downpayment is to invest in far away places like USA or Brasil.
Seriously…this has been about the most entertaining discussion (from an amusement perspective) I’ve read in recent months!
I can honestly say I felt the same way as Oz when I looked into Lyoness (yah it’s not exactly some super-special by invitation only company, I get “invited” by people weekly, and everyone of them pushes the business op not the discounts).
I haven’t had even one person involved with that company give me the same explanation on their comp. plan so it’s pretty obvious they believe what they were told by their upline who probably didn’t get it either…perpetuating dysfunctional information. Duplication LOL!
So, question(s): gift cards vs actual product purchase essentially comes down to sales tax (because these are retail sales no?) When is it paid? Who pays it?
That’s the point when a product is sold…until then you merely have virtual spending power unless that gift card can be exchanged evenly for cash.
Ponzi or not ponzi I don’t care. Yes, I did put down 2000 eur and I already got back over 6000 eur so the system is working.
You can write on this little forum anything. You are like kids in kindergarten. Until you wasting your time here, the real members are already making money.
And there you have it folks. Finally a Lyoness member not trying to dupe everyone with rubbish about the legitimacy of the merchant network.
Put in 2000, get out 6000 from your fellow members investments.
Personally I’d like to think that if you simplified the concept, even kindergarten kids would see the fallacies of Ponzi schemes.
Sleep well at night.
Your comment should more accurately say: “some members are already making money, but over 90% will lose a significant amount of their initial investment when the Ponzi collapses, just like we saw with AdSurfDdaily, Zeek Rewards, and dozens of others high profile Ponzi’s that insist that the fact that those at the tip of the pyramid are making money is evidence that everyone will make money.”
A down-payment can be considered to be an investment, or a “consideration” in a pyramid scheme. Purchase of products do NOT pay any ROI or interests, but the down-payment does (if you recruit additional investors).
TRADE is per definition “an exchange of values” between a buyer and a seller. Down-payment doesn’t meet that definition, you don’t receive anything in return from the seller except for accounting units.
It’s not similar to lay-aways either. Lay-away will allow you to cancel the purchase for a minor fee, and will return the money you already have paid.
So Lyoness is basically an illegal and unfair trade practice, very similar to a pyramid scheme in the most significant parts of its compensation plan. But it doesn’t fit exactly into the models, neither for pyramid schemes nor for Ponzi schemes.
Promotional pyramid is per definition “a plan or a system, where participants pay consideration, for the right to earn financial gains, that derives primarily from other participants being introduced into the plan, rather than from sales or consumption of goods or services”.
A part of Lyoness’ compensation plan meets that definition close to 100% (points 2-10 in the CP). A pyramid scheme doesn’t have to follow the exact boundaries of a single company structure, it can be a PART of a company structure or it can be extended beyond the boundaries of a single company structure.
In the U.S., participants can be permanently restrained from participating in similar activities. “Similar activities” will usually include all recruitment driven opportunities, where you’re selling the opportunity itself (recruiting), rather than selling products to external customers.
Pyramid schemes also have the risk of clawbacks in the U.S., called Equitable Monetary Relief. It means a court can halt the illegal activities, and pass an order to the participants ordering them to preserve any net winnings while the case is being tried in court, and where you eventually will have to pay net winnings to a Receiver.
Look at the newest thread about Herbalife and FHTM, here on this website. Scroll down to one of my comments where I have analysed BurnLounge “Final Order”, and read the final order yourself (the PDF found on FTC’s website). That order will probably be presented for several others than the organisers.
It is posible to earn Roi only if I sale gift card in a regular bussiness?
Uh… selling a giftcard doesn’t require an investment. Lyoness only requires one because of the whole Ponzi scheme they’ve got going with the account units.
Hello All,
I started reading this page sometime around 6am EST today as Ive been looking for as much information as I can find about this whole “Lyoness”, and I’m glad that there are other individuals who have similar concerns, objections and questions as myself.
A bit of history on my Lyoness story as I was introducted to this company by a “premium member”, have spent 2 hours on a phone call with one of the top Lynoness guys in Canada as well as attended their conference in Toronto last week – so that being said, I have heard their story a few times.
A bit about myself, which I think will add some weight to my comment(s). First I’m a CA and CPA, practiced accounting in Canada and USA for 6 years before quitting and opening my opening company in payment processing (long story, in short had a bad boss so I quit and decided to do something totally different).
That being said, I know numbers and math very well. My company earns a profit based on a percentage of my customer’s (we call them merchants) VISA and MASTERCARD(MC) processing. On average it is 0.10% on every dollar they process.
So to start with some simple math, lets say my portfolio of merchants process $100,000,000 of VISA and MC per year; I get to keep $100,000. Now, this very quantifiable math and tangible income. I have my expenses of purchasing terminals and then selling them, where I make some more profit.
Point I’m trying to make here, tangible products are being sold and quantifiable profits are being earned; actual transactions are being processed to yield quantifiable profit.
Now, coming to Lyoness. The individual who first introduced me to Lyoness got me to become a premium member and said I would get cash back on my purchases, recommended that I should purchase, through the Lyoness website, PetroCanada gift cards, great idea, I get to save some money on gas through the indirect cash back discount.
Problem, after registering, I got a fancy email saying I need to deposit money to the Lyoness website to buy the gift card, and I have to “put down” a certain amount of money to get the value of the gift card.
Well, so I asked myself, why would I put down $x, paid to some company, when I can keep filling up at PetroCanada as I do on a regular basis, keep collecting my Petro Points and get my gift card or gas savings card or a free car wash without going through this entire hassle and reducing my bank balance to fund the balance sheet of another company.
Effectively Lyoness is keeping a consumers money in escrow till the full “down payment” is made towards the gift card. Seems senseless and not economically feasible for a very very low return on money for a regular purchase; I rather put that money in a useless, yet safe and regulated T-Bill fund and earn more – plus I know where my money is when I needed.
Next; so after many calls and conversations with the premium member I know, he kept the sales pressure of getting me to become a premium member myself. So, I said lets get the top guy from Canada to explain is math from a parallel universe to me as I surely cannot understand how this whole thing is working and how a company like this even manages to clock out a profit.
So, after a long conversation with the two individuals; I asked for some time to think about it. Now, effectively after doing my own math from this universe, using the same processing activity off my merchant portfolio; I came up with a pay back period, i.e. the time it would take to recover my $3000 investment would be 6.5years, that is just to get my money back.
I presented this analysis to the two individuals and they said thats not true and I have made a whole bunch of mistakes on my inputs to the calculation. Ok, fine, they said I should attend the conference in Toronto, at which a Lyoness member from a top Lyoness member.
Ok, so I went; there was a lot of fan fare, music and just positive mood building activity going on. Then came the meat of the information.
So I asked one question: I have an Airmiles card, member since 2000, have not paid Airmiles one dime to day, got two trips out of it, one to Bahamas and one to Las Vegas – totally free, just for spending where they accept Airmiles. I know the merchants pay Airmiles a fee to accept Airmiles so as their customers get Airmiles for flights and other merchandise. A true rewards program.
I asked a second question: I have a Scotia Gold Visa card for business, I pay off the balance on a monthly basis, so I have not interest cost, I pay the $120 annual fee, but the bank will waive it for me so long as I maintain a certain balance, so I get that for free as well.
To date, Ive redeemed my Scotia points for Scotia investment dollars (real money in real investments with a real bank in Canada) and also for a pair of Oakley sunglasses and a watch; so why on earth would I pay into some company with the hope of earning cash back when I have access to this program for free.
So, that being said my questions were “deflected” as saying that Lyoness is a loyalty and cash back program which has such and such a record and such a long history and some many members joining daily and so many people are making such amounts of money and that the potential for me to make money is nothing compared to my Airmiles or Scotia Visa card.
Ok, the answer was about 1% valid it the gentlemen did correctly state that Lyones was not Airmiles or Scotia Gold; but it still did not answer my questions. I need to know how can I make this ridiculous of amount money that has been touted by three different individuals now.
So next, coming back to my business. Prior to getting a merchant to process their VISA and MC through us, we need to sell them on the rates, the prices and the product. Sales in this day an age is NOT easy. Especially with the economy in which small to medium businesses operate, they are looking for the best price on everything and so are most of the employed friends and family I know.
That being said, one thing came out of all the conversations with the Lyoness individuals; to setup up a merchant/business with Lyoness for the merchant to accept the Lyoness card, the merchant has to spend $800 in cash paid upfront.
I told the guys they were out to lunch, to date in my own business I have only sold POS terminals with cash paid upfront 3 times over 2 years. No business owner wants to shed that kind of money when they can take a POS terminal on rent or lease and pay less than $40/month. Best part the Lyoness terminal is effectively a POS terminal, which cannot be leased or rented, it has to be purchased.
So where I’m going with this, is that once you become a premium member, you have to do two things, one is to sign up more people under you, get them to pay that $3000 or keep giving out the free cards which are $5 each and/or two start selling this Lyoness POS unit to merchants.
Now, so say we go with the idea of trying to sign up premium members, I myself cannot even properly explain the math behind this crazy idea, so I would not even know how to get people to shell out $3000 with some crazy return on some parallel universe math.
Second, say I dont do that but get into the activity of giving free cards out to friends and family I know, that would cost me $5 per card to give, even though I know each card costs $0.35 to manufacture+program+design (I do gift cards as well on the side) and then hope that all these people I give cards out to will login to the Lyoness website and start dumping their money with Lyoness.
Or third, I will start selling Lyoness POS devices with the bleak hope that I will find some crazy merchant willing to dish out $800 + tax.
Now, my very last point. So after all of the above, I let the premium member who introduced me to Lyoness that I was not interested at all; he was shocked and a bit pissed that he wasted his time on me and that I have a large enough customer base which he will never have access to through me, let him go after them one at a time.
The last thing to totally surprise me was that he said, and I quote “this really changes things, I thought you were going to be my second premium member for the period allotted to me, I need to go, I need to find someone to sign up ASAP or will have to put more money into this or I will have to stay a level 1 member for a while”.
That my friends is really sad if not disappointing, as I know, he has to dump more money into this Lyoness to keep his level or stay a forever level 1.
So, I have not said this is illegal or a ponzi scheme – I find it just a great con idea that the guys at the top seem to enjoy all the little worker bees working on this crazy idea just to find themselves stuck into it because of the money they, let me say it, “paid as a down payment towards future purchases”, i.e. an investment in nothing.
I look forward to some crazy and interesting responses.
That is, if you don’t recruit any premium members.
If you recruit any premium members, that 6.5 years got reduced very quickly. 🙂
Downpaymens is usualy in regular bussiness? What happen with downpaymens if I cancel in regular bussines?
I watched the “10 ways to get paid” infocast and was really dubious as to how he explained how one would get back their down payment if so desired.
Said if you went to store x to purchase a TV for $1500 and store x had a 10% bonus for Lyoness. You would only have to pay $1350 for the TV, there by gaining back $150 of your down payment. Sounds like paying full retail to me. Any one else see that?
Downpayments that pay out a guaranteed ROI after a fixed number of new “downpayments” have been made by people you recruit into the company?
No.
@Pescade
You get it back by recruiting new members and getting them to
investmake downpayments too.How many new
investmentsdownpayments need to be made depends onhow much you investedthe size of your downpayment.No I understood it as someone who wished to get out or opt out of Lyoness, wanting their money/downpayment back.
This is how he explained how they would go about getting their money back. To me they were getting nothing back.
I understood how they explained the AU’s and prepaying for future purchases, there by getting them in a quicker time frame that through simply using the cash back and other credits.
No real downside on simply purchasing the gift cards I thought. The prepayments are what through me. Then the infocast and the explanation of the way to get back your prepayment, really made me think something wasn’t quite right.
Oh opting out of it? Lol they’re not going to give you a refund, the money you’ve invested has already been paid out to existing members.
You have to “play the game” if you want your money back. You can try and get it back via shopping (and maybe your kid’s kids will get your refund) or go and recruit new members and get them to invest.
The giftcard/merchant side of things looks legit, it’s the whole AU investment thing that’s a red flag. Doesn’t stop Lyoness members from trying to legitimise the investment scheme by claiming people just don’t understand the merchant network though.
The Lyoness infocast website, (Ozedit: URL removed, password required) is where I got the refund information. In reallity it is no refund at all, just made it sound like a refund.
I guess they figured no one would be paying attention to the refund explanation.
I couldn’t get a refund anyway as they have $0.00 of my money. The “red flag” that popped up in my head after listening to the audio online pitch kept my cash in my pocket.
In other businesses, you will get your down-payments back if you want to cancel the purchase, minus a small fee to cover some expenses. In Lyoness, the down-payments are non-refundable.
“Lay-away” is about making one initial down-payment for a specific product, e.g. 10-35% of the total price, followed by weekly payments e.g. for 8 or 12 weeks.
It’s an agreement between seller and buyer, the seller has to reserve (lay away) the product and not sell it to other customers. The customer can cancel the order and get his money back, minus a minor fee, or fulfill the purchase by paying it in full.
In Lyoness, the down-payments are non-refundable. In addition, Lyoness has a “money game” connected to the down-payments. The “money game” seems to be the primary motive for people to make the down-payments.
To make it simple, you can analyse whether it IS a “money game” or not, you don’t need to make it more difficult than that.
We have analysed Lyoness more than enough for people to make their own decisions about it. We’re not able to identify it 100% correctly, e.g. for whether it is a Ponzi, promotional pyramid, “other money game”, “investment” or whatever. But you will find enough information here to give you a clue about what it can be.
It makes very little sense for an ordinary consumer to participate in something like this. Most comments here have come from income opportunity seekers rather than from consumers, and they will ALWAYS be eager to defend the schemes they’re participating in.
It makes sense if you’re an income opportunity seeker, but it doesn’t make much sense if you’re a consumer. Income opportunity seekers will ALWAYS be attracted to different “opportunities” and “money games”.
It makes some sense if you have plans for how you will attract minimum 4 additional investors, and if you don’t believe the scheme will be halted in the first 12 months. It makes sense if you believe in “the bigger fool theory”, i.e. “there will always be possible to find bigger fools than myself, and to find MANY of them”.
You have actually got more than enough information to use your own common sense, if you have one. You will have much better chances if you’re able to identify this opportunity relatively correctly.
If I buy a gift card can i got my money back cash if I cancel after let say 3 months in a regular bussines?
Use 6 weeks as an example rather than 3 months? The answer is YES, you can cancel your order and receive your money back (minus a minor fee). Try to google “lay-away”, and check some of the examples in Wikipedia or any other sources?
“Lay-aways” are normally for shorter time than 3 months, or up to 3 months. It’s not regulated by laws, it’s regulated by fair and common business practice. I’m rather unfamiliar with solutions like that.
In the U.S., lay-aways are most common for typical presents, e.g. birthday presents or Christmas presents, e.g. toys, jewelries, electronics.
I checked lay-aways because someone was comparing the down-payments to that solution, claiming “the down payments are simply lay-aways”. But a statement like that is misleading and false.
I have been in the payment space for 18 years. I even founded and sold a card program in 2008.
When I was approached about Lyoness, I listened closely to their sales approach and asked the hard logical marketing questions and the more important technical questions. To my surprise the so called “guru” at Lyoness couldn’t answer how many merchants there were (NOT online, I mean actual store front brick and mortar accounts).
However he did state less then 5,000 across the US and proceeded to tell me the HUGE opportunity to sign up merchants – good luck with that one pal! So there are millions of card holders and fewer then 5,000 merchants? Good luck using your card at retail locations.
He could only explain how the cards worked “online” from accounts outside the US. I can tell you from experience that the US payment infrastructure is not like other countries.
Make your own conclusion, but proceed with caution, unless of course you plan to move out of the US.
Dear Oz,
I want to wholeheartedly thank you for this thread. That was the only comprehensive piece of valuable information I could find on this scheme… er..I apologize, “opportunity of a lifetime” 🙂
My friend got signed up and tried to convince me. Of course, he didn’t fully understand it, so I got bumped to his sponsor and we arranged a meeting.
It started with usual opener “what if I told you that you could make 20000 a month, laying on your couch ?” I said, sure, that’s quite interesting, please tell me exactly how it works as I went through the website and it doesn’t make any sense.
Then the person got irritated and told me that this opportunity for people with a vision and I actually need them more than they need me, so … if I don’t see a good thing when its looking at me – my loss.
Reverse psychology is really lost on me so I bid my goodbye. But still I started to look for any valid point to this and alas, there is nothing. Again, thank you, I can sleep easily now 🙂
I just did my research today and my question is, why is the down payment such a big deal? The way I see it people have free will and it’s all about making the decision to do the down payment or not.
So, yes, maybe sending the $3000 in to get on the fast track to being rich is a scam, but no one said that they absolutely had to put that money in. It’s a choice. So maybe that’s not where the focus should go?
Maybe it should go to the fact that getting more people under you in the pyramid can help everyone in the long run. Or am I just not getting this right?
I didn’t really understand everything that they were saying in the videos that I watched. It’s all very interesting and seems like it could be excellent if you just play it the right way.
If I’m not getting it could someone please help me. I’m not looking for a biased answer. Honest to god pros and cons to both sides would be great. Thank you.
There are no pros to a Ponzi scheme.
If you claim to have done your research and need to ask why participating in a Ponzi scheme isn’t a good thing, you haven’t finished your research.
I also said I didn’t want a biased answer but thank you anyways.
There’s nothing biased about pointing out the fallacies of Ponzi schemes.
I think what you’re asking for is someone to convince you participating in one is ok. That’s not going to happen here.
You’ll probably have better luck getting an income potential tainted answer to your question from a Lyoness affiliate, complete with bias.
That’s not what I’m asking at all. If I wanted that I would just be asking the person that is trying to get me into it and I’m not. I’ve read a lot of what’s on here but there is so much information that it’s hard to wrap my head around it all.
So instead of re-reading it all again and getting confused again I am literally asking for someone to really break it all down for me personally so that I can better understand everything. I’d just rather not have someone who is 100% against it or for it to tell me.
I’m not on here to start drama or go back and forth, I just want information from people instead of reading it all to death and still being confused.
Basically as far as the income opportunity goes, you invest money with Lyoness and after you’ve convinced enough new people to invest (that you’ve recruited) you get a >100% ROI.
You can completely ingore the shopping merchant side of things completely.
It’s not confusing unless you make it confusing.
Hmm, Thanks.
Not everyone in this world has $3000.00 to invest…( not really a invest because you can shop it off and get your money out over time. no downside)
the upside….do not have to pay $3000.00, do not recruit people do nothing but shop and you will save anywhere from 2%-20%…..no risk…….now if you feel you want to do more with the company than go ahead..
not everyonoe supports oz’s opinion…one part of Lynoess MIGHT BE FLAWED, that is up to the courts or people (They will not support it, so it will fail) to decide, it is not up to Oz…he supports only one side of the arguement….I disagree with oz and some of the other members….since I have been a member of this site and Lyoness I will argue the other side..2011…
4000 member is the us and canada..end of of 2012 over 35,000…It is growing and if your are lucky enough up people for $3k go for it….in less than a year I was able to sign up 2…lol..I guess I am a fail, but I also save while shopping which is great.
so join Lyoness with low exceptions and you will not be disappointed…putting 3k is a bigcommitment……know what you are getting into with low exceptations and you will not be disappointed…once you join there is no other fees, it is all profit.
MB
Ponzi schemes are fundamentally flawed. Courts, “the people” any myself don’t decide that, it’s just fact.
You can diagree with the facts all you want, they are what they are.
Your “free will” concept is flawed. True “free will” should include “… and it’s RIGHTFULLY mine”. If the free will isn’t rightfully yours it’s only an illusion.
It’s not about what you CAN choose to do by your own will, it’s about what you rightfully can choose to do. There’s a major difference there.
Here’s a correction to your statement:
“The way I see it people have delusions and it’s all about following their delusional ideas to do the down payment or not.”
Currently we don’t know 100% whether it’s about free will or delusion to make the down payments. But all the different comments here should probably give you an idea about what it might be.
Your own statement was clearly delusional, because you didn’t manage to include the most important part of the “free will concept”.
And Zeek has a million members. So what? Bandwagon fallacy is so lame.
That’s like saying victims of fraud all “deserved it” because they are dumb enough for fall for it. Isn’t it? They have “free will” and they chose to be victims, yes?
World wide Lyoness has 3 million members..so what!
@Matt Bryant,
Rules are useless unless they are ENFORCED.
The way I see it, Lyoness has done NOTHING to address the AU Ponzi side of the equation, it is a suspicious activity.
So what if they have millions worldwide, it just means the collapse will be even more colossal when the authorities shut it down.
Have you got any information about how to solve taxes, e.g. have you or anyone in your upline received a 1099 for 2012?
In the U.S., you should normally receive a 1099 tax form by the end of January, if you have received more than $600 in payment during the last year. “Payment” doesn’t include discount or cashbacks on your own purchases, but it will include most other payments.
“Payment” is about any time the company makes an amount of that type available to you, where you can choose either to withdraw it or reinvest it. It will probably include payments in giftcards, too.
The cashback card is fair enough, but you can probably find better solutions. The income opportunity has too many unsolved “potential problems” to be worth it for a normal consumer.
One of the reasons why I won’t recommend it for normal consumers is because the system seems to have been set up to CONFUSE people, but without making them FEEL too confused. They are logically confused, not emotionally.
Experienced MLM people have detected that problem, and have mostly avoided Lyoness (other than when Zeek collapsed, and some people had to jump from the sinking ship to save their downlines).
An example for confusion:
It makes very little sense for a consumer to make “down payments on future purchases”, yet most participants seems to find that behaviour “perfectly normal”. 🙂
They are clearly confused, but most of them seems to be unable to realize that themselves. Some have rationalised that behaviour by comparing it to “lay-aways” (e.g. post #919) or talking about “free will” (e.g. post #931), but that doesn’t make them less confused.
The biggest red flag here is all the confusion that’s being reflected in this thread. People are probably being tricked by some “mind tricks” or something.
I have been reading all the stuff out there on the internet and I think the big misconception is where the money for the rewards and payouts comes from. It all comes from merchants.
The down payments strictly buy gift cards so when I go in and order they have them on hand because they got them at a discount. Now If I’m a merchant and I give a 10% reward only 2% of that is paid out immediately then 1% yes to the friendship bonus but the other 7% goes into the loyalty rewards which is the money that pays out on the units.
It is specifically stated that down payments are not used to pay out ANY rewards. Now the accounting units are created by shoppers as well as down payments. There are no people in the accounting program only accounting units created by people.
Therefore as long as every one is shopping there are constantly accounting units being put behind your units.
Now if you want to speed up this process you purchase down payment units or refer the program to your friends who will then create more shopping units. THIS is not a requirement to have a unit pay out.
I guess as a pizzeria owner I looked at it that I spent tons of money on advertising and trying to keep my customers loyal this program does that for me but I also earn when ever any of my customers shop any where in the Lyoness program.
I will also get new customers from the cards the other merchants hand out as well. So it’s a win win.
I have had an air miles card for over 15 years and I think the total rewards have been a flight to have my mother in law visit and a few rental cars over the years. I also have HBC rewards and I swear I have been shopping at zellers and the bay forever and never accumulated enough points to buy anything.
This card allows you to shop at 100’s of different merchants and accumulate rewards. The unfortunate thing is how because it pays for referrals all of a sudden it’s a horrible thing. I wish the MLM and network marketers would go do some other business and leave this program alone.
From a merchant and customer stand point it is a brilliant idea. Get more customers and get paid to shop.
Invest money with Lyoness as account units, recruit new members who do the same and earn a >100% ROI once a fixed amount of new account unit investments have been made.
What merchants?
You can toss the gift cards in the bin and still receive your >100% ROI once enough new investments have been made by your downline after your own.
“People” who are in your downline, meaning they have to be recruited. If you’re playing the accounting unit investment game, each AU represents one recruited member in your downline.
Or you could just bypass the whole merchant network and invest directly into account units. That’s much faster than participating in the merchant shopping side of things.
Perhaps, shame about the whole account unit investment thing they’ve got attached to it though.
As I stated in post #936, the biggest RED FLAG for Lyoness is all the CONFUSION.
People are generally being TRICKED into believing all kinds of stuff there, often by their own mind or experience, even when the ideas are completely irrational.
People can TEST themselves. “Does it make sense for me to make down payments on giftcards, as a consumer?”. The answer should normally be a big “NO”. That type of behaviour is way out of the range for “normal consumer behaviour”.
The worst part is that people are tricking themselves to believe they’re acting “normal” and “rational”. They are being tricked by their own logical confusion. It FEELS quite “normal”, so it won’t trigger any warning signals in the brain.
Here’s a so called “rational explanation”:
It sounds quite rational, and the brain is obviously willing to accept it. But as a merchant, he should have been able to realize that his idea probably is UNTRUE.
* He hands over $225 as the first payment for a $7,500 giftcard to Lyoness.
* In return, he gets an accounting unit in AC2
* He BELIEVES Lyoness is purchasing a giftcard from the giftcard provider (e.g. Wal-Mart) for either $7,500 (full payment) or $225 (partial payment), and are laying the giftcard away specially for him.
* In addition, he BELIEVES that none of the $225 he has paid Lyoness is used to pay out commissions to other people, “it goes strictly towards a giftcard purchase”.
That’s why I was talking about that people are tricking themselves. It has been reflected through this whole thread, in more than 900 posts. That’s a HUGE red flag.
Until then is > 1000 lyoness loyalty merchant in Us and the number is increase day by day.
1000, 10,000, 1,000,000, does it matter as long as the whole account unit scheme is attached to the opportunity?
@M Norway
Anyway just to clarify I didn’t mean that they actually put the gift cards on Layaway for me, what I meant was that there are gift cards held by Lyoness and different merchants who as a Lyoness member.
You can get the gift cards directly from that merchant, that have to be bought by Lyoness so that when a new customer comes on board or an existing customer wants to purchase gift cards, they have cards on hand.
Also they have to have the cash to buy in bulk to get the discount on the gift cards. They aren’t going and buying gift cards one at a time every time someone orders say a superstore gift card.
There has to be a bulk amount of cash somewhere to purchase these gift cards. If all the money that came in from the down payments went out in commissions how would they purchase gift cards?
I really am interested in what ever one is saying because I don’t want to get all my friends and business owners involved in what you are making this out to be. But I do think the focus you are putting on how the down payment works is not clearly explaining the process.
Now maybe if the program was strictly the rewards card with the two levels of friendship bonus (which is paid by the merchant % as well) it would be no different than an air miles card where merchants pay air miles for all rewards given to their air miles customers it would be the exact same idea except for the fact their is an added bonus for anyone, merchant or customer, that refers the program.
Further on the air miles thing the reason they can give the free flights is because the merchant pays on every air mile given to a customer but a customer can’t spend them right away they have to accumulate this allows the flow of money to always be there for the person who finally gets enough rewards for a flight.
How many thousands of air miles are paid for by merchants and how many are actually paid out in flights? Yet I do not see anything written about an air miles scam.
Here it is the same thing. The rewards are accumulated until a unit is created at 75 dollars it then goes into the accounting program now it won’t say pay out at $675 (or a flight) until enough units are put behind it.
Now they could be put behind it by just my own shopping which could take some years, but all those rewards have been paid by the merchant already for every dollar spent at all the merchants I have shopped. But it will only be the diligent shoppers that will get rewarded on that side of the program however you still haven’t lost because you have still received the 1-2% cash back on every purchase.
Now if you don’t want to depend on the people in front of you shopping and putting in the units you can go refer your friends for the FREE shopping program. Do you see a problem with that? I’m not being sarcastic I truly am asking.
I sense you feel all the down payments are made and no one shops. In canada you can’t buy a down payment without buying gift cards as well as the down payment. So everyone must purchase gift cards.
So the down payments are pooled to buy the gift cards the company then sells to Lyoness members. The merchant has paid the % upon purchase of that bulk purchase which is what in turn pays the rewards.
When I ordered my gift cards they were couriered to my door in 5 days so not sure what is going on with the lady that it is taking 2 weeks.
And are you against anything that looks like Network or Referral Marketing or MLM?
Am I completely out in left field about how I see how the program works? Oh and I’m not a he, I’m a she.
@Oz
Now why would I throw $300 hard earned cash in the garbage?
First and foremost giftcards aren’t cash.
Secondly “why” is not relevant, only the fact that you can. If you tossed your giftcards in the trash Lyoness would still pay you a >100% ROI (in cash) once a fixed number of new investments had been made after yours.
You seem to have been sold on the whole shopping side of the business which, as above, can be completely ignored. Invest money with Lyoness, recruit new investors and once a fixed number of new investments have been made with Lyoness you get a >100% ROI. You didn’t buy anything from a merchant.
Furthermore it’s worth noting that the whole gift card nonsense was only brought in relatively recently to cover up the investment scheme. It exists solely so that the merchant side of the business can be sold to people like you, who then come here and go on about it, completely disregarding the AU investment scheme.
Do you honestly think any of the top earners recruited thousands of people and waited years for them to generate AUs to earn the incomes that they do?
Of course not. They bought into the scheme with AU investments, recruited others to do the same and that’s where the money is in Lyoness. Any AUs generated by shopping is purely incidental.
As for cashflow to buy cards, Lyoness have been running this for a while, surviving by establishing new Ponzi schemes in different regions, which they fund by allowing investors from existing countries they operate in to invest there and kickstart things.
The gift cards are just a front after it was exposed that “downpayments” and “credit” were about an obvious Ponzi scheme as you could have.
Ultimately it doesn’t matter what they attach to the AU investment scheme, as long as I can join Lyoness, invest money directly with them, recruit new investors and then earn a >100% ROI after a fixed number of new investments with Lyoness have been made, it’s an effective Ponzi scheme.
Dunno about left field but we’ve seen more than a few Lyoness members rock up here proclaiming that the merchant network legitimises the business, I’m guessing it’s in the marketing they put out.
Meanwhile the AU investment scheme is completely looked over. I figure it’s only mentioned when people realise that AUs generated by shopping takes forever.
‘Oh it’s taking too long to generate units? Well uh… psst…. you could always just uh… buy them yourself – ssh sssh you didn’t hear it from me.’
After reading the evaluation about Lyoness it diffently gave me a headache that these individuals have NO clue how the comp plan works!
With all the multi million or billion dollar companies associated with Lyoness and with staffs to investigate who to do business with, put there reputations on the line, anybody that would listen to any of these bozos must be BRAIN DEAD !!!!
^^ That’s just the old “you just don’t get it” routine.
As for using the reputations of the companies in the merchant network to legitimise the AU Ponzi scheme, dunno how many times this has to be said but here it is again: There is inherently nothing wrong with Lyoness’ merchant network, it’s the AU Ponzi scheme it’s attached to that’s the problem.
The merchants have nothing to do with the Ponzi scheme, as all monies are invested directly with Lyoness. Upon a fixed number of new investments being made, investors are also paid their cash ROI directly by Lyoness too.
You cannot cherry pick parts of the Lyoness compensation and use it to represent the business.
Giftcard retailers will normally pay for the giftcard when it’s SOLD to an end user, not when they buy it. That’s what the tax rules mentioned earlier in this thread showed (around post #401 somewhere, if I remember it correctly).
It’s “loaded” or “activated” by the retailer when a customer pays for it. Until a customer buys it, it’s only an empty card worth less than $1 (if bought in some quantities).
The down payments goes towards buying accounting units. You don’t receive anything else than that from Lyoness in exchange for your money. Only the last payment gives you a giftcard in exchange, all the other payments are non-refundable transactions with no “exchange of values”.
The down payments will pay out “cash rewards” 3/3 5/5 10/10 15/15 20/20 and 25/25, a total of $198 in AC1 or $19,800 in AC5. They will also pay out Loyalty Credits when above/below are filled.
My main point was about the CONFUSION, your comments were only used as an example. Similar statements as your’s have been made earlier in this thread, but I needed a more recent example.
The confusion is about all the “I think I understand it” explanations throughout the whole thread. People will analyse it and find logical explanations that sounds perfectly believable until you analyse them logically. There’s far too many ideas here that doesn’t make any sense.
People are not acting rationally (as consumers) when they hand over money to Lyoness “for future purchases”. Yet their brains are tricking them to come up with “rational explanations” for why that makes perfectly sense to them (as consumers).
I specified “as consumers”, because I have separated between “consumers” and “income opportunity seekers” when I have asked people about it.
I have read comments where people are comparing the down payments to “lay-aways”. That makes no logical sense. You corrected your own idea with “I didn’t mean that they actually put the gift cards on Layaway for me”, but your idea still doesn’t reflect the reality or makes much logical sense for a consumer.
It’s better to face the reality. You’re participating in something where your own brain tricks you into believing in “irrational ideas”. That’s a HUGE red flag.
The people acting rationally here are the ones who have realized “There IS something wrong here, so I prefer to skip this opportunity”. Among those there has been several experienced network marketers who normally would have accepted most income opportunities.
I have 6 in my lifeline and all are free shoppers. No premium members. I’m earning between 3 and 4k a week, money being deposited straight into my bank account.
I’m a happy Lyoness member. Unfortunately, 95+% of Lyoness members don’t fully understand the concept. Less than 5% make serious money from it. The rest don’t believe what you hear.
Yeah so I’m calling major BS on that. Quite obviously you’re not earning $3,000-4,000 a week from 6 shoppers unless you’ve managed to recruit some large corporations or some such.
Why waste our time with misleading claims?
You see Oz, the majority of the money I’m making I’m generating myself not from those in my lifeline. Clearly your understanding of the scheme is not complete. If you really want to know you simply just have to ask.
Ah so it’s your own cashback.
Well you didn’t actually make any money then did you. Cashback on your own purchases is hardly a generated income.
We analyse Lyoness as an MLM income opportunity here. Getting a cashback on your own purchases is part of the merchant network (shopping side of things). As far as an income opportunity goes, you’d actually be classified (as an affiliate) as running at a net loss.
I think you’ll find that 5% you referenced making “serious money” (not cashback on their own personal spending) via the recruitment of premium members and their own investments into the AU scheme. You’re in a far smaller minority than 5%.
Like I said, there’s no need to be deceptive about it. You pump thousands of dollars into the merchant network and get a cashback. Why try to mislead everyone pretending that’s commissions?
Oz, I’m actually quite surprised by your response and lack of understanding. You’ve surprised me.
Ok, I’m going to give you the secret straight between the eyes because clearly you’re at a loss. Ready? Now you just need to provide a yes or no response because clearly if I provide ALL the information I might lose you. Ok, here we go. One at a time. Be clear, I’m about to tell you how I earn an additional 3-4k a week when before Lyoness I did not.
1. Do you agree merchants offer 3-30+% cashback on purchases?
I’m pretty sure the minimum’s 1%, not 3%. According to Lyoness’s own literature, half of the rebate goes to the shopper, and half goes to shoppers’s upline.
The problem with your explanation is you are probably NOT explaining how would PURCHASING an AU (not shopping) would work (as no merchant contributed)
What secret?
You said
You I assume are not a Premium member investing in AUs and by your own admission don’t have a downline investing in AUs.
Therefore you’re pumping money into the scheme via shopping yourself and getting a cashback on your own money. Let’s not pretend that’s “generated income” or typical in Lyoness.
Taken from the Lyoness US FAQ:
lyoness.net/us/faqs.aspx
They don’t specify a cap so I have no idea. Honestly this is starting to sound like an awkward sales pitch… get to the point please.
Whatever secrets you may or may not have, anything to do with the merchant network is undermined by the whole AU investment scheme.
(Ozedit: enough spam, get to the point)
Interesting articles. Can someone answer the question regarding AUs? Oz makes a valid point about the integrity of this scheme when it comes to the purchasing of units.
If it looks like a pig, etc. Good work Oz. keep up the great reviews.
Man, you clam you have good knowledge of Lyoness and then writes this. The person telling you this is obviously lying to you.
There is no way that the merchant discount can support all the money that is payed out. I know people that earn money before any shopping was ever made in our country (or at least, hardly any).
During “Lyoness phase 1 and 2”, the investment phase, shopping is only possible through online shopping. This didn’t stop people from earning a lot of money.
This money must be derived from downpayments, because the payouts is based on AUs, and in phase 1 and 2, approximately 95% of the AUs comes from downpayments and 5% from shopping.
Or you have and explanation for that as well?
Anton,
It looks like a classic Ponzi, with the shopping side as a disguise to make it look legit.
I have read ALL posts, and by all indications, it is a Ponzi/pyramid scam.
The few oldest investors with the most down lines win, and the newest suckers lose when the scheme collapses at some point in the future or authorities shut it down. Not question of if but when?
I am surprised that after all this back and forth the question has not yet been answered. The answer is a mathematical one. A unit requires 35+35=70×75=$5,250 to payout. Even if you take into account all the partial pending payouts of the units in between there is still money left.
This money goes to pay other incomes: bonus units payouts, career bonus-commission etc. in reality, every time a unit is booked in the binary system it splits into many pieces and pays out its upline(unit upline,not people) every unit generates a bonus unit on its road to maturity, so that the binary system keeps a steady growth rate.
Lyoness does not profit from the AUs directly. All the money goes to the units above.
Note that while your downline’ s units help your unit mature, inevitablymost of your next units will be placed under your downline’s. this is one of the ways that lyoness differentiates from ponzi schemes. It is more of a help me help you system.
I will adress the “investment” part later as my phone is dying
@Rev
1. How do you know they don’t?
2. “All the money goes to the units above” = new investor money being used to pay off existing investors.
I have clearly identified it as “pyramid scheme” since post #252, so we’re covering both those options here, pyramid OR Ponzi. Please cover both of them in your explanation?
Ponzi scheme is because we don’t know what people are doing with the Loyalty Credits, whether they’re reinvesting them (buying more AUs) or using them to buy gift cards. Reinvestments like that are more typical for Ponzi schemes than for pyramid schemes.
Pyramid scheme is because it will require minimum 4 directly recruited (plus some indirectly recruited) to work properly as an investment. It’s rather meaningless for people to join (as “investors”) if they don’t have any plans for recruiting a downline of “investors”.
Ponzi schemes do NOT require recruitment of additional investors by the participants themselves, but pyramid schemes do.
Fixed investment amounts (e-g- “investment units”) is also typical for pyramid schemes, but less typical for Ponzi schemes.
At least you’re contradicting all the misleading statements about how the down payments are used, e.g. “down payments are going STRICTLY towards buying gift cards”, the theories where Lyoness is buying partially paid giftcards for each down payment.
ADDITIONAL QUESTION
How did Lyoness solve the TAXES for 2012? Did people receive 1099’s or other tax forms from Lyoness?
If you have received more than $600 in payouts from a company during the tax year, the company should normally send you a tax form.
I’ve seen old associates recruiting for Lyoness in Pasadena and San Gabriel California the same guys were pushing 2by2net back in the day. I think it’s not for me
Good questions. My information is not official as I am just a member. What I say here is mostly derived from experience dealing with the company for 2 years.
The truth is that I was very skeptical about the whole thing for a while, and Lyoness isn’t really fond of disclosing too much information about its inner workings, something that I really dislike. Although I’ve made my “investment” back 20 fold, I’m not here as a blind supporter.
I’m not a Lyoness member in the US, so the only info I can get on taxes is this link
http://cdnlarge.lyoness.net/downloads/pdf/us/download/infos/lyo-idp-landscape-us.pdf
In my country it is my responsibility to declare any income from the company. You should also take a look at this http://cdnlarge.lyoness.net/downloads/pdf/us/download/infos/lyo-ids-us.pdf
What differentiates Lyoness from a ponzi scheme in my opinion is this: The model is sustainable without any down payments aka. purchasing of accounting units.
Sure, it’s grows much slower when the shopping volume is low, but the members and the volume are growing exponentially. My lifeline of 10,000 spent over 4 million euros shopping through Lyoness in 2012. That is an average of 400 euros spent for each member in 1 year, hardly a huge amount.
In 2 years my family has spent over 20,000 euros through Lyoness, buying things that we would have bought regardless, but getting a discount on them.
The way I see it, premium members are given the opportunity to create a line of “toll booths” with down payments so they can get the maximum benefits of new units that are created. This drives them to work on growing the network.
The premium members bring in the businesses and the businesses bring in the shoppers (free members). Note that the amount of 3,000 is the limit and you can’t buy any more. There used to be no cap but it was implemented to deter people from seeing it as an investment and depositing large amounts expecting stable returns.
The requirement of 4 direct members with at least 1 unit each is there to encourage the growth of the company.
Here’s some more reading.
http://cdnlarge.lyoness.net/downloads/pdf/us/download/infos/lyo-compensation-plan-us.pdf
http://cdnlarge.lyoness.net/downloads/pdf/us/download/infos/lyo-business-plan-us.pdf
http://cdnlarge.lyoness.net/downloads/pdf/us/download/infos/lyo-gtc-us.pdf
http://cdnlarge.lyoness.net/downloads/pdf/us/download/infos/lyo-policies-and-procedures-us.pdf
Sustainable has nothing to do with it, how it functions is what matters.
Again, nobody has ever questioned the legitimacy of the shopping network, it’s the AC investment scheme attached to it that’s the problem. It’s not sustainable because sooner or later you run out of new investors feeding the system.
Let’s face it, Lyoness wouldn’t exist today without the AC investment scheme.
You can call it whatever you want. It’s still investors investing money and expecting a guaranteed return after a fixed amount of new investments are made by new and existing members after their own.
I’m talking about the documentation you receive from the company at the end of the tax year, not your own tax return.
And NO, I was not asking about the Income Disclosure Statement, or about its IDS Policy. And I wasn’t asking about any of your other answers, either.
Try to give a CLEAR answer for your own country, e.g. “NO, Lyoness does NOT report any taxable income or anything else” or “YES, Lyoness is sending out the correct tax form at the end of the year”.
Normally, Lyoness members in the U.S. who received more than $600 in payouts from Lyoness in 2012 should have received a 1099-MISC or other tax form from Lyoness in February 2013. European countries have probably a relatively similar system.
“Payouts” does not have to include cashback or other discounts derived from personal purchases, i.e. the member and his/her family’s own purchases.
Any payouts that derives directly or indirectly from recruitment are normally taxable as income.
RED FLAG
I seriously don’t believe it when people have “misunderstood” questions about taxes, and is answering something else. Most people are probably familiar with taxes and which types of documentation they normally will receive at the end of a tax year.
All the vague and misleading answers to important questions is a huge red flag. Lyoness is obviously not reporting taxable income at the end of the tax year.
Why then have “accounting units” at all?
I would appreciate it if you dropped this aggressive attitude, I am not here to argue with anyone. What I’m here for is to share the information that I’ve gathered and in a way play the devil’s advocate so we can come to solid answers. I am not a cultist so don’t treat me like one.
The answer to your question is already answered. I do not know the tax procedures in the US. If you are so consumed by this, why don’t you give them a call?
You say sustainability has nothing to do with it, and then proceed to call it unsustainable. There’s two ways to create a unit: You can shop through lyoness until you accumulate $75 in loyalty discounts, or you can buy one. This is where sustainability kicks in.
People shop and they create units which benefit not only themselves, but people in both their upline and downline. Nobody has to buy any units for the system to work, but buying them definitely speeds things up.
Personally, I do not look for investors. I actually stay away from them and have even refused to register a person with a premium package because they didn’t and wouldn’t understand the concept. They saw it as an investment and I knew that sooner or later they would come to me asking for their money back.
I do not pressure anyone to put any money down, whoever does is doing a disservice to themselves, to their friends and to Lyoness. I just provide the information and register them as a free member so they can get acquainted with Lyoness.
It is up to them to decide if they want to make a financial commitment, grow a network, or just use their card for their everyday needs. This is not a get rich quick scheme. It takes a lot of time, effort and luck in order to receive a substantial income.
Not being sustainable is a result of it being an effective Ponzi scheme, it’s not a definition of the business model in and of itself.
or you can invest in AUs, recruit new investors and earn Ponzi scheme ROIs. We can go around in circles pretending Lyoness could survive without the attached Ponzi scheme (and it could), however as an MLM business opportunity that’s not where the money is.
As Kasey pointed out, if the shopping was enough to attract MLM income opportunity members, why have the AU investment scheme at all?
That’s not surprising. It is what it is. You yourself admitted you joined as an investor.
You cannot define the “concept” of Lyoness solely as shopping whilst the AU investment scheme exists. You can choose to ignore it but that doesn’t negate it.
Choosing to participate is not a valid Ponzi scheme defense. If the opportunity is there people will participate, and that rests solely on Lyoness itself (affiliates didn’t write the compensation plan).
As I understand it, Lyoness starts up in countries with a huge focus on the investment side of things – without which it wouldn’t exist. When the market slows down they expand somewhere else and encourage existing members to invest in their new markets to get the ball rolling.
You can bury your head in the sand and pretend it’s all about shopping but there’s a big elephant in the room you’re choosing to ignore.
I hope you at least acknowledge the existance of the Ponzi investment scheme built into Lyoness, and are not simply just dismissing it when your prospects ask you about it.
The accounting program is what differentiates this system from all the other discount/cashback services, and what dazzles and lures in potential new members, making them think that they will become millionaires in a few months.
This problem arises from the way it is presented by many people, and thus is inevitably perpetuated.
Actually the problem lies in the scheme itself. In that it’s a blatant Ponzi.
You invest money with Lyoness, get others to invest and earn a guaranteed ROI once a specified number of new investments have been made.
You’re essentially complaining about Lyoness members advertising the above AU investment scheme honestly, as opposed to disingeniously marketing the MLM income opportunity as being about shopping.
You acknowledge that without the Ponzi investment scheme attached, that Lyoness is no different ‘from all the other discount/cashback services‘ out there. If you’re not a fan of Ponzi schemes and are truly infatutated with the merchant shopping side of things, perhaps you’d be better served joining another discount/cashback service.
Could you specifically point out what makes it fit the definition of a ponzi scheme?
My goal is not to recruit new investors. My goal is for my lifeline to recruit active people who will recruit SMEs and regular shoppers, who will in turn recruit more shoppers. Their shopping will generate units and I will benefit from that.
Some will purchase units, most won’t. Even if nobody did I would still make money, and when the number of shoppers is large enough the amount will be substantial. I have personally created 35 units already, it really isn’t all that hard.
Sure:
Given that no shopping takes place (all money is invested with and paid out by Lyoness themselves) and the ROI is paid out upon condition of a fixed number of new investments being made, where do you think that ROI comes from?
Penny dropping in 3…2…1…
Your goals are irrelevant when the company you are in offers members the opportunity to participate in a blatant Ponzi scheme.
Well, if you disregard the shopping part then yes, it is a most blatant ponzi scheme and there’s no question about it. FWIW the company officially discourages this approach, and that’s why they put a cap on the amount of units you can purchase.
Honestly, the discussion on this blog is much more alarming to me than the one we are having here. Many a time I have asked hard questions about the company and received unsatisfactory replies.
Nobody knows how much liquidity the company has, but I do know it’s a lot. When I went to deposit a check in their US account in a capital one branch in NYC the clerk was visibly shocked by what he saw on the screen.
I inquired, and what I could eventually get out of him was that the amount was in the 8 digits (he didn’t verbally confirm but didn’t deny it either) and that the account was extremely busy traffic wise. Mind you this was almost 2 years ago.
I’ve never claimed otherwise, cheers.
Exactly, which is what made it potentially ILLEGAL and appeals to “get rich quick” people.
So what are we discussing? You and I (and Oz) agree that shopping part is legal, and the ONLY thing distinguishing Lyoness from other more legitimate shopping loyalty program is this accounting unit thing… which is also what made it potentially ILLEGAL.
You cannot “sell” a shopping loyalty program with this potentially ponzi scheme “accounting unit”. You *can* however, do the reverse: “sell” a Ponzi scheme by promoting the legal shopping loyalty program.
So which is which? 🙂
So Lyoness didn’t send you any income documentation for the tax year 2012?
Please stop acting like a “Drama Queen”? You knew perfectly well what the question was about, but you decided to avoid it.
People normally won’t start an answer with “Good question” or similar statements if their intention is to give a straight answer. Post #964 told me about your intentions.
It’s a little naive to assume with complete confidence that every country in the world has a fully computerized and automated taxation system like the US.
No, they didn’t send me any documents. As I have already stated, every individual is responsible for reporting their income from Lyoness.
Discount it not taxable( if you receive a voucher from a company you must pay taxes?). All the money from Lyoness is from discounts. There is no investments.
AU is generate from shopping ( discounts). In your accounts on the Lyoness site you have also all the accounting if you want the pay taxes.
I didn’t assume that, but I checked a few countries in the Eastern Europe for bilateral tax agreements with other countries, the OECD solution to prevent double taxation.
Are you trying to tell us that employers in your country don’t report taxable income for their employees or independent contractors at the end of the tax year?
That answer is good enough. Lyoness won’t send any information to tax authorities at the end of the tax year.
Normally every individual ARE responsible for reporting their own taxable income, but the employer paying out remuneration is also responsible for reporting it.
@Ben
Yes, yes there is.
I suggest you familiarise yourself with the accounting unit investment scheme.
Discount on your own purchases is not taxable, including your own family’s purchases. The discount ITSELF isn’t taxable, but it will become taxable if it derives from something other than personal purchases, e.g. if you’re doing some work for the company and the discount clearly is related to the work rather than to the purchases.
Payouts derived from recruiting other people and receiving money from their investments or purchases are clearly taxable. Recruitment is a type of WORK, not a type of discount.
If you receive something of value from a company it’s clearly taxable. Money paid to your bank account or paid out as a giftcard is clearly something valuable.
Lyoness is responsible for sending a yearly income report to the tax payers and to tax authorities at the end of each tax year, but it obviously doesn’t send anything.
AU can also be purchased directly from Lyoness.
You really should study what other people actually wrote and verify them instead of reacting instinctively to what you *thought* you understood to be.
The dialogue between me and “rev” about taxes was related to his answer in post #964, the “Good question” answer where he PRETENDED to answer something, but only deflected the question.
I recognized the answer as a “professional strategy”, i.e. it can be found described in books about presentation techniques and similar topics.
“Deflecting” is a method used to direct people’s attention away from something you don’t want them to focus on, and direct the attention towards something else, e.g. your own favorite sales arguments. It’s a method used to MISLEAD people, so it isn’t exactly a very good strategy.
David in post #906 describes a similar strategy used in a Lyoness presentation meeting. The method is a “professional method” used to mislead the general audience. The general audience will probably believe the question has been answered correctly.
The rest of the dialogue is related to post #964. I was trying to get a clear and simple answer, while “rev” continued trying to deflect it.
The dialogue goes like this:
#960 rev: Initial post, offering some corrections
#962 me: Asking one simple question about taxes
#964 rev: Deflectiong the question
#966 me: Asking for a CLEAR answer
#968 rev: Deflecting the question
#977 me: “Please stop ACTING”
#978 rev: Partially answering the question
#980 me: Finishing the answer for him
It’s rather meaningless to use a “deflecting strategy” in a place like this. That strategy can be used in situations where people only can ask one or two questions, and it’s generally about oral answers. It fails miserably if people can ask follow up questions, e.g. you can end up in a corner where you will draw attention towards the topic rather than away from it.
Dialogues like that don’t belong in a place like this. If people want to practise “communication techniques” they should probably try to find better places, or they should ANALYSE why the method FAILED rather than trying to replicate it.
BTW, the question in that dialogue wasn’t very important to me. I have asked a few questions about Lyoness and taxes earlier, but people have always tried to avoid them.
I should have described something in another way …
How Lyoness is solving taxes is probably VERY important, but it wasn’t important to me to get the question answered in that particular dialogue. I will not be affected personally by any of Lyoness’ missing tax solutions.
“Rev” tried to TRICK me and others to believe in the idea that Lyoness don’t have to send any 1099 or other tax forms to the tax payer or the tax authorities at the end of each tax year. He also tried to trick me into accepting “different tax systems” as an acceptable explanation.
One interesting thing is that taxes only have been mentioned in one or two posts around November/December. It hasn’t been widely discussed. “Rev” had to find his OWN answers and methods, rather than REPEATING “well proven methods”.
Lyoness is using several “half truth” tricks, i.e. a statement can be true in itself but it doesn’t reflect the reality. But people will generally accept the answer as TRUE.
For me, that is a HUGE RED FLAG. How willingly people have accepted the tricks makes it even more serious.
Something I found on the internet, about Freidl’s former companies …
SOURCE:
“MLM The American Dream Made Nightmare” blog, author David Brear (England)
http://mlmtheamericandreammadenightmare.blogspot.no/2012/09/lyoness-is-lie-and-hubert-freidl-is-its.html
The article contains a better translation of the L’Hebdo article about the pyramid scheme case in Austria (an old case, but probably on going).
Other than that, it contains some other type of information than we have here, e.g. more about Europe. It also seems like he has done some other types of research, e.g. contacted companies and asked them about the type of relation they have to Lyoness.
Other than that, the blog has 7-8 “anti Lyoness” articles total between September and December 2012.
December:
Some of the articles were temporary only searchable through chillingeffects.org, removed from ordinary search results.
Personally, I will consider more “neutral” and “balanced” articles to be more effective than exaggerated use of personal opinions.
While you were ranting about me “tricking” you, I went ahead and did the research for you. It appears that Lyoness does send a 1099 when a member makes more than $600.
BTW, I had posted the link to that blog in #974.
I will consider it to be “tricking” when people use methods like deflecting a question. That method is designed to direct people’s attention away from something.
I was simply pointing it out. That will normally prevent people from repeating a similar strategy. It was your own strategy that failed, so you can’t really blame me for it?
I will not be affected by Lyoness’ tax routines, so there wasn’t any personal interest involved in the question. It was simply an unanswered question from earlier in this thread, and now we have received a couple of answers.
I am sorry that you feel that way. I had no intention or strategy to deflect or trick anyone. I simply stated that I did not know. In fact, I would appreciate a comment on this from a third party.
I identified the method LOGICALLY rather than emotionally, so there wasn’t many feelings involved.
Deflecting questions is a METHOD used in different types of communication. I have read about it in books, and probably used similar methods myself many years ago.
BTW, “sorry you feel that way” is a part of the same method. I have never mentioned anything about what I felt about that method being used, and most of my descriptions were logical rather than emotional.
It’s probably better to return to LYONESS, the main topic of the article?
It was your OWN strategy that failed, or I might have misinterpreted your intentions. You will look rather confused if your intentions suddenly have changed to having your own intentions evaluated. 🙂
In #964, which was the post where according to you I “deflected” your question, I had posted several links. If you had bothered checking them, in the last one you would have found this:
You should learn to admit your mistakes, because you keep making yourself look like a delusional fool.
This is my “not being nice anymore” strategy.
Sorry, then I must have missed it. It was “drowned” in a bunch of other material, in a section of your answer that wasn’t directly related to the question. I normally would have expected answer + link to be posted in the same section of the post.
You have very confusing communication methods. Check your post #964 to see what I mean? 🙂
I can be confusing too, if you prefer that style? “Somewhere on this blog”, more specifically in a thread about ZeekRewards, I have posted an answer related to you, in a dialogue with someone else in July 2012. The dialogue contains the words “nitpick” and “drama queen” in 2 different posts.
You will find my answer there. Use the “Search” button. To help you find it, I posted the following link in one of the posts:
http://redwing.hutman.net/~mreed/warriorshtm/nitpick.htm
Enough, I’m tapping out.
Everything is real, maybe this program built slowly, because many pople don`t belive in this program. But i`m sure is 100% corretli and i gat the evri coins then i deserve.
It`s true, you have four people who eant to built this buisnies with you. Ok, i have many of four people, finally i`ve get all money they LY say on my unit.
And there is friendship bonus, direct, and indirect and i have all unit from all of my structure. recommendation going to 3th level and 4th and … to deep inside. This project is awsome 🙂
lyoness is greate mlm company and i hope that it weel be number one one day (3 years proxy)
Oh, I don’t doubt it’s “real”, but is it LEGAL is the real question.
So, Alex, did your people actually do any shopping, or they just put money in and BUY the units, and call it “build business”?
Does this not remind you of MMM?
k. chang my people go shopping and get money back with every purchase.
@Popov — sorry, I was responding to Alex’s comment “you have four people who eant to built this buisnies with you.”
I have no problem with Lyoness as purely “cashback” program. I do have problem where you are allowed to “purchase” the units instead of shopping for them.
My prediction is that Lyoness will come in legal trouble long before that, in one or more countries, forcing it to make major changes in its business model or potentially shut it down.
Companies are normally not allowed to operate in “Phases”, e.g. starting with some illegal phases before they make it become legal.
Lyoness has slipped under the radar because of its “closed community” style, with presentation meetings rather than internet marketing. So regulators have mostly seen the cashback side of it, not the income opportunity.
“Legal trouble” doesn’t have to be directly related to Ponzi or pyramid scheme issues, it can be about something else.
@popov
What “your people” do is irrelevant when people can just invest and earn a ROI upon a fixed number of new investments being made.
I have 4 pepople whoput the money because they don`t wait a few mounts to earn of them purchase.
YEs, i have in my team 202 people and all of them by to diferent market, it`s oil, clothes, shops, pharmacy, backery. in my country they are many shops and markets who trade with lyoness. I`m glad for that, my consumer networ growing day by day.
Then they did not EARN money (through work/business). They INVESTED money in hopes of profit. That’s not a business (for the participant).
THE BREITENEDER CASE IN AUSTRIA
We have another Lyoness article here now, about the different lawsuits in Austria by Lyoness’ Premium Members and Business Partners (the Breiteneder cases).
https://behindmlm.com/companies/lyoness-lawsuits-and-investigation-in-austria/
The civil case for 20 of his clients was settled outside court, with a 100% refund for Premium Members and a 75% refund for Business Partners, a total refund of €48,000.
He has additionally around 200 other Lyoness clients organised in 7 different groups, and the number has been “rapidly” growing in the last few months.
The court had to make a preliminary decision about whether the members were “consumers” or “business owners”, and it ended up on “consumers”. “Recruitment of members is NOT an entrepreneural activity”. The idea of “building a business” in MLM is lipstick on a pig, and now it has been decided by a court in Austria.
Lyoness introduced a refund policy in Austria in December 2012, probably as a result of the lawsuits. The original article in German didn’t have much information about it.
Lyoness in Austria is also under criminal investigation for running a Ponzi and/or pyramid scheme. The original article in German didn’t have much information about that, other than a few lines of factual info and current status.
EFFECT ON OTHER COUNTRIES?
It will clearly have effect, but not immediately. The case was settled outside court, a method to minimize potential damage for the company. A decision in court is much more “official” than a settlement.
An important part of it is the preliminary decision about “consumers or business owners?” made by a court. It clarifies which type of laws that should be applied. That part is “official” (decided by a court), and normally a similar logic can be used in other countries. Laws may be different, but the logics used in court are normally relatively similar.
Listen guys lyoness ain’t going anywhere 10 years old closing in on 3mill members , 42 countries and every continent on earth.
Voucher cashback card. Online. Smartphone cashless purchase miles ahead in technology .
Truth goes through three stages:
1/ I it is ridiculed
2/ it is violently opposed
3/ it is accepted as truth
I have access to the top levels of this company where I live and know that not only will this company
Survive as some put it but will become the benchmark in shopping loyalty.
Let me define what lyoness are , lyoness are a shopping community and are all about shopping shopping shopping anyone who makes a partpayment for future purchases with any lyoness loyalty merchant worldwide is quite entitled legally or otherwise to do so and all member benefits are accredited and happen like clockwork.
When visa started to approach companies and individuals back in the day they were also ridiculed and frowned upon but can any of you say you don’t have a credit or debit card now?
Did visa ask you if you would like to help establish the world market and in turn allow you profit from
the turnover ??
Make no mistake for millions of free cardholders seeking out the every increasing cashback loyalty merchants lyoness have created a win win win for everyone by having the shop pay the shopper to shop more customers for the shop cashback for the customer more money to the charitable foundations building schools across the world . Loving it !!
How big or old a company is doesn’t define it, it’s business model does.
You forgot to mention the account unit investment scheme.
Judging by your reponse, I’d say we’re hovering around 2.
When new investors eventually can’t find anyone new to invest after them we’ll hit 3.
Well it’s been what, 10 years already?
When will this happen? 20 years? 50 years?
Invest $x with Lyoness. Convince a fixed number of people you’ve recruited to invest $x after you and Lyoness pays you a >100% cash ROI.
All money is invested with and paid out by Lyoness. What purchases? What shopping?
Visa isn’t an MLM company, nor do they run an Ponzi investment scheme and thus are entirely irrelevant.
1000 comments later and it’s the same old Lyoness affiliate spiel. Shopping this and shopping that whilst conveniently ignoring the whole AU investment scheme.
That only proves it’s popular, not it’s legitimate.
Zeek was popular too. And if you want long-lived scam, look at Bernie Madoff.
What you consider “proof” of legitimacy… ain’t.
Nobody argued that cashback ain’t working. Just as NOBODY who like Lyoness can explain WHY should anyone “prepay” for the units, which is the ONLY part that’s potentially illegal.
You’re just rehashing the same things… again.
I must say that most “truths” never hits 2 and rarely 3. This proves nothing…
Scientology for instance, is still ridiculed by most people and is over 60 years old. Maybe a little far fetched to compare Lyoness to a cult, but it sure dose sound like one from time to time.
You have not shown any proof that Lyoness is “truth” or whatever. Thus, anything you cite is wishful thinking. You’re conceding the field as you have nothing to offer except “you’ll see!”
Even if you live in Austria and the founder’s your next door neighbor doesn’t change the fact that Lyoness is shopping loyalty program with a Ponzi scheme element. That is the literal truth.
And I’ll offer this quote in return:
Thus, the “truth” quote is a “bad argument”.
You went through 2 of the 3 stages there?
1. “Come on guys, the company is 10 years old …”
2. “Let me define what Lyoness are …”
Your post revolved mostly around the second point, trying to come up with arguments designed to convince yourself about the idea, but failing to address any real problems. It’s a “motivational speech” or something?
You will finally reach the truth sometimes in the future, but that will probably implement other stages of “personal development”, e.g. the DABDA model.
1. Denial, “It can’t be true!”
2. Anger, “Why? It’s not fair!”
3. Bargaining, “I will do anything to make it work!”
4. Depression, when you realize you can’t do anything about it
5. Acceptance, when you finally have accepted the truth
But we don’t solve problems like that here. You will have to go through all those stages yourself.
In the end, you will probably blame it on something outside your own control, e.g. “bad management”, “other participants failing to comply with rules”, “the evil gub’mint”, “negative people” and similar causes. And you will reach the conclusion “It COULD have worked, if it hadn’t been for …”.
And lies go through only one stage:
being lies
After being ‘approached’ by the same handful of people telling me the same story [Lyoness has made them mega-rich], so many times, I decided to ‘L00K’ at this Lyoness deal from the SHOPPING SHOPPING SHOPPING perspective for products which will help me keep more of my ‘Life Survival Expenses’ [which I quote from below source], to see how effective Lyoness would be for me, here in Australia.
After spending a fair bit of time on the Lyoness Australia site, I discovered that I’d actually spent money with LESS THAN TEN [10], of their listed ‘Loyalty Partners’ or whatever they call them – on their entire list.
Looking deeper, this spend amounted to less than 1% of my monthly budget [for normal consumables].
Furthermore, the discounts, as in ‘cash backs’ offered were LESS than I receive via those companies own loyalty cards.
I discovered that my spend with their ‘Loyalty Partners’ is $20 [or less] per month of my ‘Life Survival Expenses’… Not very much and less than 1% of their oft quoted figures of $2,500 per month.
So I find their ‘$2,500 a month’ figure to be a bit of an exaggeration unless I want to eat designer clothes for dinner, hire rent-a-cars instead of driving my own vehicle, or maybe buy cosmetics to stick in my petrol tank, or hair-cuts to put in the kids lunch-boxes – none of which make much sense.
So, sorry Lyoness, you’ve got to add at least Coles and Woolworths for starters if you want to get more than 1% of my monthly life survival expenses.. So hop to it. It shouldn’t be hard if your deal is SO good!
For the naysayers out there, get this one thing straight if you get nothing else – There is NO required buy-in to Lyoness like ACN, Amway or Nu Skin.Zip. Zero. Zilch. Nil. None. Nada.
Its basic engine is you shopping and sharing, period. Are you going to get mega rich that way? Likely not. But I can tell you that in four short months I’ve already been shopping and sharing enough to make enough each month to pay all of my gas bills (about $400/month depending on prices at the pump).
Now, as for the Accounting Units, you DO NOT have to buy them. In reality, they are created and paid for by the merchants when you shop at their place of business. Can you buy Units? Yep, you can. But it is NOT REQUIRED.
Lyoness gives you no timeline on how fast they will move through the Accounting Levels because that all depends on how hard you work to share the program. It’s on you, not someone else.
Its’ not you conning 18 other people to cough up $500 or buy some skin lotion that only the guy from Silence of the Lambs would need. It’s about you recruiting people who shop and share, just like you.
So before you people keep spouting stuff about which you really have no clue, please stop and actually ask people.
Nobody said there was champ. But things move along much faster if affiliates directly buy into the AU investment scheme rather than pretend it’s about shopping.
Required schmired, who cares. It’s a Ponzi scheme.
It takes as long as it takes you to find 25 or more suckers to invest after you.
to invest. Lyoness are actually worse because there’s not even an overpriced product that nobody needs attached. It’s just a straight up investment scheme.
Why, are Lyoness lying about their compensation plan?
P-P-P-Ponzi scheme, P-P-P-Ponzi scheme…
For the yay-sayer, why have accounting units then? What’s its purpose? Why have this potential ponzi scheme thing in the whole thing at all? Why nobody can explain it other than “but you don’t have to buy any”?
And why does buying the accounting units let you skip over all the shopping required to build up all the levels and such? WHERE did the money go?
The only one accusing people of “no clue” is you. And you can’t say what we don’t have clue on. You claim we don’t understand, but you can’t point out what we got wrong.
You just don’t like our analysis and its conclusion, and because you can’t dispute it, you try to dismiss it with “you have no clue”, which is your opinion and assumption. You haven’t proven your side, much less disprove our side.
Is that important? You used CapsLock on “not required”.
You CAN join Lyoness for free, without really participating in the income opportunity. But is that important?
Laws have never been about “constructed theories” for how something hypothetically can work. You can’t use the argument “I could theoretically NOT have invested anything and theoretically NOT have recruited anyone” in a court.
You CAN theoretically earn money without investing anything and without recruiting anyone. But is it important? You will need to spend tens of thousands of dollars to finish AC1.
Recruitment isn’t “work” or “entrepreneural activity”, even if it’s being taxed like that. The court in Austria has already handled that question for Lyoness.
Consumers recruiting other consumers rightfully belong under Consumer Protection Laws.
* It’s not a type of business activity.
* It’s not work either, other than for tax purposes (to separate between income tax / investment tax).
* It’s a type of consumer activity, an illegal type.
Shopping can be a type of “consideration” in a pyramid scheme, a “pay to play”. You or others will need to spend tens of thousands of dollars to fill even your first AC.
My friend that intrudused Lyoness to me said that the average cashback is about 7%, excluding direct/indirect and Lyoness fee.
So for you to get $400, a sum of $5,700 must be spent by you.
Now that’s quite unlikely so I guess that you spend max $1,000 each month with Lyoness partners, witch will yield you about $70. The rest of you monthly sum, $330 must then come from directs. However, the direct kickback is only 0.5%, witch means that your downline must spend about $66,000 each month.
No matter how I turn the figures I can’t make sens of how you make $400 each month without the investments in AU’s. And in four month, how many people in your downline can you have?
And even if we take the AU’s into account, a spending of $67,000 (your $1,000 and your downlines $66,000), will only yield 62 AU’s, witch is not enough for a commsion (35+35=70).
Can you specify what exactly this $400 consists of. In terms of cashback from you own purchases, your directs/indirects, AU’s etc.?
To sum things up:
To generate 70 AU’s through shopping, people need to spend $75,000 on products (based on 9% total cashback).
To generate 70 AU’s through downpayments, investments of $5,250 must be made.
Pick you favorite…
Gerald Nehra is one of only a few attorneys nationwide (USA) whose practice is devoted exclusively to direct selling and multilevel marketing legal issues. He warns against participation in any MLM where coupons/vouchers, etc. are a significant part of the business because . . .
See full article here and act with wisdom:
http://www.mlm-thewholetruth.com/mlm-legal-issues/coupons-vouchers-gift-certificates-and-down-payments-in-mlm/
Kinda Ironic that he would write this when he is counsel for WCA which had no products and they asked for monthly membership fees and also other types of investing where they promised products but haven’t launched them.
This is going to be my new “go to” reply everytime we get a “fresh off the boat” new Lyoness member coming in here and crapping on about merchant shopping.
I have used Lyoness for shopping and saved a lot of money. I have 2 companies that I have signed up as merchants. Both are doing very well.
Lyoness members are happy loyal customers. I don’t care if they have accounting units or not. They buy from me. I’m happy. I pay a fee back to Lyoness and its members. everyone wins.
@richard
Whether you care or not is irrelevant.
You should care because if they got shutdown due to the accounting unit thing it’s be YOUR loss, when clearly the rest of the program works (for you).
Why would they endanger themselves by having that potentially illegal element, when according to you, nobody should care about? Why do they keep it?
There are two explanations I can think of…
1) They are stupid in keeping it
2) Their business model does NOT operate as you think it does
Neither is good. If you can come up with a better explanation I’m all ears. 🙂
The investments in Accounting Units is the “main engine” in the program. It generates giftcard purchases directly and indirectly. The program will gradually slow down when the investments slow down.
So merchants are just as dependant on the investments as the members. They will need new investors to put money in on down payments, to generate accounting units which in turn will generate “Credits”, which in turn will generate purchases.
You have got customers because they HAD TO find a place to use the giftcards/credits. That’s an artificial increase in sales, not the type of sales most merchants want.
In Austria, merchants are actually among the complainants in the class action lawsuits, “the Breiteneder case”.
If people make the $3,000 down payment, they will have to purchase a $600 giftcard first. They will have $600 to spend in your business rather than $3,600 in the next few months or years (if they don’t recruit more investors).
The “loyal customer” idea and the “people will always shop” idea haven’t worked in other markets. I pointed it out somewhere around post #63.
Yes, he was counsel for Amway and all that. However, he really should stay away from suspected Ponzis. 🙂 Apparently getting burned by ASD wasn’t enough, he had to get burned by Zeek Rewards too. 😀
I trust his explanations on MLM, but when it comes to Ponzis… 😀
After reading the article and thorough hundreds of comments, I feel that I should add my own.
I signed up yesterday by a shop owner in the neighborhood who claims to have made 10k in just 3 months. Many stores in the neighborhood have started accepting the card too.
While signing up I wasn’t notified of any info about AU’s. All I was told is that its a shoppers cashback program that offers referral money. All the official marketing materials I was given was also only about shopping. The emails, the website, didnt either notify me of the AU scheme.
So while the AU part of Lyoness seems like a big scheme, I’m not sure if in reality people are being pushed to make “investments” in Lyoness, as opposed to just cashback shopping.
That’s good to hear that somebody is marketing it correctly.
The problem is plenty of people are doing it INCORRECTLY, including some ostensibly “MLM Consultant” that held webinars pushing the AU thing about how it can generate a LOT of income, and it was pitched to people who are desperate for income.
Which comes back to the question… What country are you located (what region), and are the Lyoness agreements different there?
And if they are different, why some countries have this ponzi element, and others don’t? And if they are NOT different, why have it at all?
@yuneeq
Would you have signed up as an affiliate had it of been marketed to you as an investment scheme involving thousands of dollars?
Now they’ve got you in the door and when you realise how painfully slow the units move with shopping, the idea is that you’ll be much more receptive to the whole AU scheme.
Ask that “shop owner” in your neighbourhood how many AUs they invested in to earn that $10,000, and whether or not they were told about the AU investment scheme when they signed up.
Sounds like they got involved in the AU scheme within 3 months of joining… now have a think about how Lyoness was marketed to you. It’s like looking into the future.
We have typically focused on the income opportunity and the Accounting Cathegories investment system, not the cashback cards.
There’s nothing wrong when you as a consumer is using a loyalty card giving you discount on your own (family’s) purchases. You will cross a line if you’re recruiting others, the line between “consumer” and “income opportunity seeker”.
There’s nothing wrong when a merchant is recruiting customers, neither directly to his own shop nor to an organized “system” where his shop will benefit indirectly from a group of customers. But he has crossed a line when he’s recruiting consumers or other merchants into an income opportunity.
It clearly has been marketed as an income opportunity, or else this thread wouldn’t have existed. We don’t do any loyalty card reviews here.
The fact that you were recruited yesterday by a local merchant doesn’t mean that ALL participants were recruited in the same way. You will find several examples on the internet where people have been recruited through local mass meetings (and other ways of recruiting them into the income opportunity).
And this is based on a cashback of 9% that is far from the truth. You will probably spend most on gas and groceries, markets with low margin and a cashback of 2-3%. So a more accurate average percentage would be 4-5%.
So the amount of shopping to generate 70 AU’s is probably closer to $200,000 which is just mind-blowing.
Another thing that’s interesting to note is that a downpayment of $1,800, a premium package, is worth $70,000 in shopping.
Having spent two evenings reading through this thread I felt obliged to provide my contribution. The context of this forum is that Oz gives his analysis of potential business opportunities for people intending to be or already successfully operating mlm businesses.
In that context I accept his analysis that Lyoness is probably best avoided by the MlM professional.
I am a Lyoness Premium Member because I wanted to offer my Restaurant as a loyalty merchant to the Lyoness shopping community, and at the time I was shown Lyoness this was a requirement.
Is Lyoness a Ponzi scheme?
Many networkers who embrace multi-level selling opportunities see as such and went about recruiting their lists. Thanks to these networkers I was introduced to Lyoness as it was known that I was about to launch a Loyalty card to our customers and they had the vision to see that Lyoness may fulfil my requirements as a meaningful Loyalty programme for my business.
Since I was introduced to Lyoness most of the networking community have moved on to other networking opportunities such as Global hangout Banner Brokers or Visalus, and mostly they were disappointed with the return Lyoness provided as premium membership is only suitable for a small minority of the population.
So what is Lyoness?
The declared aim of Lyoness the Company is to have 350 million people shopping and receiving discounts from up 10% of highstreet outlets, online shops and utility providers by 2020. Through this activity they will receive 1% of the value of all the shopping transactions done with the cashback card.
So a rewards programme that will appeal to a huge number has to be devised and ratified by the legislators of most countries across the globe.
The upshot of this is the Lyoness accounting programme where accounting unit activity is used to create sufficient incentive to entice people to become involved, and using the principle of referral networking have the members do the work of distributing to people the card and educating people in how to use the card without employing a workforce. A mammoth task!
So yes the rewards for those who do this work needs to be generous, That this creates a short term Ponzi opportunity is possibly unavoidable.
The fact that a networker finds that they are being successful recruiting members who are prepared to make downpayments for units and that they start receiving large sums of Loyalty credit from maturing units, results in them learning how to shop with Lyoness loyalty merchants.
This causes almost all the money that is entered into the accounting programme eventually finding its way to the till of a Lyoness loyalty merchant such as myself or perhaps Walmart.
As a Lyoness member my business can now leverage its purchasing power to access discounts from suppliers who are also loyalty partners. To date after 16 months as a member my business has created 91 accounting units by spending the same money we spent the previous year but with different suppliers.
Im pretty sure my new suppliers are happy to receive the €100,000 worth of business I have been able to put there way because they provide the product quality I need whilst offering the discount I want.
The maturing of these units will add greatly to the bottom line of our business and I expect to generate even more units this year as I move more and more of my purchases to loyalty partner suppliers.
As my customers whom I have given cards to engage more and more with shops offering them discounts via the Lyoness Cashback card My business and I personally will enjoy more and more friendship bonus payouts which will also improve the viability of our business into the future thus securing the 22 jobs that are required to provide our service to our customers.
In summary I believe you are correct to warn potential mlm business owners that this may not be the business for them, but I do believe Lyoness has a very big future in the retail sector as a loyalty product of choice for the masses.
Your shopping units would not be sustainable without the investment scheme injecting new funds into the scheme. Not mathematically but because Lyoness wouldn’t exist without the AU investment scheme and those MLM marketers pushing it.
You said it yourself, at least “€100,000 of business” and only 73 units created. Without the Ponzi AU investment scheme the shopping side of things doesn’t exist anymore.
Otherwise as has been pointed out many times before, why have it at all?
As the AU investment scheme is the primary revenue generator for Lyoness (ask any Lyoness top income earner), the money simply shuffled between affiliates far dwarfs the money paid out in AU returns generated by merchant shopping.
At the end of the day you cannot justify a Ponzi scheme by singing the praises of whatever it is attached to, which in the case of Lyoness appears to be a legitimate shopping network.
A Ponzi scheme is still a Ponzi scheme, for MLM marketers and anybody else who participates.
Hi Oz,
Thanks for your reply. The primary revenue generator for Lyoness the company is 1% of all shopping.
The top earners in the membership initially get the majority of their return from recruiting people who make downpayments, but I believe that the opposite is true when it comes to the sustainability of the accounting structure.
I Think a return of 91 units from €100k shopping is very acceptable remembering that each one earns €582 by maturity.
It is becoming clearer and clearer that in mature lyoness territories the shopping drives the accounting programmes even though it was certainly downpayments that kick started the programme with a small percentage of the membership having downpaid units and vast numbers shopping and now creating units.
So in the US at the moment the Shopping has not started to any significent effect because Lyoness is in the recruiting phase as merchants such as myself agree to join.
As they issue their Lyoness loyalty cards to their shoppers the same will happen to the American Accounting programme being driven by discounts given by merchants to shoppers in the form of discounts.
Its a big picture small picture scenario Small ponzi – Massive shopping rewards programme.
I hope your us investers start to identify ways and means of generating lots of shopping in the biggest consumer market on the planet otherwise the real golden eggs will never be produced from the lyoness goose.
Think shopper ~~ spending €20k on products annually channel €10k through Lyoness create approx 6 units per year of which 3 mature so instead of a disappearing €20k as is the case at least €1700 will make its way back to the humble shopper. No other rewards programme offers anything to match that.
Best wishes Tim
Here your stating that Lyoness has maid all its money from a “short term Ponzi opportunity”, which is illegal, and your still supporting it?
(Ozedit: link removed, nothing specific cited)
Where do you get the numbers from?
You used something that looked like real numbers for your own business, buying €100,000 from new suppliers … Or it didn’t quite sound like real numbers, but I can accept them as estimated numbers.
Can you please identify where you have used imaginary numbers, estimated numbers and real numbers?
The primary “revenue generator” in the US will be the down payments as long as that program is active and attracts new investors. But it depends on how you define Lyoness’ “revenue”.
Please put in your DEFINITION for “revenue” in Lyoness’ case, e.g. is it about the total worth of goods sold through cashback cards and giftcards you’re talking about?
If a customer or a merchant is buying €1,000 worth of products from another loyalty merchant, that’s NOT “revenue” for Lyoness. Lyoness will receive a small “sales provision” for organizing the loyalty program.
Selling giftcards doesn’t actually generate “revenue”, it generates “sales commission” or “wholesale provision” for Lyoness. Giftcards are NOT products in themselves, they are containers for unfulfilled transactions.
Down payments should normally not be counted as “revenue”. It should probably be accounted for as an “investment” type of transaction, money DEPOSITED rather than money spent.
Again, your numbers are rather meaningless if you don’t tell us which definitions you have used. “Channel through” isn’t the same as revenue.
You have used an example where a consumer spends €20,000 in total annually, where €10,000 is “channelled through” Lyoness, and that will generate €1,700 in member benefits? That’s 17% in member benefits.
How can 3 out of 6 annually generated AU mature in the same year they were generated? “Mature” should normally be about generating a final payout?
Normally those 6 annually generated AU’s can generate the first 3/3 payout (3 units above and 3 units below).
“No other rewards programme offers anything to match that”, and neither does Lyoness.
And how does that differ from an exact description of a pyramid or endless chain recruiting scheme ??
Not only is such a practice illegal, in terms of potential new members it is a GIANT red flag
In your own words, “top earners get the majority of their return from recruiting people”
There is no “initially” grace period in these things.
To take your “initially” to its’ logical conclusion, what you’re saying is while Lyoness may “initially” be an illegal pyramid/endless chain recruiting scheme.
It/they intend to “eventually” become compliant and legal, which is tantamount to saying while a street level drug dealer may “initially” be breaking the law until he/she has sufficient capital to break into the legitimate pharmaceutical industry, he/she should have a free pass to be allowed to continue the illegal activities.
@Tim
…
Seriously, read those two consecutive statements again.
People get roped in, invest and then the scheme starts off in a new area. Those who previously invested are invited to kickstart the investment in the new area.
This is how Lyoness have expanded over the past decade.
The shopping side of things is just a front.
If the shopping programme is profitable, why have the Ponzi at all?
At the end of the day there is no excuse for Ponzi schemes in MLM. None.
Are you talking about a real business here or an imaginary one?
You have changed from your old reliable suppliers to new ones, just to generate discount and accounting units? That idea works for products your business is buying as a retail consumer in small scale.
For most other types of purchases, your business should normally have agreements with suppliers for “wholesale discount”, “quantum discount”, “campaign discounts” and various other discount types, built up through years of relationship with the same suppliers.
You use examples from business, but you’re THINKING like a consumer. You’re thinking like a participant in a programme where Lyoness is the main source of income, not your other business.
91 accounting units = 91 * 75 = €6,825.
That number can be true, it’s an average of 6.8% in member benefits. I’m not familiar with the cost of European accounting units, so I used the same $75 amount in Euro.
That number can be true for a business as “consumption types of purchases”, i.e. situations where the business acts as a consumer. “Consumer behavior” is about buying in small scale for personal use, as frequent purchases or on a regular basis.
Normally we’re not talking about “suppliers” in a case like that, we call them “retail stores” or something similar. Can you give some examples here for the TYPES of “suppliers” you’re talking about? E.G. “My business is spending around €xxx per month/year on yyy type of products from the local yyy supplier”.
People in business will normally not THINK like consumers, other than when they’re buying in small scale from random “suppliers” not related to their primary business. And yet you provided us with typical consumer examples rather than business examples.
As a business purchaser I source all my Poultry products from a poultry wholesaler my beef products from a craft butcher my disposables and cleaning chemicals from a wholesaler and dry goods and sauces from another food distributor all offering between 3 and 6% Lyoness discounts. I bought a second hand van from a car dealership.
As a consumer there are numerous clothing retailers we use also Booth pharmacy for toiletry products Marks & Spencers for food and clothing Hotels.com for hotel breaks
Once the habit is formed it is difficult to allow yourself shop outside the lyoness loyalty merchant community. All I am saying is that long term once Lyoness gets up and running in a territory it is sustained by shopping & shopping.
The difficult thing is for networkers to really grasp this and to teach their downlines to shop the Lyoness way otherwise the activity will stop. Only a small number of people want believe in the potential of making downpayments to create future profits as very few people trust the concept of networking.
I just hope I am being as clear and honest as possible to help people make up their own mind and at the end of the day we are all responsible for our own decisions
Best wishes Tim
What exactly are you basing this on?
All the top earners (read: where the money comes from) participate and recruit affiliates into the investmnt scheme. The shopping network generates some activity but is just a front (it exists so people such as yourself can run around claiming it means something).
It doesn’t stop if they just keep searching for new AU investors and treat it like a Ponzi investment scheme, which they do.
Lyoness is set up to be far more easier to work as an investment scheme then to work as an income opportunity via shopping.
You keep ignoring this:
If the shopping network was able to sustain the business, why have the AU Ponzi investment scheme at all?
Why have the downpayment thing at all then, as it DISCOURAGES shopping?
Clearly Lyoness corporate believe it well enough to include it, while you don’t?
So who knows better, you or them?
Hi Mr Chang I will identify for you why the downpayments are the driver towards shopping. The reward for maturing a unit is €450 of credit that must be shopped with a loyalty partner. What businesses want is money that is targeted in their direction.
So loyalty partners join lyoness so that they are in a position to benefit from this money being spent within the Lyoness community. The shopping has now begun!! and new au’s have been created.
I can tell u that the vast majority of lyoness card holders never make a downpayments. The function is to reward activity whether it be shopping or downpayments but in reality it is a combination of both.
Then the maturing money is destined for the Lyoness merchant shops thus satisfying everybody’s expectations. I see no losers once everyone understands the cycle.
Regards Tim
You convenently forgot to mention the >100% cash ROI.
Invest, recruit new investors and earn a >100% ROI. Ignore the merchant network bing-badda-boom Ponzi scheme.
Based on…?
Again, ignored for the third time now:
Why even have the Ponzi scheme if the merchant network is sustainable as an income opportuntiy by itself?
Sorry for delay but im back to work after a few days vacation which allowed me the the time to indulge in this forum which Im sure many find helpful.
Apologies for omitting the €132 loyalty commission yes its earned by the units also but I dont believe people will build teams that purely focus on units, If they do and do not shop or teach how to shop the work involved in recruiting would not be worth the hassel for a few payouts of €132.
The programme needs all elements working and again its my belief the only assurance of sustainability is through the shopping of the masses and the minority who issue cards as a business can be rewarded through the downpayment process. It is the whole of any business model that makes for success and isolating one aspect of any business will make for a misrepresentation of the whole.
Again this is only my opinion and is why I am happy to be involved.
As to what I base the statement re member numbers and unit downpayments In my lifeline there are 104 directs and indirects of which only 16 have made unit downpayments and only 2 are premium so the majority that have made down payments did so at 3 units just to kick start their benefits, the rest are just shopping.
Best regards and why not just have fun getting discount from the big boys for a change. Tim
They have and do. Just ask any top earner in Lyoness how many AU’s they’ve invested in. Hell, everytime Lyoness migrate to a new area these investors are called upon to kickstart the investment scheme in that area.
They treat it like a Ponzi marketing wise, but when confronted harp on about the shopping merchant side of things. That’s pretty much the only reason it exists.
You’re discounting continued re-investment into the scheme (compounding). Also if you build a big enough downline who also re-invest, over time their own recruiting efforts will compliment your own.
It all sounds very sinister to someone who was sold on the shopping side of things but it’s precisely how the top earners in Lyoness earn their money.
Participation in the AU investment scheme is unavoidable to anyone who wants to treat Lyoness as an MLM income opportunity.
If the shopping network needs the Ponzi to survive, the business is doomed (from an MLM perspective).
Whatever helps you sleep at night.
The Ponzi side of the business certainly doesn’t need the shopping merchant side, other than to prop up the flimsy facade that the entire thing isn’t just a convoluted Ponzi investment scheme.
Commission wise, have you made more from these 16 members or the 88 shoppers?
So what’s the business SUPPOSED to do? Is it a shopping program or not?
If it’s a shopping loyalty program, then WHAT IS THE “down payment for AU” for, since it BYPASSES ALL SHOPPING?
Refusal to study ANY part of a business is called denialism.
They say the down payment ( Which is optional ) is for future shopping with Lyoness Merchants. That is if you want to buy a big screen T.V. from a Lyoness Merchant you can use your down payment towards the T.V.
But Also you can earn on other shoppers whom you sponsor. For a 1,575.00 down payment you get 2 AU’s ( 7 per AU’s ) The pic is showing AC 2. ( 7 $225 ) AC 1 would be 7 $75 AU’s.
http://samcik.blox.pl/resource/matrix_pl.png
The explanation’s bull****. A shopping loyalty program’s purpose is to bring in SHOPPERS. Anything that bypasses the shopping part is bull****.
Let me try explain this another way: Give me $1000 now, I promise to give you $2000 in shopping credits later. WHERE is that difference COMING FROM?
With the “REGULAR” shopping the difference is from merchant contributions (up to 3%). WHERE is that when members make down payment? How is Lyoness making up the difference? Money doesn’t grow on trees, you know. If it’s a “down payment” who is making “the rest of the payments”, so to speak?
But you can also REINVEST the Loyalty Credits, buying additional Accounting Units. People who want to MAKE money do that, people who want to SPEND money on shopping will buy giftcards.
Those who want to MAKE money will actually encourage people in their downline to reinvest at least some of the Loyalty Credits rather than spending it on shopping. The Loyalty Credits are PRIMARILY targeted towards reinvestments rather than shopping. They can EVENTUALLY be targeted in your and other merchants’ direction.
You know perfectly well that most people will prefer to MAKE money rather than spending it. Most Lyoness members’ comments in this thread have been from income opportunity seekers rather than “shopaholics”.
I’ll translate that to $198, for the US’ market. The €450 maturity payout (in Loyalty CREDITS) is the same as the $675 payout in the US’ market.
The conversion rate between EURO / USD seems to be €2.00 = $3.00. That should normally stimulate people to “invest in Europe / receive payouts in the US”.
You can seriously expect people to produce gold eggs for YOU an OTHER MERCHANTS, rather than for themselves?
When the recruitment of new investors slows down in a market, the experienced Ponzi players will lose interest in that market and jump to the next one, investing their Loyalty Credits in a new market rather than spending them on giftcards.
I have asked questions about it during this thread, and other people have filled in lots of details.
* People CAN reinvest the Loyalty Credits.
* People also DO reinvest the Loyalty Credits
* They can even invest it in other markets
Lyoness is PRIMARILY set up to work as an investment scheme, but it WILL generate some shopping as a secondary function.
You can’t seriously expect people to treat it as something other than what it primarily has been designed for?
In mature markets like Austria, Lyoness is under investigation as a pyramid / Ponzi hybrid. It has also settled 220 money back claims from dissatisfied members and merchants (the Eric Breiteneder class action lawsuits). That’s only the top of the iceberg.
People can easily skip all the shopping (other than the initial giftcard purchases), and invest / reinvest (Loyalty Credits) in Accounting Units, or DELAY shopping into the future. If they do so, they will receive higher monetary payouts (Loyalty Cash), but they will also have more money bound up in the system as investments.
The majority of Lyoness members who have posted in this thread are not interested in making YOU rich through shopping. They are interested in their OWN potential payouts.
The investment part of Lyoness will mostly harm your own business as a merchant.
* It will generate some INITIAL purchases (when people will have to buy giftcard before they can make down payments).
* It will generate SOME purchases when people receive maturity payouts, from those who prefer shopping rather than reinvestments.
* It will stimulate Lyoness shopping for a short period of time, when people are EAGER to generate more AU’s. But most people will return to their normal consumer behavior after a while.
Most of the money in the investment system will be shuffled upwards and out of the market, e.g. for reinvestments in other markets.
* The majority of your customers will have less money to spend on shopping (they have some of it invested in Lyoness).
* The minority will have more money, but they will probably reinvest it over and over again.
If a plan or a system CAN work in a specific way, e.g. as an investment opportunity rather than a shopping community, it probably WILL work in that way too. Believing in the opposite idea is rather naive.
Hi M
Just for clarity maturing downpaid units produce €450 loyalty credit this can only be used to shop … end of… it can not be used to buy more downpaid units.. fact.
so unit downpayments must stimulate shopping fact
Accept this as a reality guy. This is a good thing for people who want to create more disposable income
I dont wish to argue anything just identify that Lyoness can be a positive proposition for people who need an opportunity to turn a very small amount of money ie €150 into significant disposable income
Dont get involved if you dont want to or dont like the concept but dont misunderstand something and then tell others you know something is bad.
Best regards Tim
I leave you guys now to chew away on this and the many other topics available here I wish you all much success in whatever opportunity you choose to work with. Oz has my email if you really want to talk with me
It’s coming from the Lyoness Merchants Kasey. Not Affiliates.
@Chang Hey look, I don’t need you to give me your Friggin arrogant ego attitude for my explanation. I’m telling you what Lyoness said, Leader Kim Simsby.
I’m not in Lyoness and I can care less where the F’in money comes from. It’s not my explanation but Lyoness. I’m here to give input about programs but not anymore.
I have ASKED people about it earlier in this thread, “CAN they use the Loyalty Credits to make down payments?” and “Do they have to buy more giftcards to do so?”.
It looks like other people CAN reinvest the Loyalty Credits. I’m pretty sure many of them will do it too, e.g. reinvest the first maturity payout ($675 / €450) into 3 AU in AC2, bringing that AC halfway to its first 3/3 payout in cash.
People can also reinvest the cashbacks. I have ASKED about that, too. They CAN transfer money from the withdrawal account to the “internal accounts”, but they can’t transfer anything the other way.
Experienced income opportunity seekers will typically reinvest Loyalty Credits and withdraw Loyalty Cash, making sure they’re earning MONEY rather than giftcards. They will do so as long as the program has some momentum in a market, bu after that they will reinvest in other markets.
We can of course try to verify the information. People either CAN reinvest Loyalty Credits or they CAN’T. It will make a difference for you as a merchant in the long term.
You can just ignore the loyalty credit and focus on the >100% cash ROI Lyoness pay you. Fact.
Oh we’ve been trying, 1055 comments later and we still get Lyoness affiliates coming on here and crapping on about the shopping network. They just simply refuse to acknowledge the >100% cash ROI Lyoness pay affiliates on maturation of an invested AU.
Where does that ROI come from?
Other affiliates.
Thanks for the assumption but I’m just in it for the analysis. Some of us can see past the money and just focus on the business model itself.
@NHRA
I invest in AUs with Lyoness, get others to do the same and Lyoness then pay me a >100% cash ROI and some credits.
Firstly it has nothing to do with merchants and secondly why on Earth would they contribute to the ROI an affiliate receives?
It’s obviously paid out of newly invested affiliate money.
One of the first rules of Ponzi analysis is to just skip to analysing the business model and compensation plan. Leaders/marketers will just spin you BS and quoting them usually doesn’t bode well.
After 1 year and 1056 comments later, the pro-Lyoness forces simply cannot defend the AU down payment side’s Ponzi structure. They mostly repeat the company line.
Until someone adequately and clearly address the Ponzi issues that have been raised by Oz, Chang, Norway, and others, there’s really no further need for pro-Lyoness people to chime in their 2 cents.
It wasn’t aimmed at you.
I have checked the compensation plan … You CAN reinvest the Loyalty Benefits (just like other Lyoness members have said).
Maturity payout in AC1 is €450 / $675. It CAN be reinvested, and I’m pretty sure it WILL be reinvested by people with a downline.
The info can be found in point 9 “Volume Commission” in the compensation plan, the table for Career Units etc.
l.b5z.net/i/u/10161506/f/Compensation_Plan.pdf
A Ponzi scheme with respect for itself will of course have reinvestment options, and Lyoness clearly has that.
When I first started checking Lyoness, I checked Europe first, markets closer to my own. The idea “People will always shop (generate more AU’s)” seems to fail when the investments are slowing down. If the idea fails for the members, it will fail for the merchants too.
Lyoness will stimulate shopping in the beginning when people are investing, but after that the market will slow down. Disposable money is actually drawn away from shopping and into the investments.
The MANY will have less money to spend on shopping, the FEW will get more to spend on shopping or investments. And Lyoness is first of all an investment opportunity, while shopping is a secondary function.
It doesn’t CREATE any money from thin air. All the money invested in Lyoness will have to come from somewhere, from the members themselves and from the merchants.
Lie. Here’s the FAQ item that explains you’re wrong:
http://gleehosts.com/wp-content/uploads/0LyonessCashBackProgramBriefSummary.docx.pdf
Not when it was contradicted.
And you don’t ask where is the difference is coming from, do you? Or is that a case of “TL;DR”, i.e. willful ignorance?
Same applies do you. Don’t misunderstand something and then tell others you know something is GOOD.
But I can see you are not going to follow your own advice…
You can use the credit to re-invest? Far out when did that happen??
Now Lyoness is even more dodgy!
Of course they can. It will prevent people from withdrawing too much money (including giftcards) from the investment.
Reinvestments from yourself and your downline will make you advance much faster upwards in the system, giving you much higher CASH payouts and will give you access to the 6 last points in the compensation plan. That’s where the BIG money is.
“when did that happen??”
It has probably been there all the time, but it became visible when I asked questions about the July 2012 compensation plan.
By reinvesting the Loyalty Credits, you will generate CASH payouts to your upline and some people in your downline. That will motivate them to do the same for you (when they receive maturity payouts), so all of you will get more CASH and less CREDITS. It will also prevent money from being withdrawn as giftcards.
The more people (with a downline) reinvests the more they will earn in cash. It will also stimulate reinvestments from other people in your upline/downline. But it doesn’t make much sense if they don’t have an active downline doing the same.
It doesn’t make much sense if the recruitment of new investors have slowed down either, a part of the investments will have to come from new investors.
Was pretty sure it was there all along. The difference between “downpayment” and “cash out” was too big to be made up by mere shopping. There had to be some sort of further delay mechanism.
That would also explain the multiple “level” of accounting units… Make the members “rollover” their AC’s into the next level version for the promise of bigger rewards.
That’s the idea, but the market needs to be ACTIVE, with new investors joining all the time and old investors reinvesting.
It won’t work without new investors. It will HELP if they have enough people shopping, but it won’t “work” properly as an investment opportunity.
There’s absolutely no POINT for people to reinvest if they don’t have a downline (minimum 4 directly recruited investors). But then they won’t have much to reinvest either. 🙂
Reinvestments will also potentially reduce tax liabilities. Giftcards are also taxable. It’s better to reinvest the Credits and get CASH, rather than paying taxes for giftcards.
That’s why the comp plan is so complicated, to PREVENT people from achieving those levels, IMHO of course. 🙂
It HAS systems to prevent unexperienced people from making money, e.g. the binary pairing system (“above/below”). People can have hundreds of units in one of them, and zero units in the other. That won’t generate much payout.
It will reward people willing to INVEST and REINVEST, able to RECRUIT other investors and help a downline to recruit investors.
If you’re not in it for the income opportunity itself (recruitment and investments), it makes very little sense to invest anything in it as a consumer.
I don’t recall seeing it in the comp plan information I originally cited (which has probably been convolutedly updated numerous times since then knowing Lyoness), and then we had all that “you have to spend the credit on giftcards nonsense” from a while back.
If you can re-invest loyalty credit back into more AUs then that pretty much destroys any shopping merchant legitimacy argument.
It’s just a straight up Ponzi, invest, get paid a ROI, invest it back in to generate a higher ROI. Recruit new investors, wash, rinse, repeat.
There is no posibility to invest in Lyoness. Downpayments is not investitions. Study GTC ad you see. Downpayments mean shopping. Then you can earn ROI.
Pay money to Lyoness, get more money then you put in when enough people give new money to Lyoness.
Re-invest credit and cash ROI to generate more returns.
Please don’t waste everybody’s time pretending shopping has anything to do with investing in AUs.
And you really believe every word companies tell you? Try applying the Howey Test instead. I’m waiting.
http://en.wikipedia.org/wiki/Securities_and_Exchange_Commission_v._W._J._Howey_Co.
When you make downpayments you understood what is mean? Where is write in information about “investment”?
Downpayments is only downpayment=AU=shopping not investment. If you make downpayments=AU=shopping and your network make downpaymens=AU=shoping your ar able to recive ROI. In 43 country I think is the same . Its not diferent between clasical downpayment and Lyoness downpayment.
Its not different between pay a small part of product and recive after lets say one day and pay for rest and Lyoness downpayments=AU.
When you go on holidays you make a reservation and make a downpayments an you use product after 3 months . What is different?
Blahblahblah give money to Lyoness, wait till a certain number of other new investments have been made and Lyoness gives you back >100% of your money. Re-invest by giving the ROI back to Lyoness.
Do you understand the downpayment investment scheme?
Wherever I made a reservation at doesn’t pay me a >100% ROI on the cost of my reservation. Duh.
oh crap I’m sorry. Forgive me ? 🙂
Now we know you ignore other people’s argument while you insist other people take your argument seriously. Howey didn’t call their thing “investment” either. Look where it got them.
I simply ask you to give the same courtesy to other people’s argument that you’re demanding from other people (i.e. consider your argument in all seriousness).
It isn’t written, but people are actually using it that way. They pay money IN to Lyoness, for a promise of financial gains if they recruit more investors doing the same (paying money IN to Lyoness).
The financial gains are clearly related to the amounts they have invested themselves, plus the amounts invested by others. It’s not related to WORK (recruiting participants is legally a “consumer behavior” rather than work).
People do not make down payments for the desire to own, use or consume a giftcard. They do it to participate in the income opportunity. It isn’t really important whether or not there’s a potential giftcard purchase connected to the transaction.
Lyoness has released an income disclosure statment. What can you make of it?
If LittleRoundMan posted this already, I’m sorry, but his analysis of that income disclosure statement shows:
I’m getting a (403) Forbidden on that Lyoness link.
Ozedit: Google cache works, have they blocked non-US visitors from viewing it?
I’ll go that income disclosure tommorow. Having glanced at it, all I can say is it’s hardly surprising to see the “customers” generate sweet FA revenue.
Seriously, look at those averages… revenue wise it’s all affiliates (AU investment).
You don’t have to feel sorry for his analysis? 🙂
The IDS didn’t tell us anything important, since it didn’t specify what the amounts are about, e.g. separating between payouts and internal transactions, between discount types of payouts and income types, between income derived from own “investments” and other people’s “investments”.
IDS are typically designed to keep people occupied for a period of time with some meaningless activity, allowing them to mislead themselves about something.
One thing it showed us was the importance of recruiting people and building up career levels fast, exactly the arguments I have used for why it only makes sense for SOME people to make down payments.
It doesn’t make any sense for “consumer investors” to “invest” in the Accounting Cathegories, unless they have clear and realistic plans for recruiting additional “recruiter investors” doing the same.
it cost $ 3000.00 to invest in AU why… stay away.
My scheme only costs $2999 why not send me a check?
New article about Lyoness contains 2 interesting videos.
1. “Dragoon’s Den” TV-show, with a Lyoness investor trying to get support from professional investors (25 minutes into the video).
2. An investigative report by Austrian nationalt TV-channel ORF (in German, but with English subtitles)
https://behindmlm.com/companies/lyoness/lyoness-ceo-its-all-about-positions/
Both videos are worth seeing, regardless of whether one is a member or not. “Dragoon’s Den” is entertaining but also “scary”, in that he tries to get the 5 investors to invest $35,000 CAD each in Lyoness, a total of $175,000 CAD. Some people have just lost contact with the real World.
Note that there’s an ongoing investigation in Austria, and it probably involves several other countries too. Investigations can go on for months and years, and the one in Austria started in late 2011.
mlmtheamericandreammadenightmare.blogspot.com.au/2012/09/lyoness-is-lie-and-hubert-freidl-is-its.html
^^ It should be noted that I haven’t seen proof of this anywhere other than comments on David Brear’s blog. I’m treating the purported class action lawsuit in Australia as questionable until anything further surfaces.
I took me half a day but I read this entire thread. It is pure gold. Well done!!
I’m finding this very informative and helpful. Thankyou Oz. A shopping rewards program seems like a wonderful idea, and I do believe that MLM must change as we move into the future. The AU’s in this program, however, are enough to scare me off.
Is there a company out there that runs on the rewards and shopping guidelines without all the AU crap?
Love to find a company to work with that doesn’t make me force some miracle product down all of my friends and families’ throats.
Suggestions anyone?……
MLM can never work unless you are at the top of the pile happy to strip mine peoples moeny or a sucker at the bottom happy to overpay for a product that other companies sell without layers of people are margin.
No money ever comes as easy as the mlm marketers tell you. It is the hook they catch you with.
HI to all, I joined Lyoness as a free member (shopper) and have created 3 units from my shopping through Lyoness merchants. I do not need to make any down payments. As I am going to purchase my first new car from one of the Lyoness merchants. I will spend just a little over $30,000 that will make me a premium member and generate some more units.
And NO ONE needs to spend into Lyoness. Join as a free member and do your regular shopping through any of the Lyoness merchants, brick and mortar, Gift cards , shop online or through your mobile and receive cash for every purchase.
The personal choice not to invest doesn’t negate the facts that you can invest and the majority of revenue generated within Lyoness comes from affiliates investing directly into AUs.
A Ponzi is a Ponzi by definition of its business model, not what you personally choose to do.
Great! So why *does* Lyoness have this unit purchase as an option at all? Whose money is used to pay for the benefits as it’s clearly NOT funded by merchant contribution unlike units generated through shopping?
Yes, the shopping’s great. But you’re just ignoring that other questionable part.
No one has criticised the the cashback solutions, other than that the friendship bonus system technically is a pyramid scheme. Bur most people would probably have accepted it anyway, since the payouts derives from purchases.
What people have criticised most is the down payment system. It’s simply about a type of investment. Payouts derived from that will be “money over money” = people will receive payouts derived from other people’s investments.
Of course it’s nice to hear from someone who feel he’s not part of the problem = one who only earns payouts from his own purchases and do not recruit anyone (if it was that you were trying to tell us?). Then we finally have found you in post #1089, so we can update the statistic with the new data.
Here’s a couple of questions:
1. Have you ONLY earned payouts from your OWN purchases?
2. Have you recruited anyone, other than your own family?
3. Which country/car dealer do you plan to buy the car from?¨
Question 3 is about that I want to check the benefits from that car dealer. It seems like you have calculated around 10% “Total benefits” from him, 2.5 times the average member benefits in Lyoness?
Pyramid scheme isn’t about what you personally have paid IN. The worst problem is about the chain recruitment. And Lyoness doesn’t make much sense if you don’t recruit anyone, you’ll need to recruit minimum 4 directs before it starts to make some sense. And you should preferrably recruit other recruiters.
1. Please specify which country/merchant or which area (state, city), or other details so I can check the average benefits derived from a purchase like that?
I found ONE used car merchant in the first 48 or 60 hits for “Motorcycles & Cars” for the whole U.S. (107 totally listed). I found SOME that potentially sell cars among the others.
The used car retailer had 2% “Total benefits” = 1% cashback and 1% member benefit.
2. Can you please specify your math? Something like this:
* If I buy a $30,000 car
* and receive 2% cashback = $600 cashback
* and receive 2% other benefits = 600 “benefits”
* the 600 benefits will generate 8 AU in AC1
Premium Member is normally $3,000 worth of units, not $600. Do you plan to buy 5 cars or something to upgrade yourself to Premium Member?
3. Please explain the logics too, for how that car purchase will upgrade you to a Premium Member? You’re not the type of guy that will make any down payments, so the $600 cashback from your purchase can’t be reinvested.
I ask detailed questions like that to be able to separate between real stories and fake ones, so here’s your chance to show the World that your stories can be trusted.
@lerdbaron:
I found 1 new car dealer in Sweden, offering 2% + 3% total member benefits. That gives 900 “benefits” = 12 units in AC1, or 3+3 units in both AC1 and AC2.
That’s 30% of what it takes to become a Premium Member = you will need to buy a $100,000 car rather than a $30,000 to upgrade yourself in that way.
It simply doesn’t make much sense for a consumer to participate in Lyoness’ AC program? That part is actually a Ponzi or pyramid scheme rather than a consumer solution. It’s primarily designed for people who willingly will place themselves in the “Bigger Fool List”, the list that derives from the “Bigger Fool Theory”.
Hi everyone, with Lyoness you can become a Premium Member by one of 3 options.
Option 1:
By making fully paid purchases in the amount of
$30,000 within One year.
Option 2:
A combination of fully paid purchases of $15,000
within One Year and Partial Gift Card Payments
of $1,500.00
Option 3:
A combination of gift card full value purchases of
$600.00 one time.
and partial gift card payment of $3,000.00
I only have 3 shoppers under me.
I am in the USA. And if you do a search on the Lyoness shopping site you will see
many new car dealerships as well as used car dealerships
One Nationally known car rental.
with over 3,000.000 members and growing (Note 70% are free member) why not join as a free member so you can see that it is working.
So if it does not make sense to join Lyoness don`t
just make sure you have all the facts before you call it
a Ponzi
Bolded the Ponzi scheme bits.
As I understand it everyone is a “free member” in Lyoness. With the majority of commissions being paid out to those who invest directly into the scheme (Premium affiliates or whatever they’re calling them now).
ok, so I should have said 70% did not make any partial gift card payments and we are still receiving cash back for every purchase. And once the first units matures we will receive the funds into our accounts.
As for the ones who make partial gift card payments will receive shopping credits from the units that mature. while still receiving cash back for every purchase.
Could you please explain to me why if someone makes a partial gift card payment you keep saying its a ponzi?
It`s my understanding that if one makes a partial gift card payment and the units mature. The Shopping credits can be used in any Lyoness Merchant for goods or services. That is what is happening in Europe. Why would that be a ponzi?
That’s OK. I probably knew about the 2 other options, but I had forgot them.
I did check “Cars and Motorcycles” for the US and Sweden, just to find some examples. Most of the companies placed under that cathegory wasn’t about car sales, but about car parts, car repair, car wash, etc.
Sweden had 1 new car merchant among 18 other companies. The result for the US was relatively similar, I had great difficulties finding car dealers among all the others.
That’s why I had to ask about it. If people plan to spend $30,000 on a new car, they normally have some ideas about WHERE to buy it and WHAT type of car they want to buy.
E.G. I can accept travelling up to 60 or 100 km (60 miles) to a car dealer in another district, but I will clearly prefer one of the more LOCAL car dealers. People normally have ideas like that if they have concrete plans for something, and not only vague ideas about it. Your ideas sounded rather vague.
You claimed you already had found the merchant (or alternative merchants), since you knew they were Lyoness members.
That’s why I wanted to check it/them, to see the level of member benefits they could offer and to verify if it really was worth the efforts for a consumer. The new car dealer I found in Sweden would give 12 units in AC1. Buying 2 more cars and you will have filled up half of AC1.
So if you can’t find any Lyoness merchants selling cars, you can rent a car instead?
Because you may be participating in a Ponzi scheme, and be “upsold” into it even though you only joined for the allegedly shopping benefits?
Again, you’re IGNORING the part that is potentially illegal and pretending not to hear or see the evidence. You said it yourself: “you don’t have to”. So why does it exist? Obviously so people can do it. So WHY would a company do something like that, or is that too much to think about?
We asked one of the Career Level 6 members in the US about it. She had around 2,600 members in downline, all of them premium members.
I believe she told the truth. Other people have told similar stories, without being vague like you were.
I believe you should scroll to the top of the page, click on “Lyoness” right under the headline in the article, and take a look at some of the other Lyponess articles. That should help you communicate things better, e.g. stories to avoid.
You’re either repeating “sales arguments” told to you by an upline or making up your own “rational explanations”.
I simply don’t belong on that list, the “Bigger Fool Theory” list. It will require too much “adjustments”, e.g. I must start to really believe in all sorts of stuff.
That’s the story they tell the merchants, but experienced people will normally prefer to reinvest the Loyalty Credits so they eventually will get more CASH. They will also encourage members in their own downline to do the same, as a type of “team work” where everyone qualified will get more cash payouts.
WOW! I have never heard that you can reinvest Loyalty Credits.
I do know that once the unit mature that was created by shopping we will receive cash. If the unit was created by partial gift card payments a Credit will be issues that can only be used to make purchases within any Lyoness merchants.
As far as I know no one can reinvest the credits unless you are making things up to fit your Ponzi claim.
Now back to my future car purchase I will be receiving 1% cash back and 1% Loyalty. And to my understanding once I make $30,000 in purchase I will be a premium with a few new units under me from my purchase.
Like I said within the USA several New Car Dealerships like Knudtsen Chevrolet is one of them. I don`t know why you can`t do the same search as I have been doing to come with the same results.
I have been spending my money with Lyoness merchant and will continue to do so as many are doing. So I guess I am amongst the Bigger Fool bunch I guess.
It will only make some sense if you are “qualified” = minimum 4 direct recruited. But people are clearly using that method.
The idea is to invest $3,000 in 7+3+3 units, recruit 4 others doing the same (to qualify for level 5-10 in the compensation plan), and help your 4 direct doing the same so you have at least 4+16 in your downline.
If people can’t afford the down payments, recruit them anyway if they potentially can be skilled recruiters.
You will get the 3/3 5/5 10/10 15/15 20/20 25/25 CASH payouts when you have qualified with 4 directly recruited. You will also earn CASH friendship bonuses from your downline when they are qualified, 2 levels deep. You will potentially also qualify for Career Level payouts in CASH.
Loyalty Credits can be reinvested. That will generate some units in your downline coming from you, so people in your downline will receive their units a little faster. That should normally stimulate them to reinvest their own Loyalty Credits if they’re smart enough to see the idea.
“Smart enough” = the idea doesn’t make any sense if they don’t have 4 directs in their downline.
When you first have a downline of investors / recruiters, you can start recruiting some shoppers too. You will indirectly find information like this in one of the other articles. You will indirectly find some methods to avoid in a third one.
The possibility to reinvest Loyalty Credits is one of the reasons for why we call it a Ponzi scheme.
I did. I clicked on the menu, “Cars and Motorcycles”, checked the first 12+12+12+12 = 48 out of 107 companies. I mostly found other types of car related companies, but I managed to find ONE used car dealer.
Take a look at the list? It isn’t very user friendly if you’re not familiar with the companies. You’ll need to KNOW “That company do also sell new cars” before the list can be useful in any way. It’s simply not designed for normal users.
I did not use any search function or anything like that. I did what a normal user will do e.g. first time they visit a website, and that is typically to try to find something via the menu choices.
New cars should normally be found under “Cars and Motorcyles”. It makes very little sense if they have placed them in another group.
“As far as you know” we made the **** up?
The loyalty credit can be used to buy gift cards, but buying gift cards generate more loyalty credits, doesn’t it?
Because it’s not a “partial giftcard payment”. You pay Lyoness $x and get back >$x (fixed) once a fixed number of new payments have been made into the system.
That’s precisely how a Ponzi scheme works. Where do you think the ROIs come from? The Merchants Lyoness buy giftcards from aren’t certainly coughing up hundreds of thousands of dollars.
One of the dialogues can be found around post #1060, but it’s actually a long time ago when I first asked questions about it. Most discussions will typically revolve around other parts of the compensation plan.
Reinvestments won’t make much sense for a consumer, but it will actually make some sense for people higher up in the system, if their own reinvestments can stimulate others to do the same.
It makes sense because it adds to the Volume Commission, the commission generated from your entire downline. That’s where most of the payouts eventually will come from.
Reinvestments can also be used to balance the binary system “above / below”, e.g. place the reinvested units where you’re missing some
Come on guys, class by thousands of members, high level government investigations, top presidential leaders (million dollar earners)leaving and being terminated because they know the truth.
The launch into Australia was based on deception. Why are people still analyzing the plan when people should be warned about this seriously dysfunctional company that is upsetting more people than it is rewarding.
ok, I must be the dumbest person in the planet. I still can not find any reference concerning reinvesting credits. Have looked at the webinar and I sent an email to my upline who is a Premium to ask him if reinvesting credits was possible.
He flat out told me NO Credits can only be spent through a lyoness merchant or by purchasing actual gift cards to spend at a Lyoness merchant.
Again if a unit matures from making a partial gift card down payment a unit worth $75 the person who make the partial gift card down payment will receive $675 in shopping credits that can be used at a Lyoness merchant or purchase $675 worth of gift cards why is that consider a ponzi?
And once my $75 unit matures since I am only a shopper I will receive $675 into my bank account. that I can spend any where most likely with a Lyoness merchant that will give me cash back for my purchase is this also considered a ponzi?
It`s my understanding that units are created by shopping and by partial gift card payments. Most if not all of you guys have a problem with the partial gift card payment part why?
When I go purchase a big ticket item like a car, boat or house I am only making a down payment. Paying the rest off in monthly installments (If only I was rich so I can pay it all at once) that is how I see the partial gift card down payment with a difference being that if people let it mature to receive the full amount in shopping credit.
If people don`t wait for it to mature and want to use it I think depending on the amount the item might be worth then the remaining balance will be due. Again I am not a premium with partial gift card down payments so I don`t have to worry about it.
@K. Chang
The loyalty credit can be used to buy gift cards, but buying gift cards generate more loyalty credits, doesn’t it? Yes also making purchases at any of the Lyoness merchants and what is wrong with that? I think that is the whole point of the system if that is illegal please contact your nearest Gov agency and stop the evil Lyoness from operating such dastardly scheme.
OMG I think I finally figured out how to re-invest shopping credits! too bad I am only generating units that will give me cash once matured.
But buy purchasing from lyoness merchants I will be reinvesting generating more cash back WOW! this system is Brilliant
Then I suggest you go and read the compensation plan. Of course it’s not going to blatantly tell you it’s possible to re-invest loyalty credit, you have to read between the lines.
All ROIs are part credit part cash. There is a cash component at every AU investment level on top of the credits paid out. Please don’t waste yours and our time contacting your upline, read the Lyoness compensation plan material and educate yourself.
Where do you think the cash comes from? Given you are only paid it when enough people have invested in AUs after you, it should be obvious.
“Matures”, where is the “matures” money coming from? Other investors.
Why did they invest? So that they can be paid by new investors/re-investment too.
Do you seriously still not understand the Ponzi component of the compensation plan?
All money invested in AUs is paid to Lyoness. All money paid out as a ROI is paid out by Lyoness. No money is paid to merchants, so the money has nothing to do with giftcards.
There is nothing wrong with the merchant shopping scheme component of Lyoness. It’s the AU investment scheme that functions as Ponzi wherein the problem lies.
You must know very specific what to look for to find it. It will typically be mentioned indirectly, e.g. “Loyalty Credits will have to be used inside Lyoness itself for shopping, e.g. to buy partly or fully paid gift cards”.
It can be mentioned in a part of a sentence only through a whole webinar. They don’t want to highlight it in public presentations, but experienced people will clearly find it.
You can verify it yourself LOGICALLY by asking yourself questions about the higher payouts, e.g. does it make any logical sense to you to receive a $24,000 gift card and have to pay taxes for it? Does that sound like a good deal to you? Or will you prefer to reinvest it and eventually get a higher payout in CASH through other parts of the system?
CAREER LEVELS
I found it by asking some questions about it to people who had medium size downlines, eager to show their own insight into the system, around the time when I asked questions about Career Point payouts.
Since it only makes some sense for people who want to earn Career Level positions, you can’t expect to hear anything about it from your sponsor. But of course you can use the Loyalty Credits to make down payments (“reinvestments”).
Down payment is about exactly that = making partial payments towards a giftcard. That’s what Lyoness considers to be “shopping”.
ATTRACTING SKILLED RECRUITERS
People want to earn MONEY rather than gift cards. Reinvestments of Loyalty Credits will give them money rather than gift cards after some time through other parts of the compensation plan, but it only makes sense for skilled recruiters.
MERCHANTS
Your sponsor is probably a merchant himself? Merchants like to believe in the idea that Lyoness will generate more sales for them through all the gift cards. It will do so for a short period of time when Lyoness is introduced in a country, and people are forced to buy $600 gift card before they can make a $3,000 down payment.
Small merchants are among the “Biggest Fools” in this system. A merchant should preferrably focus on running his own business rather than recruiting people into different opportunities.
ADDITIONAL INFO
Troy Dooly published a temporary report from Len Clements about Lyoness, listing up some other types of investments in other markets. You can invest up to $10,800 in the Brazilian market, up to $10,800 in the Asian market, up to 3x$10,800 in the American market.
http://mlmhelpdesk.com/lyoness-america-violating-pyramid-ponzi-business-opportunty-security-regulations/
I believe his mathematical logic is flawed, in that he calculates each and every unit as “profit centers”. But his other logical conclusions seems to be correct.
Len Clements is a well known MLM expert, and will typically cover the legal aspects of compensation plans in details. He will typically identify other details than we do, but that goes in both directions.
We will use each other as “resources” from time to time to add something to own material.
“Temporary report” means he has finished all the parts he was able to find and have sorted them logically, but that he is allowed to make some corrections. It’s the type of report you produce to meet a deadline. It will typically only cover the most important parts.
Your $30,000 car purchase will give you $300 cash back, and 4 units in AC1. It will eventually generate a $675 cash payout when you have bought 16 more cars. Does that sound very rational to you as a consumer?
Imagine telling your friends or neighbors about it?
Lyoness doesn’t make much sense for consumers, but they can easily be tricked into believing so. The cashback system itself makes sense to a consumer, so they can easily believe the other parts will make sense too.
That’s why mature markets will slow down when the investments slows down, and why people are offered to invest in new markets if they have a downline of some size.
Lyoness will eventually run out of new markets. Mature markets will generate units very slowly, causing investors without downlines to claim their money back through lawsuits. That’s what happens in Austria, Lyoness first market.
Other markets will both grow and slow down more rapidly, the more old investors investing in it the more short lived a market will be.
TIME TO STOP THE DISCUSSION?
We have had similar discussions 20 or 30 times before in this thread, and I have already given you most of the information you potentially can be interested in, directly or where to find it.
If your sponsor haven’t given you the same information it can be for several reasons, e.g.:
* he doesn’t know it himself
* he doesn’t think it will apply to you
* whatever other reasons he might have
Reinvestment of Loyalty Credits isn’t CLEARLY mentioned, but it is actually a commonly used method for people with downlines of some sizes. The people telling me about it were typically people with a few hundred people in downline, and the information typically came indirectly through other types of questions.
Upgrading yourself to Premium Member doesn’t make much sense if you don’t have any plans for recruiting a downline of some size, a downline of investors. Shoppers will only SLOWLY generate new units, e.g. your $30,000 car purchase will only generate $300 worth of units. You will need to recruit 16 other car buyers to get your first $675 payout.
Consumers are meant to be used as “fill” in a downline, not as a primary part of a downline.
* if you ONLY have other investors in your downline, the payouts will “collapse” when you run out of investors.
* if you ONLY have consumers in your downline, you will hardly generate any payouts at all. But you won’t be affected by a “collapse” either, because consumers generally are more stable than income opportunity seekers.
Bottom line, Lyoness will put all other US MLM companies out of business when they take over the North American market and have swipe processors in every major checkout.
The storm cloud is growing and soon Lyoness will be everywhere. Television, print media, radio etc. When this monster is released, MLM is DEAD.
Well, I see your point as I have managed to accumulate 3 units from my own shopping. The three people in my downline have been doing some purchases through Lyoness merchants and must not have earned enough cash back or loyalty cash back to generate at least one unit, in time I will have 3 additional units as I did with my own shopping.
With my 3 current units plus 4 from my future car purchase I will have 7 units. It will take some time as you said for me to receive my $675. As long as I and my 3 shop for our daily weekly or monthly needs through a Lyoness merchant I am sure at some point I will come in here and post that I have earned $675 from my shopping.
Since Lyoness started a few years back here in the USA I hope more shoppers join and am curious to see if this will collapse as you say or will it grow.
Question to you all:
If this is a Ponzi and Lyoness is world wide. How long before it gets shut down or will it be shut down in the USA/CA by the authorities?
@lerdbaron
I have one more important information to you = “The biggest red flag is all the CONFUSION about Lyoness, reflected all over the internet in almost every dialogue or review.”
IT’S BEING REFLECTED
* It’s reflected here, in all the trouble we have had clearly identifying it as either a Ponzi or a pyramid scheme.
* It’s reflected in Len Clement’s report, where he tries to interpret the units as “income centers”.
* It’s reflected in your own comment, where you clearly are trying to identify it from a consumer viewpoint, but where the car purchase only was a vague idea.
* It’s reflected in the “Dragon’s Den” video, in the investor’s own confusion when the professional investors won’t accept his investment opportunity.
* It’s reflected in Lyoness’ own material, and in the Austrian Consumer Protection Agency’s reaction to the Terms and Conditions.
* It’s reflected in the difficulties I had in finding a new car dealer in the list (plain and simple logical methods didn’t work)
* It was clearly reflected in Jeanette Hayworth’s blog, and that was probably why she let it expire or deleted it.
CONFUSION IS ABOUT …
A: When your own brain is able to identify something within its own experience (e.g. “identifiable patterns”), and will fill out missing parts with corresponding info until it has a more complete pattern.
B: When you, after the first pattern has been discovered, will be presented for the same type of info but with an opposite conclusion to it. And maybe a third and a fourth conclusion, which all can make some sense.
Confusion is when your brain discover that the first conclusion potentially may be flawed, but it still makes some logical or emotional sense to it. The potential flaw is typically identified by other parts of the brain than the first conclusion.
ONE QUESTION
Exactly WHY do you want to upgrade to Premium Member?
Please answer it within your predefined role as a CONSUMER, one that primarily is interested in the cashbacks and benefits derived from purchases, and is NOT interested in making any down payments or recruiting a downline.
An answer should typically be something like “It will give me [result A], [result B] and [result C]” = a few identifiable results that makes some logical sense for a consumer.
Well, to Answer your question M_Norway I did not want to upgrade to Premium simple I do not like to sell or am any kind of mlm guru. I hate selling to people the three that I have are friends who asked me what I was doing on my break times at work as I was reviewing the webinar.
I am interested in saving money looking for coupons and was looking for the best possible price. To me Lyoness made sense I shop as I regularly do at the same store that I have been shopping for years and it happen to be a Lyoness merchant so now I not only use my coupons but also get cash back!
I know it is a little bit but in this economy every little bit helps. Like I said I do not want to be Premium but once I make the car purchase I will become one that is how I was told the system works and if I earn more by having a 4 th person join under me that would be great! if I don`t I will not lose any sleep over it.
I only wish the only way for anyone to be Premium would have been through shopping. (I just checked my back office and noticed I created one more unit I know you are probably saying big deal so now I have 4 units).
Sorry for a long answer and I probably did not answer your question.
Authorities seems to have the same type of problems as anyone else = CONFUSION. They can’t identify it clearly.
You can’t use normal logical thinking on some parts of it, e.g. you will need to identify some flawed logic before you will be able to ignore that and focus on the correct logic.
EXAMPLE 1:
Does the down payments actually lead to a giftcard purchase, does it lead to a payout, or does it lead to both?
If it doesn’t lead to a giftcard purchase, it’s clearly not what it claims to be, and that version should simply be ignored because the logic is flawed.
Each and every down payment will need to lead to an actual giftcard purchase of similar value as the combined number of down payments in an AC, rather than to a “cycle” and a “maturity payout”.
EXAMPLE 2:
You’re asking questions that are more typical for participants in pyramid schemes than for consumers. Are you SURE you have identified your own role correctly?
Consumers don’t have “investments” they can be concerned about, but participants in pyramid schemes have. They will typically HOPE the investment will last long enough so they can make a profit.
You’re telling us that you really are a consumer, but it’s not reflected in other parts of your statements.
So do we… So do we. So we wouldn’t be having this conversation at all.
As we’ve said many times before, Lyoness as a shopping loyalty program works fine, as it’s funded by the merchants (much like credit card fee and such). But somehow it has this huge suspected Ponzi scheme grafted onto it.
It’s like marrying love of your life, only to discover she’s schizophrenic. 🙂 What you do about it… is up to you. But first, you have to acknowledge the reality.
That’s part of the confusion. 🙂
K. Chang, M_Norway `I agree, so for anyone reading and who is looking to join Lyoness just do it as a free member/shopper like me and if this turns out to be a Ponzi well we will not lose out any of our own money.
We all have to shop why not do it and get cash back with every purchase.
Just beware of the adage: in for a penny, in for a pound. Once you’ve joined, you will be continually pitched “it’s also an income opportunity”. And keep in mind that Lyoness prices may or may not be the lowest. It’s all up to the merchant.
Whether you think you’ll get more out of the scheme than your POTENTIAL losses… that’s up to you. 🙂
Your cashback motives are completely normal and sane for a consumer, but you crossed a line between rational and irrational in your own description of the car purchase.
1. You became a free member and have earned 3 or 4 units through shopping.
2. You have recruited 3 friends. That isn’t a typical “consumer behavior”, but the explanation for it was rational enough in itself (if you have told us the truth about it).
3. You entered this thread, and tried to present yourself as a CONSUMER user of Lyoness, but there is actually a lot of CONFUSION in your own statements. A consumer wanting to buy a car will have different preferences than you reflected, e.g. they will typically have analysed lots of details logically (other details than you reflected).
That’s OK in itself, that purchase will actually upgrade you to become a Premium Member, giving you the right to invest in other markets than the US, giving you the right to invest more money in the US market. But that’s clearly not a consumer motive, is it?
For a $30,000 car purchase, those $300 cashback plus those 4 units simply shouldn’t be enough to motivate you as a consumer (as one of the PRIMARY motivation factors). You’re acting more like you have a “community feeling” than as a rational consumer in that case.
4. To your credit, most people will simply disappear from the thread when I start to ask logical questions of a specific type (typically where I know I will find some confusion about something).
5. You have actually helped me identify clearer why the idea “People will always shop” seems to fail, why most markets will end up like Austria with dissatisfied investors.
People will temporarily be motivated by cashbacks, “units”, “Premium Member” and similar factors, e.g. looking for a Lyoness merchant as the first choice. But most people will return back to their normal consumer behavior when that motivation starts to lose effect.
6. I will recommend you to re-think your idea. If you’re attracted to the income opportunity itself your own consumer role will only confuse you = you will neither make very rational consumer decisions nor rational investor decisions.
The ONLY rational decision for an investor is to recruit a downline (primarily other investors). An even more rational decision will be to avoid it completely, because of the “Bigger Fool” principles (“You will first need to become one yourself”).
7. Post #1112 contains some examples for where you can look at OTHER PEOPLE’s confusion, e.g. the “Dragon’s Den” video (and that can be found in the article “Lyoness’ Founder: It’s all about poistions”).
That will help you identify that there actually IS some confusion involved in this case.
@Dr
They’ve been saying this for over a decade now in Europe. Never happened and won’t happen in the US.
Lyoness has been released and operational in the US for some time now. But thanks for the comical prediction.
*sigh* why do you think people do this?
Wishful thinking.
http://skepdic.com/wishfulthinking.html
Wow, exhaustive reviews, All I want to say is I am a SME Merchant in North America. And a shopper. If you have not gone to a presentation, then you really should not give your thoughts on it, as it would not be factual.
I do not have to pay the outragious advertizing costs to newspapers, radio etc in hopes of return, as Lyoness sends thier members to me.
I do not pay a cent to Lyoness until thier shoppers have spend money in my store. As for the shopping end of Lyoness, I am happy to say it cost me nothing to join, and I get cash back on my purchases.
I do not have a yearly fee, nor have to buy into anything. Do not have a monthly shipment coming whether I want it or not.
Simply there is no minimum, if I shop at a loyalty merchant, I recieve cash back, if I don’t I won’t.
We all have to eat, buy gas, we take trips, buy clothing, why not get something back?
Why? Are Lyoness publicly misrepresenting their business model in their compensation plan material?
That’s great chief. Fact remains you can still join Lyoness, invest in AUs and not go anywhere near shopping or the merchant network.
Interesting fact you say, about investing in AU’s. You do not invest into anything, nor do you have to pre-purchase anything.
Some people get it, and obviously some don’t.
As for not going anywhere near shopping? Do you need to eat food? do you need fuel for your vehicle? and so on with our everyday needs.
Sit back and Think about your comments. I need to feed my family, and also need to drive places, so being that as it is, I choose to make my purchases from a Lyoness Merchant.
I join Lyoness, I pay deposit money with them and they pay me a specified ROI after enough new deposits have been made.
That’s an investment any way you look at it.
To invest in Lyoness? No, these things are not required to invest. All that is required is Lyoness affiliate membership and a deposit of money with the company.
Ignoring the Ponzi scheme side of the business does not negate it.
You heavily believe in the “Bigger Fool Theory”, as an idea everyone will need to follow to understand something? “People will need to go to a presentation, and first then they will be qualified to give their thoughts on it”.
And you are among those who have got it, or among those who haven’t?
Most other people will consider it to be an investment if you give your money to someone else, let them handle your money, and expect to get your “principal” back plus a ROI (Return On Investment) within a period of time.
We are mostly communicating with those “other people”, the ones who have some rational ideas about what an investment will be about. If you have other rational ideas then please define those ideas.
“THE EXPECTED OUTCOME”
The expected outcome of an investment should typically be “financial gains” for an investor. But unlike gambling, it is the expected outcome for most of the investors most of the time.
The expected outcome of a purchase should typically be a “non-monetary result” for a customer.
The expected outcome of a cash back solution is a discount type of “monetary result” = lower price for a product or service. That’s not an investment, it’s a part of normal trade practices.
The expected outcome of an AU down payment is typically about a “monetary result” of some type, it can both be about immediate results and future results (depending on your own and other people’s investments). That’s not a part of normal trade practices.
The expected outcome of a pyramid scheme is a ROI (Return on and of Investment) if enough other participants make similar investments after your own.
Lyoness is actually in conflict with your merchant role in some areas, unless there is an unlimited supply of money coming in to your customers’ accounts each time they spend some money, refilling their accounts with the same amount they have used.
The typical way to become a Premium Member is to purchase a $600 gift card and to make a $3,000 down payment. That might result in an immediate $600 purchase in your shop, but the customer will actually have $3,000 or $3,600 less to spend.
It doesn’t make much sense as a merchant to recommend any of the customers to spend their money on investments. The cash backs make some sense, but the investments don’t.
Recruiting people into income opportunities is NOT a part of “professional merchant behavior”. Recruiting customers to his own shop is, but recruiting participants to a third party investment opportunity isn’t. Lyoness is clearly in conflict with your rational motives as a merchant.
Then none of this should concern you, as this is about the “shopper/unit buyer” side of things.
Sounds like you’re accusing people “you don’t know what you’re talking about”, without giving any actual rebuttals about details being wrong, merely general accusations.
You then proceed to point out a few obvious facts that we never disputed, while ignoring the suspicious items (such as buying units to qualify for bigger payouts)
You are the perfect example of someone who has the Horatio Nelson symptom: putting the blind eye toward something they don’t want to see. (BTW, that story about ignoring the order to retreat is apocryphal, but it’s a good story)
If I may, K chang, No one needs to buy units to qualify for bigger payouts. I guess I did not explain it before but as a shopper units are created.
If people do a down payment units will be placed in several accounting categories. Again I only wish that Lyoness would stop the down payment part all together and only keep the creation of units through shopping.
Correct, but typically the shopping units are supplementary to AU units generated by investments by new and existing affiliates.
It’s been a decade now, they won’t do that. The AU unit investment scheme is the core of the business. Which, as I hope you can understand, makes it all the more nonsensical when we have a newly recruited Lyoness affiliate join the discussion and profess the legitimacy of the shopping network every few weeks to us.
So why have unit purchase at all, as it contributes NOTHING to shopping? Where does the money come from if it’s NOT from the merchants (which contributes the points when shopping units are created?)
Of course you don’t *have* to participate in the potentially illegal part… So WHY HAVE IT AT ALL?
So far the best explanation ANY ONE had come up with is “so it’s different from the competitors”, which makes absolutely no sense as you don’t pick a feature that’s potentially illegal as your “differentiator”.
Can you do better?
Hi Guys
Why do the units exist? they form the reward program for those who grow the membership through growing a network of shoppers the units represent the additional discounts over and above the 2% cashback that most merchants offer the membership.
Downpayments kickstart the programme but as stated many times before it is the shopping volume that sustains the the process. Premium membership level downpayments are not required to build a rewarding network of shoppers.
The business model is that a team of people will distribute the Lyoness card to the general public and are rewarded by the volume of units that result from the shopping.
This shopping is only beginning in most territories at present and therefore the network growers are still being recruited, For these people the main reward for the work of teaching people how to shop successfully is the comissions earned on units in the accounting programme.
If you dont teach people how to shop successfully and recruit uneducated premium team members you will have many unhappy people to answer to if you educate new entrants well and show them how to create 1 -3 units quickly and then to create a network of shoppers then you can look forward to a team of happy members.
This work is not suitable for typical MLM B usiness owners as they like to sell product, Lyoness is not about selling as you are simply giving people access to a card that earns discounts that reward those who are most active in building a team of people who shop significant amounts of their disposable income with Lyoness merchants.
So recruit Premium members if you wish but expect disappointed friends if they dont understand the importance of shopping, the roi is instantly satisfying but does not create a lifelong passive income which is the main purpose of becomming a Lyoness recommender. I have 180 in my lifeline only 2 of whom are premium members neither of whom I recommended to become premium members.
Lyoness is a toolbox of systems that each individual should look at to identify whether they are of benefit to their current situation or their future situation.
All business opportunities carry risk in my experience Lyoness comes with virtually no risk if you start your business correctly.
Regards Tim Murphy Lyoness Merchant Ireland
I’m amazed at how it’s been #1135 posts including this one and yet the exact same arguments for Lyoness are repeated again and again.
It’s been over a year since the original review and yet people still keep showing up, either ignoring the investment scheme or downplaying it to talk about shopping.
@Shark
Welcome to my world. I audibly groan everytime there’s a new comment left on this article after a few weeks of quiet. It’s guaranteed to be the same old “what about the shopping units and merchant network” talking points from Lyoness’ new affiliate brochures again and again.
Back when I first wrote about Lyoness it was mostly non-English speaking European countries, then the comments came from the US… now it appears Ireland is being targeted.
You can spin it anyway you want son. Why they exist is irrelevant, how they function is all that matters.
That being, I deposit a fixed sum with Lyoness and after a specified amount of fixed sums have been deposited after mine, Lyoness pay me a return greater than my initial fixed sum.
If the shopping volume is able to “sustain the process”, why have the AU investment scheme to begin with?
Nobody who has ever made any decent money in Lyoness has done so via the shopping network, it’s all in the AU investment scheme. As per Hubert Friedl himself, “positions, positions, positions!”
That’s one business model.
The other is to sign up, invest money in account units and then recruit others to do the same.
The idea is that you re-invest, and those affiliate investors that you’ve recruited re-invest and recruit their own investors.
Given enough time and enough recruited investors, the idea is that you’re left sitting at the top of a great big Ponzi scheme. Ultimately you want to be high enough that you can highfive Friedl personally.
And thus far from which group has the bulk of your income strictly via shopping units originated? And what about that of your downline?
You are but one affiliate. If you want to concentrate on the shopping network, more power to you. That in no way negates the AU investment scheme Lyoness are running.
Ponzi scheme participants do not care about “correctly”, they only care about their bottom line and what they can bank.
Welcome to the Lyoness reality chief.
Do customers in Ireland need to be taught “how to shop successfully”? You’re probably talking about something else here, e.g. “How to use the Lyoness system” or something like that?
We have pointed out the downpayments to be the main problem. It works very similar to an investment, e.g. the main motive for doing it is financial gains. And like you said, it will end up with a huge number of unhappy members.
We have asked some high level memberss in the US about their downlines. Michelle (Career Level 6) in post #589 had around 2,600 members total, all of them Premium Members.
You’re trying to present quite an opposite story, with only 2 Premium Members among 180 members total. Have Lyoness been marketed differently in Ireland than in other countries?
People from the US, Australia, Canada, Norway, Italy, Greece and some Eastern European countries have mostly presented different stories. Some MERCHANTS have of course preferred to recruit customers only, but people in their downlines have often grabbed the investment idea (if it is there, then people can also be expected to use it).
Some countries even have extended investment limits, e.g. you can invest $35,000 CAD directly in Canada if you want to.
But I can add your version of the story to the total picture, “one merchant in Ireland has primarily recruited customers rather than investors”. That clearly makes some sense from a professional viewpoint, so I have no problem believing in the story. The opposite idea (recruiting investors) should normally raise some red flags.
The cashback solutions will make some sense from a customer perspective. Recruiting other people into a downline makes less sense, the driving force for that is a different type of motive. Joining an investment opportunity (or recruiting other people into one) also make very little sense for a consumer.
Tim Murphy has probably used his brain as a merchant rather than as an income opportunity seeker. It will end up with many unhappy customers if a merchant primarily is recruiting investor types of members.
It’s not a professional behavior either. The focus in a merchant / customer relationship should be about the products and services. It’s unprofessional to try to recruit customers into third party “opportunities”.
A huge part of Lyoness’ program is simply in conflict with “normal merchant interests”.
I have no reason to disbelieve that part of his story. Even the 5 professional investors in “Dragon’s Den” pointed out something similar = they would not feel comfortable recommending the investment part to friends or business relations.
@Tim Murphy
I forgot to specify something in a question.
The typical marketing method used in other countries has been “Lyoness presentation meetings”, some type of mass meetings where trained presentators are presenting the opportunity and the cashback system. They will also answer questions from the audience.
Lyoness do also offer training courses for how to present the system. I didn’t ask about any details for those, but it was a formal requirement if anyone wanted to educate themselves for “Lyoness presentation meetings”.
I have also heard about the “merchant pack”, but I don’t remember the details there. It was something about a card reader, flyers and cards, primarily designed for merchants to market the cashback part of the program to customers.
If you’re primarily are using the last option and not the first one, then you will probably attract customer types of members rather than investor types. But then the system won’t generate much payouts either, compared to the amount 180 investors would have generated.
Hi Norway
Premium team membership is certainly still seen as the preferred way to recruit the leaders who will develop the network of both shoppers and merchants.
The understanding that in order for these downpayments to produce a long term passive income for the individual requires that an active shopping community be built in all territories is sometimes lost in my opinion, and therin lies a potential flaw, but the presentations do go to pains to explain this reality.
Because of the huge population in The US the mlm lists will take some time to be used up but its whether the networkers successfully build a community of shoppers that will decide whether Lyoness the Loyalty card for businesses world wide will thrive and be the boon to business and shoppers that it can be.
Because of Ireland small size the investment opportunists have been expired having failed to create the shopping community. It is now up to business owners to distribute the cards to their customers as a cashback card for use in multiple sectors and across borders.
It is in that capacity that I operate and I will require a reward for doing this work. I understand that it is through the commission’s that I earn on the units that I have created via my original downpayment and the subsequent 80 odd units that have been created by my shopping through fellow lyoness merchants, that I will receive this reward.
This in my view is where the accounting programme is crucial to the success of growing the Lyoness Loyalty Card, A loyalty Card must offer a rewards programme! why else would consumers offer their loyalty to a select number of businesses over other businesses.
I hope this is helpful
Best regards Tim Murphy Lyoness Loyalty merchant Riva Brasserie Dundalk Co Louth Rep of Ireland
@Tim
After a decade, it’s still possible to sign up as a Lyoness affiliate in Austria and invest in AUs.
This is still how the bulk of revenue commissions wise is made there. It is the same globally in any country Lyoness operate.
Lyoness’ CEO privately admitted to Belgian affiliates only a few years ago that the business is, and I quote, “all about the positions”.
The myth that the shopping network will become relevant is just that. It cannot when it is far more financially rewarding to sign up an equal number of new investors over shoppers.
You can attempt to justify this however you want to yourself, however if you think Lyoness will ever abolish their AU investment scheme you’re deluding yourself.
Again, if you’re focusing on shoppers then more power to you. That in no way negates the Ponzi scheme aspect of the business. Without which there wouldn’t be a Lyoness shopping network.
Discount based reward programme, or recruitment based?
A consumer should normally not offer loyalty to a merchant. Consumers should normally be completely independent from the merchants, and shop where they can find the best offer. And “best offer” is about price, discount, quality and service, not about recruitment rewards.
“Loyalty” is a problem rather than a solution to fair market conditions. It will meet some needs for an individual merchant, but it won’t meet the needs in a market.
“Best offer” should typically be about what you legally can offer as a merchant. The AU system is probably a type of investment. The recruitment system isn’t among “fair trade practices”, it’s actually point #14 in the 31 points “black list” for unfair trade practices.
If in doubt, you should preferrably get an answer from the correct authority, whether the system is legal or illegal. “Correct authority” is typically the Consumer Protection authority, and it will get answers from other authorities if needed (it’s potentially an investment system involved here).
BTW, Lyoness is a third party service. Why do you care about growing a third party service that potentially can cause trouble for you?
Lyoness is outside your own control = you can’t make corrections to it and solve problems if the solution is causing any trouble among customers you have recruited.
As a side note, a Court in Kerala, India banned Amway just recently for operating a pyramid scheme style of business. The laws are different, but the logic from the Judge was something like this …
“The company is the cause of this problem itself, by offering more rewards for recruitment of new participants than for sale of goods or services to end users.
It will need to adjust its plans so it can operate legally within the laws of this country, rather than expecting the laws to be adjusted to fit its own business needs.”
The Judge in Kerala has told you the general idea for what people expect from you as a business man. They do not care about your profit or whether or not you feel a system works for you.
They expect you to operate professionally as a business man. Recruiting consumers into third party “systems” isn’t exactly “professionally” if you haven’t checked it properly.
Hi Oz
I can only view this from my perspective and I know that I will never need to make down payments into the future but I have the capacity to add 80 – 100 new units annually as I have for the past 18 months from discounts received from both my personal shopping and the shopping of my business.
This is true of even people like yourself if you decide to seek out lyoness discount.
The fact that 350,000,000 people world wide can potentially be the size of the membership as SME’s give away free cards to their customers.
They will then have a choice of many stores from whom to collect discounts, “IF” THE PREMIUM TEAM MEMBERS have done their job of introducing SME’S and committed shoppers to the community DURING THIS ROLL OUT PHASE.
By the time all the global markets mature less than 1% of the lyoness community will be premium members who have made downpayments.
By then the volume of unit created from shopping will dwarf those created from down payment I Accept that in this roll out phase Lyoness appeals to the quick buck return from an investment types, but the job a premium team member is signing up to is the task of teaching people to shop effectively within the lyoness loyalty partner network and to seek out and support new SME’s for the community.
When this is carried out and understood we all as consumers will have a way to leverage out disposable income to create savings for our future. If premium members just recruit investors then there is no future for Lyoness.
As a merchant I know that Lyoness can be be a most powerful loyalty programme but only if the big picture is worked towards.
I accept OZ that you believe this to be poppycock but as a shop owner I can see where this gives the small merchant an opportunity to tap in to the spend with the retail giants that have decimated the SME footprint in all developed markets.
So happy shopping everyone
Tim
@Tim this is a company that’s a decade old. It’s not new and there’s never going to be any “maturing”. The fact of the matter is Lyoness don’t have one market where shopping trumps direct AU investment revenue.
This is as good as it gets. As Lyoness hop into one region from another eventually they’ll run out of new investor markets.
You might be able to ignore Lyoness’ CEO himself proclaiming the importance of AU positions but that in the end pretty much sums up the opportunity for me. The Lyoness compensation plan is rotten from the inside.
Your position is illogical. Lyoness’s shopping rewards program has NOTHING to do with the ability to purchase accounting units. Buying accounting units bypasses shopping altogether.
@Tim
Did you read my post about “loyalty” and “best offer”? That should normally make some sense for a merchant, if he use his brain rather than his feelings about something.
As a merchant, you should also be able to terminate agreements with third parties, rather than being completely dependant on them.
Even a merchant should be able to choose “the best offer” in a market, and be able to choose new “best offers” whenever the situation require it. Unless of course if you’re operating a franchise type of business, and are bound by an agreement.
Yes K. Chang, you can buy accounting units. You and your mate Oz have been going on and on about the same thing for over a year. So what if you can buy units units. What is the problem? How does this give an unfair advantage to a member?
I say it’s actually a disadvantage but you seem to know everything about Lyoness. Tell us how this is a problem. I know the answer but share with us what you know and I’ll tell everybody how you’re wrong.
Here’s your moment of truth. Tell us what the issue is around buying accounting units and I will explain why you’re wrong.
Oh dear god…
Yeah, clearly.
If you’re going to trumpet off the company approved marketing sales pitch at least have the decency to read the 1000 plus comment discussion here before doing so. That way you don’t ask silly questions and waste everybody’s time.
As you decided to skip the whole article and 1000+ comments on the problems, I don’t have to treat you seriously at all, as you clearly have your blinders on toward things you don’t want to see.
But I will, but I have a feeling you won’t read it.
“Buying your way to rewards” is called a PYRAMID SCHEME, esp. when other members can do the SAME THING.
Next question?
It doesn’t, but recruiting other members doing the same does.
It makes absolutely no sense for a consumer to make multiple down payments towards future purchases of gift cards or products, or to spend their money on purchasing units in a system.
It makes SOME sense if the units in the system are about ADDITIONAL discounts from merchants, e.g. if the units can be used as partial payments for future purchases, e.g. if each unit in AC1 holds a $75 value that can be used for shopping at any given moment (each of them holding the value of $75 towards a $5,250 purchase).
For the AC system to make any sense, you will need to involve other motives than consumer motives. The AC system will first of all reward you for introducing other investors or consumers into the system. That’s the PRIMARY function of it, 9 out of 10 parts of the compensation plan revolves around recruitment directly or indirectly.
You’re right, it doesn’t make any sense for a consumer to invest in Accounting Units. However, it makes some sense for participants in a pyramid scheme as “seeding money” for the first 3 matrices, e.g. to prevent anyone in your downline from bypassing you in the system and enter a new matrix before yourself.
I have already analysed and answered it several times in this thread. The down payments will ONLY make sense for participants in a pyramid scheme.
“Tell us how this is a problem.”
Pyramid schemes will typically attract vulnerable group of people, e.g. small merchants without the insight needed to understand what it is about, or inexperienced consumers believing “the system” will generate money for them.
Pyramid schemes won’t create much value on their own, other than experience. They’re simply about redistribution of money among participants, from the bottom to the top.
“I know the answer but share with us what you know and I’ll tell everybody how you’re wrong.”
Just start with “You’re wrong because …” and fill in all the details you want, but try to cover my points too. And try to avoid constructed and hypothetical theories if they don’t reflect the reality.
This whole conversation seems to evolve around the definition of a Pyramid scheme. I have looked it up and you can find a dozen different definitions on it.
It seems to me that it is a debate that neither side can win.
If this was to go to court and (I know of the past Lyoness court trials which have been settled and the arguments of the trial had nothing to do with this topic PYRAMID SCHEMES).
Oz makes some theoretical good points, but none of them apply to modern day life. There is enough difference to other people to make it not a pyramid scheme.
Still a decent blog and lots of facts here, but not enough to clearly make a case either way.
JB
Eric Breiteneder used plain and simple consumer protection logic, rather than complicated to prove pyramid scheme logic.
He used the logic “Lyoness hasn’t delivered what it promised to deliver during its marketing campaign”, and proved his point. Lyoness has settled the cases with 100% money back to consumers and 75% money back to business owners.
His main goal was to win or settle the case for his clients, not to prove anything about Lyoness in general. He’s a lawyer, not a government agency. So WHAT those cases were about doesn’t prove anything other than which TYPES of laws to be used.
Feel free to explain? “Enough difference” is a rather vague explanation, it sounds more like a “belief system” than some rational ideas.
It should typically start with “Lyoness is not a promotional pyramid because …”, and preferrably identify what a promotional pyramid is so we can see the difference.
Thank you for agreeing with me that the court cases was not involving Pyramid Schemes.
First you must establish what definition you are going to use when saying Lyoness is a Pyramid scheme. Only at this point could you start a proper debate on Lyoness if it is a pyramid scheme or not.
Perhaps you can start with “Lyoness is a promotional pyramid scheme based on this defination…___________.
I have read most of the above posts and none really get into the technical part of Lyoness to show by the numbers that Lyoness is a pyramid scheme. I believe if you are going to debate the accounting program or AU part, than using actually numbers could prove Lyoness can not sustain itself in the long term.
But to do any of this lets get a definition of PONZI OR PYRAMID SCHEME!
JB
@Jordon
Here’s one:
Invest money with Lyoness. Recruit new investors to do the same. Once a set number of new investments have been made you get cash.
It’s a Ponzi because you’re being paid with new investor money and has a pyramid aspect because new recruits are required to invest in new units.
This is how every top earner in Lyoness makes money and should be the focus of every Lyoness affiliate, as per Hubert Friedl himself.
As with any Ponzi scheme it’s sustainable only as long as new investors enter the scheme. Hundreds of thousands of dollars in shopping can move the units along, but the fact remains that comparing shopping to investing it’s always far more profitable to have recruited affiliates invest.
That’s why the whole “what about the shopping” argument falls flat on its face.
Hi Oz,
I am sorry Oz but know where in your comments was a clear definition of a Ponzi Scheme. I would like to use some sort of definition so could we use the wikipedia definition of a ponzi scheme, and debate from there?
And if not you may reference a site for a definition of a ponzi scheme.
I am a Lyoness shopper, My friend is a premium member, I do not want to become a premium member because of my own personal reasons. So, I don’t really care either way. I mentioned this site to him and he read it, and of course he did not agree with it. But I told him you must open your mind because if what OZ says it’s true could be one the biggest world wide ponzi scheme’s collapses ever.
@Jordon
Well, as they say you can lead a horse to water…
A Ponzi scheme, at its simplest, is the investment of money and a return paid out of newly invested money. Or in other words, Lyoness’ core business model.
I’m not surprised. Although you’ve taken a different opening approach, I can see this conversation boiling down to a useless “but what about the shopping? Haha see it’s not a Ponzi scheme!” waste of time.
If you have to convince someone to “open their mind” to accept facts, they’re a lost cause. The same reasoning is used to discard facts and convince people Ponzi schemes aren’t as such.
The Lyoness business model accepts new investments from affiliates and guarantees a >100% cash ROI after enough new investments have been made. Everything external to that core mechanic is irrelevant, with said core mechanic being identifiable as a Ponzi scheme in nature.
You’re welcome to go off on a quest to learn what the definition of Ponzi schemes are and their origins etc, I have no interest in doing so. A Ponzi scheme is not some great mystery whose definition needs to be debated, it’s a very simple to grasp.
That’s why I asked you to be more specific, rather than using the vague explanation “enough difference” and “in modern day life”.
1. Chain recruitment system
2. where participants “gives consideration”
3. for prospected financial gains
4. that derives primarily from other participants
5. rather than from sale/consumption of goods/services.
Point #5 is simply about fair trade exceptions, e.g. to separate traditional pyramids / promotional pyramids / MLM. “Gives consideration” is about ANY type of payment of some significance, directly or indirectly, including work.
The promotional pyramid definitions belong under Civil laws / Commercial laws / Consumer Protection laws –> sections “misleading actions” / “misleading omissions” (where you will find other definitions).
“Hierarchy” means you can test an actual case against the definitions themselves and against “parent rules” found higher up in the system. You will also need to test it against rules with similar rank in the system, e.g. “fair trade” or “the right to be compensated for work”.
Paying people for recruitment can simply be about fair exchange of values (paying for work or expenses). Sales to a downline can simply be about fair trade.
There you have the answer for why he choosed simple rules rather than complicated ones. “Misleading marketing” / “breach of contract” is much easier to prove than complicated pyramid scheme definitions.
A good lawyer will often try to simplify a case, making it more possible to resolve inside court or outside court. The opposite strategy can also be used, e.g. making your opponent’s case difficult to win.
In Lyoness, 1 out of 10 points in the compensation plan will reward you for your own purchases = the cash backs. The other 9 points will reward you primarily or solely for recruitment of other participants.
Then someone will have to bring in some actual numbers from Lyoness itself?
That’s why I said it sounded much more like a “belief system” than rational ideas when you posted your arguments about “in modern day life” and “enough difference”.
* Rational people will identify the information they HAVE available, analyse it and draw conclusions.
* True believers will focus mostly on the information they DON’T HAVE, and use it to support what they WANT to believe in.
There are almost as many variations of what constitutes “A” pyramid or ponzi scheme as there are schemes themselves.
It’s a continual cat-and-mouse game between the authorities and those prepared to push the boundaries.
I would point you to the 1998:
here: http://www.ftc.gov/speeches/other/dvimf16.shtm
In which Ms Valentine states:
and
A Ponzi scheme is simply a fraudulent investment plan, but it doesn’t need to be about typical “investments”. “Work opportunities” are much more common model than investments.
“Fraudulent” is because people are led to believe that the investments they’re making actually will produce / do produce positive ROI (through profitable business activities, profitable investments), but the plan is simply shuffling money around in the system typically from new investors to old investors, with little or no “profitable activities”.
Lyoness is probably a pyramid/Ponzi hybrid. It generates payouts solely from investments in parts of the program. If you consider the AU units to be a principal investment, Lyoness use the money coming in from new investors to pay the old ones.
E.G.:
2 investors investing in 5 AC1 units each will generate a 5/5 payout for someone in their upline. It will also generate payouts in other parts of the compensation plan, typically higher up in the upline.
The money paid out to the upline derives from the investors themselves, not from any “profitable business activities”.
A group of investors in the same downline may invest
$5,250 in 70 AC1 units, and generate several payouts higher up in the system.
* $198 in 3/3 5/5 etc.
* 675 Loyalty Credits maturity payout (can be reinvested)
* total 70 * $4.50 = $315 Career Level payouts
* 25% friendship bonuses (18.75% and 6.25% of $198) = $49.50
All in all, the $5,250 investment generates immediate payouts of $1,200 – $1,250, in the parts I have been able to identify here, solely from the investments alone.
But the system doesn’t make much sense as a Ponzi scheme if you don’t recruit anyone. The profit will go to your upline rather than to yourself. Your upline will get a positive ROI, while your ROI will be negative.
There is no investment plan . Only shopping. If you understood that all your review is nonsense. You not able to buy AU in reality you buy gift card or voucher( products) . If your downline do the same you receive ROI.
I pay Lyoness money, Lyoness pay me more money than I paid them if enough new payments of money are made to them.
Rightio chief.
Why the Wikipedia definition is not clear enough for you? Let me simplify that for you.
* You put in money
* You were told that you can get WAY-ABOVE-MARKET rates back through some sort of unexplained or misrepresented method
* In reality you only get that money if more people put in money (just like you you did)
As Oz said, if you prefer NOT to look at the potentially illegal part, i.e. purchase of units, with whining like “But you don’t *have* to purchase any units”, then that’s known as “selective hearing” or “turning a blind eye”, or perhaps “willfully ignorant”.
What do you get when you buy an accounting unit from Lyoness?
Not shopping. Merely PROMISE of future ROI… IF your downlines also buy or generate accounting units.
You don’t consider that investment? Since you yourself no longer have to do anything?
Your “rebuttal” is nonsense.
Wrong. You “make down payment” on gift card was the official explanation. You don’t actually receive anything until OTHER people generate units (either through direct purchase [fast] or shopping [very very slow])
You just said “it’s not investment”. How can you receive ROI , or “return on investment” if it’s not investment?
You can’t even keep your own story straight, man.
To become a Premium Member, there’s 3 methods that can be used.
1. Buy a $600 giftcard and make $3,000 down payment
2. Shop for $15,000 at Lyoness merchants, buy a $300 giftcard, make $1,500 down payment.
3. Shop for $30,000 at Lyoness merchants
Some countries may have stopped the recruitment of Premium members, but I’m pretty sure they still have down payments.
For a $3,000 downpayment you will get 13 AU in return,
7 units in AC1, 7 * $75 = $525,
3 units in AC2, 3 * 225 = $675,
3 units in AC3, 3 * 600 = $1800
In Canada, you can invest even more, I have seen people been invited to invest up to 10 times the amount as an initial investment. Look at the “Dragon’s Den” video in one of the articles here?
BTW, vouchers and gift certificates are NOT “products” in MLM. A product sale is about a fullfilled sale, a bona fide sale to end user. A downpayment towards a giftcard is definitively not a fulfilled sale.
Just for everyone’s info and the author of this article.
1) If Lyoness was a PONZI Scheme, one of the worlds LARGEST PROFESSIONAL GOLF TOURNAMENTS would not have it as the primary sponsor for the last 4 years.
2) To help the author and everyone else to understand it a little more, Lyoness operates on a NEGOTIATED CASH BACK for the retailers of a minimum of 4%. So in addition to the initial setup fee and monthly payment charged to the merchant, EVERY PURCHASE has 4$ of the price being paid back to LYONESS.
EXAMPLE:
-John Smith buys $100 dollars at a partner store.
-Partner store is at the minimum of 4% CB
-2% is what is then paid out in commissions/AC units
-The remaining 2% is then retained by LYONESS and used for the company profits and charity events….of which they have MANY.
Apparently, the author was impatient to actually get that information for someone actually IN LYONESS. Yes, putting money in speeds up your returns, however, the company make (my personal estimate) at least 20-50 times more than the “down payments’ made into LYONESS
Here we go again…
Please don’t try to legitimise a Ponzi scheme using the name of third-party companies.
Retailers have nothing to do with affiliates investing in accounting units, getting others to do the same and receiving a cash ROI once enough new investments have been made.
Lyoness’ own compensation plan isn’t from Lyoness? Oh dear, I seem to be in a bit of a pickle then. Good thing you showed up.
Right. So we’re going to dismiss the fact that every top earner in Lyoness has invested in AUs and convinced other affiliates to do the same, and replace it with your “personal opinion” – which is based on…
Yeah. Good luck with that champ.
And there we have it.
Thankyou, come again.
This blog should be dead by now, as Lyoness is clearly a fraudulent operation. Yet people kept chiming in to defend it, only to disappear after Oz, Chang, and Norway totally dismantled their vague arguments.
Nonetheless, it is amusing to see pro-Lyoness people keep trying to defend the scam and appeal to other senses that’s not logic. He he.
Troy Dooly has posted the first of a three part look at Lyoness over at MLMHelpDesk.
I have to admit I never took the time to dig into this one, just couldn’t keep my eyes from glazing over when trying to read the comp plan. That being said deliberately over complicated plans almost always mean they’re hiding something.
Troy’s report is a follow up from a post he made a few months back when an unnamed industry consultant offer some criticism of the company. Troy met with company officials who offered something of a point for point rebuttal. It looks very much to me like the responses were frequently overly literal seizing on a technical issue while evading the larger point of the critique.
Again, I don’t have my ducks in a row when it comes to Lyoness but perhaps someone who does can give Troy some feedback.
I read that lawyer spin he put up today… holy crap the amount of “not required”, “can”, “optional” and “is supposed to” BS was incredible. Then they still just totally ignore the fact that you can invest in AUs and get paid a cash ROI when enough new investments in AUs at the same level have been made.
Who cares what terminology they use, the above is precisely how the AU investment scheme works and is at the core of Lyoness’ problems.
So glad I’m not the YouTube face of MLM blogging, there’s no way known I’d be able to sit quietly through a day and bit of lawyer BS spin.
Guys this is supposed to be a discussion, so called pro Lyoness people to which I belong have not had their arguments dismantled they just have a life beyond This discussion which fortunately for Oz Chang and Norway doesn’t seem to be the case.
I accept they believe they are correct in their arguments but Lyoness is simply a business model that can work if you wish it to, but if you do not pursue the shopping discounts that it offers it wont no big deal.
No one should make significant down payments without understanding how to put these to work end of story its no be=ig conspiracy so settle down everyone and have some fun with it
There is no argument, only facts:
I pay Lyoness money, once enough new payments have been made by other affiliates I get cash.
Wash, rinse, repeat.
“big” conspiracy I meant there of course
You’ll need to do better than this, logan. Allen Stanford of the Stanford Financial Group was sponsoring golf (and other sports) while he was conducting the massive Ponzi swindle that led to his 110-year prison sentence:
http://golfweek.com/news/2012/mar/06/title-sponsor-turned-con-man-faces-prison/
PPBlog
I posted a comment there. When people are extremely focused on small details, I prefer to use the opposite strategy, focus on the important parts rather than the details.
Disquss isn’t a very user friendly system. My post was normally formatted with one extra Line feed between the paragraphs, but Disquss seems to ignore that.
I didn’t spend too much time on it. I focused on the main aspects rather than the details, and tried to give a quick overview.
My family has been doing Lyoness for a few years now. As an ex-pro Lyoness guy I’m gonna give my 2 cents.
After reading through this thread and others around the internet, it finally dawned on me that we are all being played. I was always skeptical but couldn’t quite pinpoint the obvious flaw and that was because it wasn’t in effect yet.
Everything works fine in theory, but when it comes to practice the whole thing crumbles down like a house of cards.
It sounds great at first. A few hundred/thousand people (business partners) start up a new country by bringing in the SMEs, they in turn give out cards to bring in the consumers and the BPs cash in on their “investment”. So where is the problem you may ask?
The problem lies in the fact that the system is 100% based on down payments. As Oz has said, the shopping part is just a genius smokescreen to cover up the pyramid scheme. Even in countries well in the 3rd phase (see Austria) people can still sign up as BPs. This should be a huge red flag.
Furthermore, there are absolutely no provisions to guarantee a viable 3rd phase anywhere. When it comes to the last and most important part of the business plan, the mass entrance of the regular consumers, nothing seems to work and for a good reason. There are no incentives for a regular member to use Lyoness while shopping.
Realistically they only receive the 2% cashback, which is hardly worth their time. This brings us to the next problem, which is the sheer difficulty in using Lyoness as a shopper. You have to sign up, go online and set up your profile, add your bank account, deposit money into Lyoness’ bank account and wait for them to process it into your online account, order gift cards, wait for them to come through the mail and finally go out and use them.
Yes you can also use your card in small stores but let’s face it, the most prestigious partners are big corporations that only work with gift cards.
So let’s recap. Imagine you are a regular shopper, you got a free card and you haven’t recruited anyone. What’s your incentive for using this card? 2% cashback. The remaining discount that goes into your units is forever lost and will only benefit an active recruiter in your upline.
You will NEVER have a unit mature without recruiting others. So I ask you this, who in their right mind would ever bother using the Lyoness card while shopping?
I’ll tell you who. The business partners. They are the one and only demographic that produces anything in the system. They use their cards because they are invested in the company and know the extremely complicated and confusing system.
I saw someone mention that 99.x% of units in the system are from downpayments instead of being created through shopping. Although I don’t know the source of this information, I can’t help but think how accurate it must be.
So there you have it. Since the beginning you have all been waiting for the big boom, the influx of thousands of consumers that will finally push you in the black, but now you see that they were never meant to be…. It was just an illusion.
So my question to Oz and co is this. Is there a clear procedure for someone to extract their “investment” back from Lyoness and how easy is it? (in the US) I’ve signed up numerous friends and family and I want to make things right.
I have posted another comment on MlmHelpdesk. Here’s a link to that article and thread.
http://mlmhelpdesk.com/lyoness-usa-responds-to-accusations-of-violations-to-ponzi-pyramid-business-opportunity-and-security-regulations-pt-1/
My comments there were actually nicely formatted with linefeeds (ENTER) both times, but Disquss doesn’t seem to accept that. I even tried ENTER ENTER ENTER the second time.
@Nagash
Other than approaching the company directly I’m not sure what else can be done. The money was handed over as per the Lyoness affiliate agreement, so I’d also go over that.
The only other thing I can think of would be to check your own state’s refund laws and see if there’s any remedy there.
wow nagash your statement is all incorrect…i created my first unit from shopping within about 6 months…
And I wonder how many invested AUs were created in that time…
you can shop it off…all you have to do is tell Lyoness to put all loyalty benefits towards your accounting units, so as you accumulate towards $75.00 unit it will give you $75.00 cash back into your bank account instead of creating units.
depending how much you spend in a month you can get your money back in about 10-15 years of shopping.
I was thinking more of a “better call Saul” kinda way. I know people have had success in Austria.
I’ve created over 30 units myself, but try reading what I actually wrote before you spam your irrelevant idiocy. My point was that AFTER you create your first unit, how long will it take you to get 70 (35+35) more units to follow it? If you never sign anyone up, the answer is never.
You are either a good troll or a lost cause.
Better call Saul??? Well I suppose you could don a black fedora and march into Lyoness HQ.
Keep us posted!
I have to disagree with everything you wrote Nagash. I would have over 30 quotes because of your inaccuracies references to the statement you made.
I will if the moderator let me write them. After reading what you wrote you have no clue to how Lyoness works, other than spectulation. I am merchant and a member.
The injustice done to Lyoness is by people who make exaggerated claims to how much money they can make. Because of these people, Lyoness office will now call up the new member to make sure they fully understand what they are getting into.
So far i have 68 people registered and i have them all shopping. i only have 1 premiere member who is struggling but I am helping him by signing new members under his life line, also meeting with his potential members. All this is irrelevant to the current blog.
This blog is about the accounting units, and how the purchasing and the recruiting seems like a ponzi scheme, which it is not.
Feel free to disprove all of my comments in as many quotes as you wish. I’m waiting.
Slight correction. The answer is probably “practically never” if none of those you sign up buy any units directly. It takes months to generate one unit, much less 35+35.
We did the same with ZeekRewards, focused on the Ponzi scheme rather than the penny auction. It’s actually the best way to do it. Those who did it the other way got burned (they lost reputation).
We do the same for TelexFree, focusing on the investments in AdCentrals and Family Packs rather than on the VOIP service. People are getting frustrated there too, “Why don’t you focus on the VOIP service? TelexFree does actually HAVE a product we can sell. TelexFree is CHANGING LIVES!”.
We did the same for JubiRev. And for Better Living Global Marketing. We’re trying to identify the most significant parts of programs, it will be misleading if we start to describe ZeekRewards as “the Unique Bid Auction niche”, or if we describe Lyoness as “the Shopping Community niche”.
There shouldn’t be any problem as long as you and others are allowed to tell other versions of the same story, i.e. that you CAN primarily or solely sign up shoppers. You will only meet resistance if you’re trying to present it as “the real story”, that Lyoness primarily is about people signing up shoppers.
Scroll to the top of this article.
Click on “Lyoness” (under the headline).
* It will bring up a list for all Lyoness articles.
Click on the “It’s all about positions” article.
* Watch the “Dragon’s Den” video (from 25 minutes)
* Watch the “ORF Report” video (English subtitles)
That method will tell you something about where your own “perceived reality” fails, where it isn’t reflected in other parts of the program. It may be real for you, but it surely isn’t what other people see.
I have read most of the other viewpoints and accepted some of them, but I have rejected some stories too. I accepted one of the merchant stories from Ireland just recently (a few weeks ago). The stories I have rejected have been about missing facts or flawed logics, e.g. people putting up imaginary examples rather than telling the truth.
(post #1168)
I have identified it in a similar way, independently (going through different stages of denial, anger, sorrow etc. before I finally accepted the reality).
I have posted around 10 comments there in 2 days, some of them waiting for moderation.
In the first 5 comments I mostly focused on posting some basic info, to give readers in general quick overviews for what the case is about.
* I TRIED to give a quick overview for the compensation plan, mostly for the purpose of pointing out the money stream in the system and how it was dependant on recruitment.
* I TRIED to do the same for the AC system. I have backed both these points up with a link to an article here, the one where the system is explained in a webinar.
* Link to the article with “Dragon’s Den” and the “OFR Report” videos.
* I also looked into a couple of details in the article, just to have started it. It didn’t take long time before I decided to WAIT until all 3 of them have been published. Lyoness defense system is simply FILLED with vague BS.
* I posted a few comments today too, mostly reply to Troy Dooly. I also asked a question directed towards Lyoness’ lawyers about their description.
From my viewpoint, there’s no need for specialised legal knowledge or any detailed knowledge about Lyoness. I handled their “carefully selected legal defense” in a similar way as I would have handled marketing BS = I looked for where it was “leading and misleading”, where there was a lack of legal conclusions.
I will NOT post MANY comments there, I will try to keep it within the main areas for what’s important in the case.
They didn’t have a legal defense, AFAIS. It’s all marketing BS and nitpicking “There is no profit center” My ***. You just call them accounting units, blah blah blah.
They had something that looked like it, but it also looked like marketing BS. It has probably been heavily influenced by the marketing team. It’s probably written by a CMO, but reviewed and corrected by a lawyer. They have probably also got a “Defense types you can use” list from a lawyer (or from a book).
My first response was “They had an awful LONG response to each and every point”. I didn’t even READ it before I posted my first comment
It is one of the worst planned defense strategies I have ever seen, but it may work in some ways, e.g. friendly people can actually BELIEVE in it, or people can lose interest and ASSUME they have put up a great defense system without trying to analyse it themselves.
GilmDropper identified it quite correctly.
It isn’t worth spending too much time on, other than maybe a few key areas. I identified a few of them.
FYI: Lyoness receives the cards loaded. The Gas card can be reloaded otherwise all the gift cards must be repurchased. when the denomination is spent.
You can log into Lyoness web office and reload the gas card by entering the number on the back of the giftcard. The other big chains do not offer this option.
In Canada we have resellers now. For example Lyoness members can come to my restaurant and buy gift cards for the big chains. The gift cards that I receive to resell are already loaded and live ready to use.
I must enter the lyoness membership number to match the gift card number and just like that the lyoness customer gets his cash back and loyalty bonus no waiting for your cards in the mail.
I was not talking about reloadable cards.
Do you actually pay “full price minus sales margin” for them, just like you do with any other products?
For instance, if you buy 50 gift cards with a face value of $100 each, and your retail discount is 20%:
$100 * 50 = $5,000 (full price)
$5,000 * 20% = $1,000 (your discount)
$5,000 – $1,000 = $4,000 (net wholesale price)
Do you actually pay the net wholesale price to Lyoness, in a similar way as my example but not necessarily exactly the same? Do you pay when you RECEIVE the cards, not when you SELL them?
1. What TYPE of gift card is that about, e.g. Lyoness’ own gift cards or from a third party?
2. Which third party?
3. Are you sure you’re not mixing it up a little, e.g. that you’re using Lyoness’ software to register the sale of the card?
4. Would it make any difference for you if you could pay for the individual gift card when it was SOLD (when the customer pays for it), rather than when you’re receiving the gift cards in wholesale? If you could activate the gift card at the time when it’s being SOLD, rather than receiveing it already activated.
5. Are you aware of that most gift cards actually are sold as described under point #4? They are sold as empty plastic cards. The same goes for cell phone loading cards (if people have a prepaid subscription). If people steal the cards from a retailer, they will only get empty plastic cards rather than “valuables”.
Activisation of a card can either be done automatically by scanning the bar codes (the “group picture from some hunger disaster”), or by entering the card number manually when a card is sold through a shop. It can also be done by the customer himself AFTER a card has been paid for (e.g. if the card has been sent by mail, businesses will usually not send “valuables” in mail if they can avoid it).
I have only seen it been done in a shop, manually by entering the card number or another printed code.
When I want to refill my prepaid cell phone, I can either pay for a plastic card in a shop, reload it directly from an ATM, log into my cell phone provider account and refill it from there. They also have other similar payment services, e.g. SMS.
* the plastic card bought from the shop isn’t preloaded
* the plastic card isn’t a product in itself
I’m actually paying for my cell phone use. The prepaid cell phone subscription is actually a type of gift card in itself. The plastic card is simply a “temporarily container for information”. It contains an activisation code, not money.
* The activisation code won’t work before the sale is registered through the payment system in the shop.
* My cell phone subscription won’t be refilled automatically, I will need to refill it manually by entering the REGISTERED activisation code through an SMS. I will receive an SMS in return “Your subbscription has been refilled by $amount, your current saldo is $amount”.
I have posted a new comment on MlmHelpdesk, trying to logically define the main problem.
I have used a method identifiable for a lawyer, using a point system and logical system relatively similar to what they can find in written laws, Court orders and other legal sources. Similar to but not exactly the same.
The resellers pays full price for the cards. He sells the gift card to the Lyoness member for full price. Once the 2 transactions are complete the cashback and loyality beneifts and friendship bonus are paid out.
The gift cards involved are actually live cards that you could possible purchase from the merchant.
There is no activation involved at all.
Yes I am aware that most gift cards are activated when you purchase them at ex. 7-eleven.
The only weakness in Lyoness regarding the law is purchase of units. Lyoness has made enough changes to the compensation plan to make it legal.
The last few changes were as follows, you must purchase $300.00-$600.00 in gift cards when making down payments which triggers shopping. also the units created must also be shopped when matured. The upline only benifits when you have spent the new found money.
The other difference they made to protect the new lyoness member is after registering as a premium member they get a follow up interview with a Lyoness agent review your purchase and to make sure you fully understand what you are getting into.
What happens at this point the new member can cancel the membership and the upline will have to go revisit the new member and explain lyoness better to him.
The flaw in Lyoness is that you get peeps projecting all these ridiculous exaggerated numbers on how much money you can possible make, when in fact it’s hard work recruiting, educating, and spending your own time on new members.
Lyoness is aware of this abuse has progressed to this point with the follow up call to the new member as well LYoness agent will make a call to upline to explain to him what he did wrong.
I know if this ever did go to some sort of court, the judge will force lyoness to modify there compensation plan which lyoness will do and continue on there business to be the #1 cashback mlm in the world.
Also please do not use the courts in austria or the stupid dragons den video which have nothing to do with the blog.
You have been TOLD that it is so by Lyoness, or do you actually KNOW it works that way? There’s a major difference there.
Most gift cards and other “containers for information” will first generate transactions when they are sold to an end user. Until then, they’re simply “empty containers” of no significant value.
“Cards” for loading pre paid cell phone are stored in a “campaign rack” in one of the stores I used to buy groceries in, e.g. “pick the card you want, get 15% extra reload amount”.
For you as a merchant it should be rather important WHEN you will have to pay for the cards. You simply can’t afford having money tied up in “products” (more than what reasonably can be expected to be sold within reasonable time). It will simply drain you for profit (the money should be used to pay off debt, or something similar).
When the normal way to pay for gift cards is when they are SOLD to end users, doing it differently won’t solve anything.
The cards won’t become “products” in that way, they will still be “empty containers” (they are filled, but completely unneeded from a business perspective). The main motive for using a method like that seems to be about being able to defend them as “products”. That’s not a professional business motive, and it will not work as a defense argument.
I can fill in more details for WHY it won’t work as a legal defense, but a short version is that regulators and courts use “normal definitions” (“average consumer”, etc.).
If a group has clearly identifiable characteristics, e.g. “elderly consumers” or “children under the age of 15”, the definitions will be adjusted for that specific groups. Both examples are “vulnerable groups of consumers”, with special definitions for “normality”.
The method won’t hold in court as a legal defense, so there’s no logical reason for using it. It’s simply an irrational way to try to bend the rules.
Legal actions (regulatory, Court) are about realities, not about constructed law theories. The reality here is that you have accepted a very irrational method. As a merchant, you clearly shouldn’t have accepted a deal like that.
What’s your retail commission for the cards, or the other arguments you used to convince yourself to accept a deal like that? You can answer it in any way you like, I only need some vague ideas about the incentives. I’m not asking for “business secrets”.
And your reasoning for this is they “require” enough shopping?
Perhaps you didn’t ask yourself this simple question: why would a shopping incentive program let you take a “shortcut” to shopping loyalty incentives… by NOT doing any shopping (but instead, pay Lyoness directly by BUYING the units, i.e pay to play)?
One wonders that perhaps the entire shopping loyalty program is a DISGUISE for this clearly Ponzi-scheme-like activity.
“Andy” in “Dragon’s Den” isn’t a problem in himself. “Andy” simply reflected the reality, the “over whelming huge returns” that had attracted him to the opportunity, and convinced him that borrowing money against his house would be a good idea.
The reality is being reflected all around you. You can make your OWN reality become different, but that won’t change the other parts of the reality.
Accepting methods for the purpose of trying to bend legal definitions isn’t a method to change the reality, it’s simply a method to mislead yourself.
A court will typically halt the illegal activities = shut down illegal parts. It will also perform assets freeze (including documentation), clawbacks and other “equitable remedies”. Main organizers will typically become Defendants in a Civil case.
Another typical reaction is time limited or permanent injunctions (restraining orders), banning them from participating in specific types of activities. I can point to more information about it, both here on this website and from official sources (but I can’t “fill” this thread with too much of it).
I’m clearly a business man even if I don’t run a business right now. I should normally REFLECT people’s OWN ideas in business, e.g. I’m asking about “profit margins” and the types of motivation people had when they accepted a solution.
For me, Lyoness is more like a “cult” than a normal business solution = people are accepting ideas they normally shouldn’t have accepted as business people. You simply can’t expect me to “reflect” ideas accepted by a “cult”. I won’t even reflect many commonly accepted ideas if they typically belong to other groups than business.
I simply got a shock as a business man when you described how the gift cards were sold to the retailers (the Lyoness merchants). I could have expected a solution like that from people in MLM, they will typically love all sorts of “bending the rules” methods.
The feedback from me should probably have been avoided. You’re not attracted to business logics right now, so I should probably have offered you an opportunity (I know about a Turkish program designed for merchants, and you will get one of the best positions in it). 🙂
So, Jordan, tell us the value of live cards you carry as inventory in your restaurant.
What sort of turnover can you expect from live cards ??
Is your restaurant so profitable you can afford to keep “dead money” in the form of live cards under the counter on the off chance a diner might like to have 2 gift cards with his dessert ??
@Jordon
Am I missing something here?
You sign up to Lyoness, you invest in AUs and then, instead of tossing them in the bin, using them to recruit new affiliates or using them yourself, you “resell” your giftcards (‘you must purchase $300.00-$600.00 in gift cards when making down payments‘) to other Lyoness affiliates.
That Lyoness affiliate who buys the card gets cashback because they’re a Lyoness member using the card at a cashback merchant.
You can make up a fancy name like “reseller” but that’s all that’s happening right? Hardly new.
Is what they’re saying not true?
The fact of the matter is that I invest a sizeable sum and if I convince a fixed number of other people to make new investments I get a >100% cash ROI.
I can understand why Lyoness don’t want to publicise this (at least not on the front-end of the business) but the problem lies with the business model itself, not how affiliates market it.
Sounds to me like you’ve been attending classes at the Gerry Nehra school of psuedo-compliance.
As far as I can see, he’s telling the truth. Not the way WE see it, but the way HE sees it.
It’s time for a “time out”. Post #1194 contains some new information, and it’s probably true in most parts. It will need to be analysed and identified.
I don’t question the truth of it, I just find it a bit silly to proclaim the reselling of gift cards as something new (even going so far as to give it a name), when Lyoness affiliates have been able to do this since forever.
It’s not new information , just a rebadged attempt of something Lyoness affiliates have always been able to do (sell their purchased gift cards).
As per Jordon:
Affiliates pay full price for the cards and have always been able to sell them at full price. Benefits and what not are paid when an actual purchase is made using the card so what’s the difference.
Quite obviously merchants aren’t paying double cashback (once on the transfer of the card from one affiliate to another and again when the card is used), so it sounds like a complicated explanation of what happens when affiliates sell giftcards to eachother (which they’ve always been able to do).
His first comment was a reply to my statement about gift cards being empty plastic cards until sold to end users. They actually are in most cases.
It’s a “perceived reality” when someone THINK (logically) or VISUALIZE how something works in reality, even if it’s based on their own experience and how they have SEEN something be done, if the reality actually is different.
I have SEEN gift cards being “registered” or “activated” at the time of purchase, when I have PAID the retailer for them. Before that, they were simply stored as “inexpensive plastic cards”.
The retailers do normally NOT pay anything for the gift cards when they RECEIVE them (other than some minor shipment costs in some cases). They are empty containers until end users actually buy them and pay for them.
They are NOT “money on a card” or similar ideas people use to describe them logically, that idea only works AFTER the end user have bought the card. The “money on a card” idea is a “perceived reality”, it doesn’t reflect how it really works but it makes it become understandable.
“Empty cards” is the NORMAL reality, but it doesn’t need to be the ONLY reality. Jordon Batton introduced another reality where gift cards are preloaded (paid for) much earlier. The same idea has been introduced earlier, but from people’s imagination rather than from personal experience.
Lyoness USA has probably made some changes to put up a legal defense. One of those changes seems to be about distributing fully paid gift cards out to merchants, e.g. to be able to SHOW regulators that gift cards are sold as “products”.
That defense strategy won’t work in court, but regulators may accept it. It CAN work in court as a “plausible deniability” defense, e.g. “We had all reasons to believe that gift cards were some types of tradeable products”.
They haven’t. It’s time for a “time out” to be able to adjust that perceived reality.
The cards merchants could distribute were Lyoness cash back cards, not gift cards (other than their own). Gift cards could be bought from Lyoness itself.
A typical “Business Pack” didn’t contain any gift cards, it contained a card reader (cash back reader), some Lyoness cards and some marketing material.
I found a vague description of it relatively early, in “the Irish forum” (boards.ie). We also have a comment from an “MLM team leader” deciding to look for other opportunities than Lyoness, when he found out that he actually had to PAY for the members he recruited (no recruitment commission, he would need to pay $1.50 for each new member). Bringing in a huge downline would cost him and his team more money than they would earn.
I have tried to follow up Lyoness’ own defense over at MlmHelpdesk.com for 6 days, but it seems like they have abandoned tha defense strategy completely, with the help of Troy.
* No “Part 2” or “Part 3” articles have been published.
* Comments to the “Part 1” article have not been updated for 4 days. The number of comments have been “freezed” at 33 comments, not updating it with any new ones.
Those 3 defense articles were Lyoness USA’s official attempt to publicly defend itself against pyramid scheme accusations and negative critique. The plan seems to have been completely abandoned.
LYONESS’ STRATEGY, AND MY COUNTER STRATEGY
1. They identified it to be about “one misguided MLM Consultant, probably suffering from Alzheimer’s disease”.
I identified it to be about a real problem, and described the details for it. I also identified it to be about a growing number of critics rather than one single one.
2. They identified it to be about minor details, a nitpicking strategy. You will always find SOME flaws you can pick on.
I identified it to be about the main aspects, and have pointed out that details are less important if the logic itself is relatively correct.
3. They identified the different aspects vaguely, e.g. quoting law interpretations but without coming to any conclusions for it.
I identified it precisely and logically. I CAN identify a case logically, but I can’t claim to be qualified in interpreting legal sources.
4. They produced a wall of text, with legal stuff and marketing statements.
I pointed out the wall of text itself as an attempt to drown people in information, the lack of legal logics in it and the similarities to marketing BS.
5. They tried to direct people’s focus towards minor flaws in the critique itself.
I tried to direct people’s attention towards Lyoness’ business model and compensation plan, and showed examples from other sources (e.g. “Andy” in “Dragon’s Den”).
TROY’S STRATEGY
6. Troy has been clearly biased in favor of Lyoness. He was the one bringing in “misguided MLM consultant” and “Alzheimer’s disease” (in his own video).
I pointed out what the case really was about, so he was indirectly countered in all other parts.
7. Troy tried to derail the discussion, by bringing in “Large Number Theory” and other theories.
I allowed him to bring in any theory he wanted, but he would need to analyse them himself without any interference from me. “It will typically end up with you coming to the conclusion that it is impossible to come to any conclusion because of all the missing information, and then you will be completely immobilized”.
8. Troy has delayed updating the comments and posting the last 2 articles, for 4 or 5 days now (since Saturday or Sunday, and today is Thursday).
I can’t do anything about that, other than accepting that the defense strategy probably have been abandoned completely, and no further comments seems to be needed (I can’t waste more time waiting for updates).
CONCLUSION
If any Lyoness supporter still believe the company has a solid legal defense strategy, they should look at that article and thread (link can be found in post #1176). Their defense strategy was killed in a few comments.
Note:
The thread must be sorted “Oldest”, and even then the sort order will be confusing with newer sub comments being sorted before older main comments. His comment system isn’t designed for people discussing something actively, it’s probably designed for other uses than that.
The logic in the thread goes like this:
1. “Joseph B” is posting a comment in Spanish about local problems in Colombia. He got some replies.
2. My first comment starts with “They had an awful LONG response”.
3. Most of my other comments have been placed as main comments rather than as replies. Other people have typically replied to my main comments. I have 7 main comments total visible now, most of the first ones are about identifying what the case is about (only 2 of them looking into Lyoness defense).
Hello to all, Just a little update.
I noticed that I am creating 1 new unit every 3 months. Also one new shopper joined me and as that person does shopping from within the lyoness Merchants it will increase the speed of my units creation.
Also, a few months ago I started purchasing gift cards from one of my local merchants. I go pay cash for Gift Cards and receive my cash back into my Lyoness account. I do not need to activate the gift cards. I start spending them as soon as I get them.
My total monthly expenses that I have re directed to purchase from Lyoness merchants is a little over $1,300 each month includes gas gift cards, food,clothing entertainment.
Some of you guys should consider joining and do your regular monthly shopping through Lyoness and Lyoness merchant so you can see that this is not a scam.
1 unit every 3 months? So 75 units need to be created for AC1, you work out how many years that’s going to take.
Yeah you could recruit a bunch of people under you, but then work out how long it’s going to take them. And if they recruit people, how long it’s going to take them. Did you run out of people (or time) yet?
Spending over three months to create a unit is fine. It’s the AU investment scheme that’s the problem.
Yes, it will take 19 years for my first unit to pay off by only doing my own purchases. I still have to purchase the same stuff why not get something back for my monthly purchases.
I do not only receive 2% cash back some merchants pay as high as 21% cash back.
If you all have trouble with the AU Down payment just don`t do any down payments.
…that’ll probably work when the regulators come knocking. You should call up Gerry Nehra and let him know.
lol, the regulators will never come knocking at my door, And yet Lyoness continues to bring in new large national merchants and people keep signing up as shoppers.
Why would large retailers be signing up to be Lyoness Merchants if it is as you say a scam? I would think any large merchant would have an army of lawyers looking over any partnership with Lyoness.
I guess you will believe what you want. And no matter what anyone comes in here to post you are all hung up on the none existing ponzi.
I believe that was the national anthem of Zeek Rewards affiliates too. And besides, who said anything about your door?
Here we go again…
That’d be because under the AU investment scheme, a Ponzi does indeed exist. No amount of “posting” will change that. There’s either the reality of the AU investment scheme, or suspension of belief that it’s not there.
Which large retailers are you talking about here?
Most of the large retailers are simply selling their own gift cards to Lyoness. They do not recruit members into the opportunity. The ones who have JOINED the opportunity themselves are mostly small and medium sized retailers.
Any “legal department” would probably point out some red flags rather immediately when it’s about recruiting customers into third party opportunities. Small retailers can ignore red flags like that, but big companies can’t.
If you can find any large retailers, it will tell more about the lack of competence in their “legal departments” than it will tell about the legality of Lyoness. Lyoness clearly has an investment and recruitment driven program in the very CORE of its business model. That should immediately put up several red flags for a “legal department”.
The arguments used for marketing and defending Lyoness have mostly been designed for “non qualified business people”. They typically have the wrong types of qualifications, and they’re not qualified enough to identify the types they will need.
You will need MANY different types of knowledge and experience to identify Lyoness clearly. If you don’t have that you won’t be able to see many of the red flags either. And Lyoness have typically been able to attract merchants unable to see many of the red flags.
Your OWN argument is a red flag in itself. You’re assuming that OTHERS have done the due diligence for you.
I have clearly identified it as “pyramid scheme” in most of my posts. I analysed it relatively early, e.g. for the main characteristics (what’s TYPICAL for different types of schemes).
Lyoness is clearly recruitment driven. It will simply not work as a plain investment opportunity. All payouts will derive directly or indirectly from your own downline = from people you have introduced directly or indirectly. Ponzi schemes won’t use a model like that, they will normally use a “pool of money” (or several of them).
Lyoness won’t work as a Ponzi scheme, but it has some (potential) characteristics similar to Ponzi schemes in the internal reward system, e.g. non monetary transactions and investments. So I can’t exclude Ponzi scheme either. “Potential” is about that they can’t be identified clearly.
I’m clearly able to identify it as a (potential) pyramid scheme. “Potential” is about that it eventually will be up to the correct authority to decide what it is, it’s not about how able I am to identify it.
(Ozedit: derail attempt removed)
This Lyoness is not what you all keep harping about at all. I see more and more people who join are not making down payments.
Without knowing the facts 100% but from my own experience I have now become to know more shoppers who are only shopping as myself and my small dwonline are all shoppers and yet I still get cash back and my units keep adding up.
As far as I can tell the only people who have a problem with Lyoness are the ones that made partial down payments and clearly did not understand that once those units had a total of 70 units behind the first unit. The people would receive $675.00 in shopping credit not cash. Why have none of those people taken Lyoness to court? If anyone has I have not read or heard about it.
You all keep saying that you are sure this Lyoness is some sort of a scheme. But when people join Lyoness an decide to do down payments it is clearly stated that once a unit moves from AC 1 to AC 2 The shopping credits will be available to them. As if having shopping credits is some how wrong to have.
Every shopper will be creating AU`s and that will not change. In a few months or years I am willing to bet that Lyoness will have even more shoppers and more merchants and nothing you guys post here will change that.
Now as far as merchants are concern you are sure that all Lyoness is doing is just purchasing gift cards in large amounts and have no agreement at all with such merchants.
Prove it!
Focusing bias: you only talk about the part you saw, and you ignore the parts you didn’t see, convincing yourself it’s not important.
Don’t all your cashbacks go toward your units, which you don’t really cash until you get like 70 units? How many units have you built so far? Most people get a unit every 1-2 months, as they don’t have that much income.
Consider the fact that you can build a unit in a few minutes by paying Lyoness directly, rather than months, and convince others to join who also build units in a few minutes, which route do you think people would rather take?
No, as far as you can imagine, because you have NOT considered all the angles, as your mind is constrained by the prior, often erroneous data that you’ve been fed.
Did they tell you Lyoness is under investigation in Austria, its home country, as a possible Ponzi scheme? And plenty of people have sued it for fraud?
https://behindmlm.com/companies/lyoness-lawsuits-and-investigation-in-austria/
Did they tell you that Lyoness was REPEATEDLY cited as example of potential pyramid scheme in Austria and Switzerland ever since it was founded?
http://en.wikipedia.org/wiki/Lyoness#Controversy
Did they tell you that average income per year through Lyoness is less than $8 USD? And that’s Lyoness’s own numbers?
https://behindmlm.com/companies/lyoness-2012-income-disclosure-statement-analysis/
You’re just not armed with all the facts, and thus, “argumentum ad ignorantiam”.
Here we go again…
@lerd
You can keep crapping on about shoppers and ignoring Lyoness as an MLM income opportunity via the AU investment scheme, but that doesn’t make it go away.
“Not understanding” the Ponzi scheme has nothing to do with it, it’s the fact that they are paid a >100% cash ROI after enough new investments have been made after theirs. All moneys are paid to and paid out by Lyoness, bypassing the shopping network altogether.
As per the Lyoness compensation plan there’s a cash component to the ROI paid out. This is more than what a Lyoness affiliate invests per unit hence it’s a Ponzi scheme (where does the money come from?).
Furthermore credits can be re-invested to increase an affiliate’s overall ROI, just like in any other points-based Ponzi scheme.
Totally irrelevant to the AU Ponzi scheme. Your head is buried deep enough in it, how’s that sand taste?
Where does the money come from? it comes from where it has and will come from shopping not down payments.Yes, the cash component is the % from cash back from shopping.
Here we go again, credits can not be re-invested no one can invest. I see it is irrelevant to come in her and post how Lyoness actually works not how you think it works.
Have a Great week months year. I`ll be back in a few months or maybe next year just to post how I am earning cash back and creating more AU from only shopping and shopping from the few in my downline. I think I will now start to promote Lyoness.:~)
I invest money directly with Lyoness, once enough new investors have invested money I get a cash ROI. There is no shopping involved.
Lyoness pays me with a slice from each of the individal AU investments required before I can get my cash ROI.
Please go and re-read the Lyoness compensation plan.
Did you just claim that the ability to purchase shopping units directly does NOT exist?
Again, we know exactly it how it works, but you seem to refuse it acknowledge there’s also a DIFFERENT way it works: direct purchase of the units.
Good luck demonstrating your ignorance out there. You may be one of the few honest Lyoness reps out there… uncontaminated by that “purchase units” thoughts.
(Ozedit: the Lyoness shopping network has nothing to do with affiliates investing in accounting units)
Oz say:
This is sound like that: I shop directly with Lyoness , once enough new people shop I get a cash ROI. There is shopping involved.
“Invest” in Lyoness its a term invented here in this blog. Because “invest” = shop in Lyoness.
When you make a downpayment= shop partialy gift card = “invest” you must chose a Lyoness partener ( eg. Walmart, Sears, Kmart, Exxon,…
We have used “investments” about the down payments, where people are buying AU units directly into one or more Accounting Cathegories (typically about the $3,000 initial investment they make to become Premium Members).
People are not “shopping” the units as products, they are investing in them with the expectations of earning a positive ROI as the primary motive. Since any positive ROI only can derive from recruited members’ investments (realisticly), I have identified it to be a pyramid scheme type of investment.
IDENTIFY IT AND POST THE LOGIC FOR IT?
If you feel we have missed or misinterpreted something important, please identify it CLEARLY and post the logic for WHY it is important.
For instance:
“You have simply ignored that people will need to purchase $600 worth of gift cards before they can make the $3,000 down payment.
That is important because it clearly will generate a $600 product purchase, and MLM will allow commissions to be paid out on that type of transaction.”
That was only an example. I identified clearly WHAT it was about = the $600 mandatory gift card purchases, and WHY it was important (making up some imaginary rules).
The problem isn’t about that we are calling it investment. That’s a misinterpretation of the problem. It won’t make much difference if we start to call it “partial payments for future gift card ourchases, motivated by the chance to earn positive ROI on the purchase itself”. It will only make the description become more complicated.
INVESTMENT VS PURCHASE
Investments are primarily motivated by the chance to earn a positive ROI on your money.
Consumer purchases don’t have any motives like that. Motives are typically limited to PRICE, DISCOUNTS, QUALITY, QUANTITY, AVAILABILITY and similar factors, and to the motives for wanting the product in the first place (PERSONAL motives about USE, STYLE, TASTE etc.).
I have simply identified the main motives for making down payments to be investment motivated rather than consumer purchase motivated. Correct me if I’m wrong, but please post the logics for it.
@nelson
It sounds like it is written, no more no less.
I pay money to Lyoness, I earn a cash ROI once enough new affiliates have paid money to Lyoness.
There is no shopping and I am only paid on condition enough new money has been deposited by affiliates with Lyoness so they can pay me my ROI.
I paid my money to Lyoness and got paid a >100% cash ROI back. I didn’t do any shopping.
MlmHelpdesk has updated the “Lyoness defense part 1” comments after a 12 day delay. But it doesn’t make much sense having an active discussion about it before part 2 and 3 has been published.
I used the following logic when I posted comments …
1. I assumed there would be readers more or less familiar with what Lyoness and the critique against it was about.
2. So I focused primarily on adding basic information and sources.
3. I also looked into a few details in the articles.
4. And I made a few replies “all over the place”.
Point 4 created chaos in the logic I followed, where point 2 was assumed to be most important. I will avoid posting more comments like that.
Point 3 isn’t really necessary. The defense logic is weak, so they won’t use it either.
Point 2 is finished from my side.
Point 1 was a miscalculation, the website doesn’t have many other readers than the ones familiar with Lyoness.
From my side of it, it doesn’t make much sense adding more to any of those points before new information has been posted in Part 2 and 3.
I have posted a “summary” for unfinished discussions in the MlmHelpdesk “Lyoness defense part 1” thread. Here’s a copy of it.
The logic for posting it?
I already know that all 3 parts are 20 pages total, a “point by point” defense with rather vague information. I hope to attract more precise answers from Lyoness’ “officials” by clearly identifying WHAT the main issue is about and the type of questions they can expect.
The idea of identifying some “unfinished discussions” was because the discussion was delayed for 12 days (no updates of the comments). Most people have probably lost interest completely.
By identifying the “unfinished discussions”, people will have the option to delay further discussions until all parts have been published, or they can finish them if they want. The idea is similar to a “To Do list”, it has the same function.
For the legal aspects of the discussion (the pyramid scheme issue), I identified the need for professional interpretation by a lawyer. I don’t see any point in further layman interpretations (I have already got enough experience in that).
Disabled link:
mlmhelpdesk.com/lyoness-usa-responds-to-accusations-of-violations-to-ponzi-pyramid-business-opportunity-and-security-regulations-pt-1/
MlmHelpdesk has now published all 3 parts of Lyoness defense.
Part 1 has 73 comments (inactive for 14 days). Disabled link in my previous post.
Part 2 has a few comments (3 or 4). Disabled link.
mlmhelpdesk.com/lyoness-usa-responds-to-accusations-of-violations-to-ponzi-pyramid-business-opportunity-and-security-regulations-pt-2/
Part 3 is the new one (active link).
http://mlmhelpdesk.com/lyoness-usa-responds-to-accusations-of-violations-to-ponzi-pyramid-business-opportunity-and-security-regulations-pt-3/
So in summary, I believe the following conclusions can be drawn.
1 – The idea of phases that Lyoness goes through is in a new market is bullcrap
2 – The Accounting unit component is likely to be illegal.
I called the SEC to inquire about Lyoness and they had nothing on record about Lyoness America which suggests it’s very easy for this kind of scheme to start in the US, gain a lot of traction by duping people yet still fly under the radar for a substantial period of time.
My question is this. If Lyoness did change their strategy in the US and decide to drop the unit purchases, would they still be liable for all the people who were duped and bought units?
Also wondering if the SEC will ever get these people. I mean they had never heard of them until I called them. It’s not like the SEC has a chance to review any scam that plans to open in the US which seems to be a pro-Lyoness canned response.
Correcttion – many obviously Pro-Lyoness comments in this thread think that because Lyoness is not being investigated in the US, they are compliant with the SEC. That canned response is nonsense.
This is getting even more hilarious. The worlds greatest shill was declared the most vocal Lyoness critic:
Google lyonessscamreview to read the rest of this biased crap.
Wonder who paid for the trip down to Florida to visit Lyoness HQ for Dooley?
I updated “Lyoness Defense Part 2” with a new comment.
“Hilarious” was the right word. Troy Dooly has suddenly become the TOP CRITIC of Lyoness.
If anyone ever was in doubt about whether or not Lyoness actually has some “legal issues”, lyonessscamreview will clarify that they actually have, INDIRECTLY by its creative interpretation of Troy Dooly’s role and its creative use of sources.
You will most likely recognize Lyoness’ defense system for what it is = misleading and deceptive. Methods like that will only harm people involved in the opportunity as merchants.
If the opportunity you’re involved in will require you to mislead your customers in a way like that, there’s something awfully wrong with the whole idea.
I’m a sales man myself with 14 years experience from repeating sales to business customers. I’m able to visualize all the different steps in the recruitment or sales process, e.g. all the different arguments we will need to come up with and all the “resistance” we will feel if we will need to bend the reality.
We CAN mislead customers, but for most merchants a practice like that will cause some “emotional disturbances” (some “gut feelings” will be triggered, trying to prevent practices that are in conflict with something).
For a merchant, it IS actually in conflict with your professional role if yoo’re trying to recruit your own customers (or other merchants) into a third party income opportunity.
Lyoness’ defense strategy has become even more ridiculous. They hired a legal expert in Austria to defend its reputation, and he came to a conclusion in September 2013.
That legal opinion is probably worth an article in itself, they have used wrong type of legal expert (expert on criminal laws rather than civil), testing it against ONE specific law (§ 168a StGB), asking wrong types of questions (they don’t reflect the most common definitions).
Link (to pdf):
http://www.lyoness.com/getattachment/6a9ae5ab-83ac-47a8-a977-02d93e35654d/Legal-opinion-confirms-Lyoness-no-pyramid-scheme.aspx/
A quote from the pdf:
He may have some valid arguments, so it may be worth looking into it. The fact that he’s wrong type of expert isn’t important in itself. The fact that he’s referring to Criminal law rather than Civil isn’t important either, i.e. he may have correct legal understanding of some basic principles anyway (legal understanding isn’t about the details, it’s about the “system”).
So uh when did that happen? Last I saw Lyoness sent a hilarious novel of irrelevant bullshit and Troy put it up over 3 parts.
None of it addressed the fact that you pay money to Lyoness and once enough new payments have been made you get a >100% cash ROI.
@M_Norway
that PDF lawyer article is about as idiotic as the crap they sent Troy Dooly.
All it says is “it is not required” and “don’t need to” over and over again. So running an Account Unit Ponzi investment scheme is fine, just so long as you add a bunch of other crap to mask it (legit shopping network).
Oh and make the investments optional too. Bing-badda-boom.
How stupid do they think everyone is? Every Ponzi scheme in history wouldn’t be one if they could get away with “investing with us is optional”. Of course it’s bloody optional, nobody forces anyone to invest.
How those that do invest are paid is what matters, and in Lyoness that’s out of new investments made after the initial investment (as per Ponzi scheme mechanics).
If you pay enough, you can probably get an expert to say the sun comes out of the West.
Given that we had several “legal experts” here in the US that pointed to a Ponzi and said “not Ponzi”, the logical course is “don’t trust the defense until you analyze it for yourself”. This obviously, will be ignored by the Lyoness lyonetties.
And Troy Dooly never changed his mind. He had always presented the condemnation as someone else’s opinion backed up by analysis.
That was for the purpose of analysing Lyoness’ legal defense, but I have already done it.
The expert is referring to incorrect law. Anti pyramid scheme rules can be found more than one place in the legislation, and he focused on the wrong place. He focused on a 1997 update of the criminal law, but Austria got new definitions in or before 2009 (from the EU UCP Directive).
Correct law should be amended version (2007) of the
Unfair Competition Act (UWG-Novelle 2007).
I also found a Supreme Court case using the “parent rules” in that Act, rather than the pyramid scheme rules themselves. The pyramid scheme rules are low ranked “regulations”, more important parts can be found higher up in the same law. The UWG law actually has 2 sets of anti pyramid scheme rules in the same Act, if I interpreted it correctly.
The details in the laws aren’t important. The important part is that Lyoness just recently have published misleading material to protect itself / pretend to be protected. They have had plenty of time to put up a valid legal defense system, and yet they failed to come up with one.
To be able to find my way back to the sources I found:
I googled “implementation of EU UCP directive Austria”. The first hit was about all I looked for.
* a Supreme Court decision (using “parent rules”)
* the law that implemented the UCP Directive in 2007
Note:
“Parent rules” is an expression from programming. The correct term is “Lex Superior” = rule with a higher rank. Pyramid scheme is only a subtype of something else, and it’s the “something else” that is most important.
The regular posters here keep referring to the ability to purchase AUs. They may have a point. Solution to all of this is quite simple. The posters seem articulate enough so why doesn’t one them draft a comprehensive letter to US authorities expressing there concerns and highlighting the ‘dubious’ elements of the AU part.
Surely the authorities will respond with a letter outlining their findings. Once the letter is returned it can then be posted here unedited for all to read and be informed. This might finally put an end to all of this speculation because at the end of the day its only speculation.
What one might perceive as illegal others in govt department may not so put it to the test and end this long-winded saga. Any takers or will the response be, what do govt departments know?
US authorities don’t publicly comment on investigations.
Unregistered securities are illegal as per the SEC. How can investing in AUs, which pay a ROI on the condition that new AUs are invested, be seen as anything but an unregistered security?
People only invest in AUs on the promise of a >100% ROI later down the track, paid out of new investment money.
Do authorities comment on findings or is this top secret also?
How can investing in AUs, which pay a ROI on the condition that new AUs are invested, be seen as anything but an unregistered security?
Easy, ask the authorities. Your opinion doesn’t matter if the authorities give the green light. Surely, you’re not suggesting we thumb our noses at authorities. Give them the opportunity to investigate.
Not if there’s no resulting legal action. That’s why you get clowns running around proclaiming companies legal based on “not getting shut down yet”.
The public only find out when the shit hits the fan after an investigation. If an investigation happens and nothing comes of it, we’re none the wiser.
Good luck with that. Ask them what color the sky is too while you’re at it. Y’know, cuz we can’t really be sure unless they investigate that too.
Authorities never publicly give the green light to anything MLM, so it’s a moot task.
The Norwegian Gaming Board (Lotteritilsynet) will write a “Supervisory report” regardless of the outcome of the investigation.
All letters FROM the authority to the affected party are normally publicly available. Most replies TO the authority will be sealed (“business secrets”). All “anonymous tips” will be sealed, but the party CAN request anonymized versions of them.
I have sent some information to the Norwegian Gaming Board (Lotteritilsynet) in May / June 2013, when someone asked me to do it. I only sent general information, e.g. a copy of the compensation plan (U.S. version), Terms and Conditions (U.S. version), links to Lyoness’ websites, links to three other articles here.
Here’s what I sent (plus explanation):
The “general info strategy” was because I don’t like to drown people in information. I focused on the AU system and compensation plan, and one article explaining them (Lyoness’ OWN explanation). I tried to send completely NEUTRAL information, “background information” rather than “pyramid scheme proofs”.
The “general info strategy” was also because they already HAD received information from many “anonymous sources”.
The Gaming Board will need to COLLECT information from the party itself anyway and do a neutral investigation. I simply added some “explanations”, something they can’t use directly.
The “Supervisory report” from Lotteritilsynet will ONLY focus on the pyramid scheme issue. The case has additional points that will need to be handled by Consumer Protection authorities, AFTER Lotteritilsynet has finished its report.
Just curious about the $75 units.. If you put a $75 downpayment down to buy a laptop and you earn a unit do you lose that unit if you use that $75 to actually buy the laptop?
The AU is a deposit that doesn’t mature until the preset amount of units have been created under it.
Lyoness use this money to pay out units above it that mature so withdrawing it and maintaining the position doesn’t make sense.
I do recall some affiliates stating the money can be reclaimed, but presumably this is only on condition that the affiliate gives up the position (ie. it’s an effective refund).
Other than noting the AU investment scheme is still intact though, I haven’t looked at the Lyoness compensation plan for some time (don’t need the headache!).
Not sure what you’re talking about here.
If you put $75 down to buy a laptop, it went to the seller of the laptop.
If you put $75 “down payment” on a Lyoness unit, that money went to Lyoness.
So, which way did your money go?
Methods like that have been mentioned a few times. It depends on the “total benefits” offered by the merchant, according to the explanations people have posted.
Example:
1. You make a $75 downpayment.
2. The merchant is offering 2%+1%+5% = 8% total benefits
3. Your unit can be used to pay 5% of the price, as a 5% partial payment for a $1,500 item.
4. If the merchant is offering 2%+1%+10% = 13% total benefits, the $75 unit can be used as a 10% partial payment for a $750 item.
5. Most merchants have only 4 or 5% total benefits, e.g. 1% cash back + 1% friendship bonus + 2% loyalty benefits. Your $75 unit can be used as a 2% partial payment towards a $3,750 purchase.
The method has been mentioned by a few members, but they generally used very poor and hypothetical examples. They focused on 5 or 10% loyalty benefits examples, but the TYPE of merchants they used as examples typically had much lower benefits.
You CAN get your down payments back through shopping, by “topping up” the amount you already have paid in and buying a fully paid gift card, or by buying something directly from a Lyoness merchant.
What I meant is the Pre payment you pay Lyoness for a future purchase of an item.
I believe M_Norway explained it which makes sense. You are actually only paying the amount of the loyalty benefit with that $75 whether you actually but the item or not… Either way the loyalty benefit is paid…
Please correct me if I’m wrong……
So the bottom line is the only way to get that $75 back is if you spend enough to make up that $75 pre payment right? This amount would probably be $3750 minimum at 2% loyalty bonus?
So much wrong with this
No one should be encouraging anyone to buy accounting units without full understanding of what that means. (I did, but I tell my friends there is no need to)
Secondly you have written that the other units are created from the 1-2% cash back, this is not the case, the member gets their cash back of %2 (rarely %1) then they get a percentage benefit on top of that, for instance some of the places i shop have %8 member benefit, meaning %2 in my pocket, %6 in the accounting program.
I have foudn it very easy to create a new unit every 1-2 months, not only does this help my initial unit pay off, but each following unit is equally payable. I have been a member for 3 months, and I have created 2 shopping units from shopping i already would have done, and I got money back as well, so no loss.
I then more recently joined up soem friends, and I get paid for that now as well, a couple are close to creating their first unit (in their first month) and thats on top of the cash back they already receive, my $1.50 I spent to to join each of them up has already paid off, and now I make money on their shopping, and hopefully soon they will bring some others on and I will benefit from that too! 🙂
happy days, everyone is happy
dno if website is allowed but my email is (Ozedit: recruitment spam removed)
And curious, you keep the rewards if you shop out the $75 unit, but min down payment is 225, so with a %10 benefit company thats a $225 down payment on $2250 worth of purchases.
if you pay the remaining 2225 later you will receive the full $2250 value that you paid, 🙂 the idea of the down payment is only if you see the value of the accounting program, otherwise don’t waste your time 🙂
What it means is simple, you get paid when enough people under you buy units (ROI).
So how many years all up before the full 75 are created at the lowest AC level?
If you’re going to go the shopping route you’ll eventually come to the conclusion that waiting a few years to make a few hundred dollars isn’t worth the range restrictions shopping within the Lyoness network brings with it.
Then you’ll realize the business opportunity money is just in the investing of units and ignoring the merchant network altogether. Then you’ll tell your “friends” to do the same.
Or you just recruit people under you, get them to buy in until enough units have been paid and cash out. Why spend your own money to generate the ROI when you can just recruit others who’ll spend their own?
(Ozedit: Appreciate the comments but enough with the anti-Amway blog promotion spam on every article)
“Secondly, YOU have written” was incorrect. That was your OWN idea rather than mine. 🙂
I identified the total benefits like this:
2% cashback
1% friendship bonus (paid to upline as cash)
2% loyalty benefits (example) —> generates units
—————–
= 5% total benefits
I don’t think anyone have criticized that part of the program either. The critique has been about the down payments, the AU system in general and the recruitment driven investment system.
2 units in 3 months = 105 months to get 70 units = 8 years 9 months to get your first $675 maturity payout. The system doesn’t make much sense for an average consumer.
FYI,
Lyoness within the next 6 months are going to be getting rid of accounting units
Peter
Source?
The link was for a Lyoness video – I just happened to put it on my site because it was so hilarious. By the way, what Amway does is copied by most other MLMs, so I suggest you read the blog to gain a better insight into MLM in general.
no one needs to read your rag, go nowhere, blog joe. all they need to read is realscam to see what you are about. lol.
And how do they plan to do that?
* Separating that part of the business into a new company?
* or paying out money for the units?
* or coming up with a new system?
The accounting unit system clearly is a problem. Trying to hide that problem won’t be any solution, it will still exist and grow bigger.
Whip, I agree, go to realscam to find out you are too scared to make a simple phone call. LOL
Sorry can’t reveal my source just look for some big changes. going to be changed in every country.
They are going to be making a shift from units and downpayments and focus on the shopping now….Currently there are just shoppers and IBR and Premium members….they are going to change all these membership class as well.
It’s not that 3rd phase (or 4th?) stuff Lyoness affiliates push when they enter new markets is it?
I’ve been hearing they’ll get rid of the AU’s after phases 1 and 2 (the investment phases) are.. uh, “phased” out. This would be nothing new if it is.
It has nothing to do with the phases.
It is going to be a complete overhaul of the units. The details I don’t know other they are doing it. If I learn more I will post.
Sounds good, thanks for keeping us posted.
I read a lot of the information that people have posted, a lot by OZ who clearly has staked his claim and can no longer afford to “understand” lyoness as he has proven his inability to understand it for so long.
Our store excepts lyoness and I have signed up all of my employees and give them bonuses to sign up my customers who are not already signed up.
While it is true that lyoness is difficult to understand you should limit yourself to posting questions about it to those who understand it until you do understand it.
How many accounting units did you invest in?
How many did you get your employees to invest in?
Did you consult your employees before signing them up first? I’d hate to be someone who opposes Ponzi schemes and working for you. I can only imagine the ostracization.
Lyoness’ business model is wholly understood. Anyone denying the existence of the AU investment scheme needs to go back and look at the compensation plan.
Oz you are letting your stupid show. We have all shopped our units in within the system, we have the benefit of being in Medford Or with over 120 lyoness merchants.
It’s impossible to sign someone up without their consent.
If this is a Ponzi scheme then please, please show me one government website that has it listed as a Ponzi scheme. Not ones that are thinking about collecting information about it but ones that have it listed. Come on you have 45 countries to choose from.
How many accounting units have you invested in?
How many accounting units did you get your employees to invest in? (Any “pay-it-forward” nonsense?)
“We haven’t been shut down, of course we’re legal!”
A business model determines whether or not an MLM company is a Ponzi scheme, not whether or not its listed on a government website.
(Ozedit: Answer the questions please. Offtopic derail attempts will be removed.)
“Appeal to age” fallacy. Also see “Bernie Madoff’.
There’s a difference between a ponzi scheme and a CONVICTED ponzi scheme. The difference is one’s merely a fact, and the other is a fact stamped with approval by a court.
Even today some Zeekheads claim Zeek was never CONVICTED as a Ponzi scheme, which is technically true, yet nobody nowadays, except some diehard Zeekheads who probably organized collection of funds to defend Zeek, doubt that Zeek was a ponzi scheme.
But it seems you only accept the COURT-stamped definition of “ponzi scheme” as ponzi scheme. Which is not really reasonable.
By your definition, if I killed you today, I am not a murderer until the court convicted me of murder.
That’s the level of your nonsense.
Paging Mr Freud, Mr Sigmund Freud, there’s been a slip in your name.
Poland: Investigation as a Ponzi scheme.
Norway: Investigation as a pyramid scheme.
Sweden: Investigation as a pyramid scheme.
“Ponzi scheme” is a commonly used nick name for many different types of investment frauds, so it’s not clearly defined in any laws.
“Pyramid scheme” and “Promotional pyramid” are defined in laws.
If somebody were to sponsor a retailer/business into this program would they receive a commission for doing so?
Actually, the Ponzi scheme is quite well defined: http://finance.laws.com/ponzi-scheme
The pyramid laws are much less clear. We have the FTC section 5 “unfair and deceptive” words, and we have a few extremely egregious examples of pyramid schemes that have been shut down, mostly for a high recruitment reward, either in cash or front loading, but the closest court defined retail sale level resulting in the primary source for bonuses being somewhere between 5% and 100%, a very large range. However, the word “primary” and “primarily” are often used, which suggests 50%, or some small range around this level based on other factors, is reasonable.
If a Lyoness member “A” brings in a merchant called WINDOW CLEANER for example, the Window Cleaner ID will show up under the Lyoness member “A” ID. When a Lyoness member “B” makes a transaction from the Window Cleaner the Lyoness member “A” will receive .5% (or $.005) Loyalty bonus.
Lyoness member “A” would not receive extra funds.
“Ponzi scheme explained” isn’t the same as “Ponzi scheme DEFINED”.
Ponzi scheme is a type of “concept” = simplified description of an idea, e.g. many different species with some similar characteristics collected together in one single group, e.g. “trees”, “animals”, “plants”.
If you try to define Ponzi scheme based on some “known characteristics”, the definition will be extremely vague. You will be unable to come up with an accurate definition, but you will find some COMMON FACTORS that are relatively reliable as identifiers for SOME TYPES of Ponzi schemes.
Check the “Pigeon King” Ponzi scheme to see what I mean? The victims didn’t invest, they bought breeding pairs of pigeons and could sell back the offsprings to the “Pigeon King” company.
“Ponzi schemes explained” is correct in something.
* It IS about a fraudulent operation
* It DOES involve some type of investment
* It IS based on illusions of financial gains resulting from something
* It will typically involve paying SOME investors a profit
But if you check several Ponzi schemes, you will find that many of them won’t match the description. The explanation focused on passive investment types of Ponzi schemes (similar to Madoff).
It will be like defining “trees” by solely looking at pine trees, or defining “animals” by solely looking at mammals. Ideas like that won’t make much sense.
Ok I was just curious since “Window Cleaner” has to pay $2000 just to join the loyalty program. I figured they would pay a certain amount of that to member “A”.
The way Im understanding all of this is a small local business that relies on local customers has absolutely nothing to gain by joining this prgram.
$2000 sign up fee, 10% of cost of purchases through Lyoness goes to Lyoness…. So you give up 10% to gain back 1% of any of your customers that join under you plus you fork out $2000 to begin with.
Chances are you wouldnt be gaining any new customers though this program since you rely on local repeat customers… So why lose 10% to gain back 1%?
Im thinking this is geared only towards big online retailers… This is getting pushed to smaller businesses around here and I just can’t imagine it being beneficial to any of them…. Am I missing something? And to boot, what small business is going to want to push their customers into joining this program anyway?
The real money in Lyoness is the AU investment scheme. All the top affiliate earners make their money through it.
The merchant shopping network is just smoke and mirrors. It doesn’t have to make sense because it’s only there so affiliates can mention “shopping” when someone challenges them on investing in AUs.
I can correct a few errors Frank. For $2000.00 you get a kit. You get a steel secure mount enclosing a Samsung Galaxy Tablet. that you can mount to a podium or wall. Software for it to do the transactions.
You also get promotional material like brochures,posters, pens, etc…you also 1000 co-branded cards so you will have your company logo on it and Lyoness logo as well. You also get your online office that tracks many things transaction, sales, etc. You get to go on there website as well which can drive traffic to your business.
It is a one time fee, no monthly or annual fees. charges for website presence. The material you are getting has a value and the one time fee you can break it down over 5 years and as it goes longer ..the 2000.00 is very small amount of money.
Not sure where you got 10% number from. The rate is negotiable. At my restaurant I give away 4% cash back.
Keep in mind Frank this is a Loyalty program in a Shopping community. Repeat business is the heart of a business and to attract new customers is very important as well to be able to grow your company.
Lyoness does this efficiently. Reward your regular customers because they will recommend your business to others…word of mouth is very powerful here. Lyoness members are looking for places to shop..so it will drive members who live a little further away to your business.
You also can create a database of your loyal customers and you target them in email advertising to get them to shop even more at your business.
Lyoness fills a market gap at this point nobody has this business model. You only pay when people create revenue. best form of adverting.
My suggestion would be to call Lyoness USA see how many Lyoness members they have in your area and decide from there. This way you know your potential new market.
I know in Miami and New York and LA Lyoness is huge…. I believe in USA they are pushing 400,000 members…so check call them. Lyoness members are loyal shoppers and will look for you.
It’s usually sold as “add your business to Lyoness network and get access to our bazillion shoppers!” and “Also join as a shopper” (left unsaid)
AFTER they paid the $2000 to join, of course.
Here’s some further description of the differences: http://www.ehow.com/info_8050306_differences-between-ponzi-pyramid-scheme.html
The Pigeon King scam didn’t only buy back the pigeons, it also allowed participants to sell the meat, sell them for pets, and/or sell them to new participants. Therefore, this made Pigeon King much more an illegal pyramid and much less a Ponzi scheme.
Obviously, there can be hybrids, but the active participation versus passive investment is the primary difference, and there’s no doubt Pigeon King consisted of active participants.
Additionally, if PK had been able to produce net winners who were doing the 3 things above and make a substantial percentage of their profit from the first 2 instead of the third, they would have been a legal MLM as opposed to an illegal pyramid.
There is no smoke screen here. This is one part of Lyoness. There are Lyoness members that shop which is about 98% of Lyoness. Go to income disclosure statement.
At present there is an investment part of Lyoness $3000 for people who want to build a business from it. Just like all business there is a risk here…
I can shop at Subway and be a consumer, Or I can take a chance and buy a Subway for $300000. Subway the company makes money both ways. Now do I want to risk 300000 or 3000
What is the difference between the business.
The disclosure statement that counts AU investment as “shopping”? Riiiiiight.
That there’s any risk involved wasn’t my point.
That Lyoness use this money to pay off existing investors, thus making it a Ponzi scheme, is what matters.
Between Subway and a Ponzi scheme? Obvious is obvious…
I got the 10% number by quite a few different sites on the net. People kept saying businesses paid so much to Lyoness and Lyoness paid a fraction of that back to affiliates.. 10% was mentioned a few times.
Unfortunately, scouring the neet is the only way I can find the answers… At least I can get some clarification on here from people in the know….
lol…no disrespect…..
but i really cant bother.
if there is dircet questions..i will answer i am not here for a debate.
Unless there are some recent changes. The % you give as cashback is negotiable. I am currently a Lyoness member. I am not an expert. But I do have knowledge about it.
Peter, this isn’t about respect, it’s about being competent. If someone who thinks they are an expert can’t explain the differences, they aren’t competent and it would damage their reputation.
This is particularly true as an expert in a courtroom, when being cross-examined by some MLM dirtbag lawyer. The judge may even dismiss them as an expert witness, which could damage the chances of the lawsuit being successful. This means, if the case was lost, another MLM could keep ripping off people, which is nothing to lol about in my world.
By the way, I was responding to M_Norway, not you.
I have checked it several times for different countries. The average percentage is probably around 4 or 5% TOTAL benefits, e.g.
* 1 or 2% cash back
* 1% friendship bonus (0.5% plus 0.5%)
* 1 or 2% Loyalty Benefit (paid to Lyoness, generates units)
———————
= 3-5% TOTAL benefits
———————
Some specialized merchants with higher profit margins will also offer higher discounts, but I was looking for what was TYPICAL rather than trying to find “nice examples”.
But how much does Lyoness keep for themselves? I thought it was over and above what you listed……
Lyoness keeps the “lionshare” for themselves and/or the affilliate program gets it. Lyoness has no direct relationships with the major retailers under their afilliate program. They can bring on mom and pop stores as a more direct relationship but then again, so can others for a much more formatable and lucrative relationship.
Other companies give it all to the reps and consumers. Most stores offer their affiliates between 4% and 12% cash back. Home Depot for example is about 6%.
Lyoness’ whole program makes no sense to me. Why would you want to pre purchase a cashback card for every indivudual store you want to shop at for only 1%-2%, when you can go online to other sites, actually do a price comparison amongst more stores, get 2% to 30% cash back, apply coupon codes etc.
Their cashback program and online presence is nothing more than a conversation starter. There is no real value in it for the consumer, and ZERO meaninful comissions in it for the reps.
I have to correct you on this.
1% Cash back
1% Loyalty Account – Creates accounting units
.5 % direct member
.5 % indirect member
2 % The fee to Lyoness
5% would be total transaction….the Cashback and the Loyalty Account are negotiable.
Ok so there is a 2% fee to Lyoness…. So depending on the negotiations you will be losing 5% minimum….. To be honest 1% cash back is nothing to write home about….
@Peter Fuhr
Cashback is optional, any member can choose 2%, 1% or 0% when logged onto his Lyoness online acount. It is not possible than to get anything from the program without signing in 4 members with at least 1 AU, That might be an issue in Poland.
Ponzi option just a click away.
1. Don’t know. Lyoness is keeping ALL your money and will give you “accounting units” in exhange, but you didn’t ask about that.
2. I have checked several countries initially, in 2012. I have also checked people’s OWN examples in discussions, e.g. when people claim they will get payouts without recruiting anyone.
Here’s one example from post #1110, where a Lyoness member planned to upgrade to Premium member by making a $30,000 car purchase (rather than making down payments).
You can check yourself at Lyoness.net –> Merchant search –> country (you can use some filters too, e.g. “district” or type of merchant).
You will find examples with higher Total Benefits, but I checked the examples people used themselves, e.g. “save money on food, gasoline, etc.” = normal consumer purchases.
wow I can’t believe this discussion has continued this long.
It is obvious that some of the people posting here have never operated a business. I would like for someone to show me a business opportunity that cost less than what Lyoness is offering.
I would love to discuss this program, one on one if anybody is interested. I will touch base on a couple topics right now.
I am only going to go with the numbers and such that you are all throwing out. The information that you are using as a tool to say this is a Ponzi scheme.
And for the record, I have yet seem a Ponzi scheme as big and open as Lyoness not get shut down by the United States Government, pretty darn quickly and please don’t bring up Madoff because their program was not an open Book.
(Ozedit: Offtopic derail attempts removed)
Lets start with one of the biggest rip offs.
The Lyoness fee of 2%.
I do not know of a Business that Has less than a 2% Gross Profit Margin. That is unheard of, Waite it might be just me.
Someone please name a business That Has a Gross Profit Margin of 2% or less.
Lyoness is a business correct?????
AND YES THEY DO SELL SOMETHING, THEY ARE CALLED MONEYCARDS/GIFTCARDS or what ever name you personally place on them.
Lyoness Purchases these money cards from Office Depot, for example, at a discount, They then sell them to Lyoness members at Face Value. The difference, their gross profit, Which is used to
Pay their members in almost a dozen different avenues as a reward for creating the sale/ profit for the company ( and I am referring to profit for Lyoness)[I believe it is 10 to be exact, you may ask why do they need 10 different income sources.
I call it “marketing”, The creation of an incentive to motivate people to perform a given task ,,, like selling and/or purchasing these gift Cards, or refer other consumers to purchase these gift cards or refer other people to start their own business]
They pay their Expenses , pay salaries, rent and many other operational costs
and Yes It is a business, They try to make a profit, THE REASON WHY BUSINESSES ARE STARTED.
Lastly the biggest unknown – Accounting Units.
in an effort to make everything uniform for these incentive payouts and commissions, they had to create a common currency , if you would, to be able to properly make these payments. Yes I will explain, heaven knows I had better.
Not all Merchants opt to pay the same percentage fee for the sales that are generated for them, so you can not simply give an exact percentage of sales for all merchants sales because they are different, you have to Have uniformity. and these units are it.
Also, this is an international company creating rewards for people in one country, coming from purchases made by people in other countries. The money from these different countries are not always valued the same to each other. I believe it is called currency exchange. Because of the value variation of these currencies they had to create these Units.
Now is everybody going to be a millionaire? No !!! Most people have no desire to participate within the program to build a business. But I will tell you that many of these people will have huge regrets in a short few years and that is a guarantee. For those people who can’t see it I’m sorry that you are not as open minded as you would like to believe you are. I can’t do much about that.
So let the Games Begin…
I just read some more of the postings and there is so much more that I would love to discuss but we need to keep it simple because it is obvious that some people like to muddy the waters..
When we are done, anybody responding to me will either show themselves as knowing what they are talking about OR NOT.
I look forward to tomorrow, till then have a great day
Let’s not kid ourselves, Lyoness never took off in the US. They targeted Europe and more recently are trying to break into Asia.
You can’t “sell” the conversion of cash onto plastic. It’s not a viable MLM product. Converting money from one form to another is not the sale of a product or service.
Cool story bro.
Pity it has nothing to do with Lyoness accepting money from affiliates for AUs, and then paying out a >100% cash ROI when enough new investments have been made.
That’s not “currency exchange”, that’s a Ponzi scheme.
What games? You just rehashed more of the same arguments we’ve seen from Lyoness affiliates for years.
Ignoring the AU Ponzi scheme doesn’t mean it’s not there.
Based on your post #1294, it seems like your only intention is to repeat ideas from your own belief system. If you don’t manage to produce anything better than that, I will recommend you to CALL someone rather than posting it on the internet.
You will probably find ideas similar to your own repeated tens of times earlier in this thread. There’s a lot of people who are unable to separate between beliefs and reality, so I’m pretty sure it already has been posted.
@Mike
Here’s the definition of Profit margin, from Wikipedia:
en.wikipedia.org/wiki/Profit_margin
Basically, it’s about gross revenue minus product costs (product, freight, insurance). That’s what people USUALLY mean when they’re talking about “profit margin” in business.
Wikipedia has a slightly different description, and I can accept that one too. Wikipedia’s version simply start from a different perspective, where some of the basic calculations already have been done.
I have more difficulties accepting your ideas, e.g. your ideas about 2% profit margin for Lyoness.
It is also obvious some people like to ignore the elephant in the room… such as the ability to generate AU via paying Lyoness directly instead of shopping… the very anththesis of a “shopping network”.
And your definition of “knowing what they are talking about” is apparently “agree with ‘Mike'”.
You are suffering from the cognitive bias known as “asymmetrical insight”. You not only believe your knowledge of your position is absolutely flawless (it’s not), you believe you know your opposition’s position better than they do. Which is a laughable assumption on your part.
Can’t bother what? Talk about Ponzi schemes and why Lyoness is/not one?
You sound like that Hamm guy… when asked what sort of evidence will change his mind, his answer as “Nothing.” Which is the same as “I can’t be bothered (with the question)”, isn’t it?
WOW Lyoness is introducing a Cashback Card with credit card functionality. In the near future, Lyoness Members will not only be able to shop and get money back with every purchase but also make payments with their Lyoness MasterCard.
prnewswire.co.uk/news-releases/shopping-community-sets-news-standards-with-the-prepaid-lyoness-mastercard-264707331.html
Hey Guys, I am a businessman also, I have been looking at Lyoness for over 1 year. Oz and Chang, you have to go back and get a better explanation about how the program works.
I look at your report on Lyoness to try to get another view about the company, to see if I want to truly engage as a Merchant or/and as a business within my business.
Accounting units are generated by the extra discount a merchant gives over the 3% that is paid out to the member up front. If i give a lyoness member a total 10% discount for shopping at my business, 3% is paid out up front( cashback 2%, .5%, .5%, 3 levels down) The additionl 7% goes into the Kitty of that member (7 dollars if it were a 100 dollar purchase).
When that backend (7 dollars) adds up to 75 dollars ( through additional spending) it generates a 75 dollar accounting unit in the system. the bigger part of the discount the merchants are providing is going through the back end. You do not give away 75 dollar gift cards.
Yes you can buy some of these unit upfront if you want to move the train faster in the beginning. that’s up to you.
But you two should go back and really understand the system. The major retailers like, Outback, Exxon,Target, Walgreens they don’t work the same way as the sme’s.
Lyoness buys Gift cards from them in bulk, and supplies them to their members on a dollar for dollar basis. They have to buy enough to keep up with demand, upfront. I buy my Exxon giftcard through the lyoness backoffice, and just use it when I buy gas until the amt on the gift card runs out.
My only question as I analyze the company is, how long does it take to generate a good income, if you weren’t buying these units upfront, not the legitmacy of the model.
I look to this site for a good opinion. Obviously I can see you don’t understand the system well enough yet for a guy like me to value your opinion, in this case
So let’s just ignore the giant Ponzi scheme than shall we?
If you read through the thousand plus comments, it’s been repeated multiple times that’s it’s not really practical for the average shopper.
The only people who make money with shopping units are merchants like yourself who push this onto their customers (who in turn never see their shopping units mature).
Everyone else makes money via the investment of units, and getting those they recruit to do the same.
Why not just rob your customers at gunpoint then? There’s no legitimacy in that either, and it’ll probably pay you quicker too.
I suggest you put down your “Lyoness marketing 101” booklet if you wish to continue, you’re not fooling anyone.
Ugh… why is we always get the shyster merchants on here after they’ve been waffle-sold on Lyoness by an affiliate?
It’s always the same “you don’t get it” story, sprinkled with some “oh I know there’s a Ponzi scheme, but let’s just ignore that”. Yawn.
You will find the Ponzi component in some internal webinars, e.g. in the 2 videos in this article (Webinar part 3 and 4, Rik Wahlrab):
https://behindmlm.com/companies/lyoness/lyoness-corporate-webinar-spells-out-ponzi-scheme/
In addition, you must analyse what Ponzi schemes really are about. They’re typically about something investors BELIEVE in, not about how an investment work in reality.
Lyoness won’t really work as a Ponzi scheme if you don’t recruit your minimum 4 directs, and they recruit some people too. But it will work after you have grown a downline.
A Ponzi scheme doesn’t need to pay out more than the amount coming in from new investors. It will only need to pay out more than the amount coming in from other sources (more than the amount coming in from merchants as Loyalty Benefits).
It will be a Ponzi scheme as long as the units are not fully backed up by money, i.e. if some of the money coming in from new investors have been used to pay other investors. Lyoness will most likely meet the definitions of a fraudulent investment.
To all the anti-Lyoness contributors…..you could have saved yourselves and others a LOT of time by just saying “Don’t confuse me with the facts..my mind is made up!”
Who exactly are your trying to help with your comments?
As a restaurant owner in Lyoness, I have even benefited from customers from other states that found me using the Lyoness Ap. I simply redirect my normal advertising expenses back to my loyal patrons.
If you don’t understand or trust the program…don’t participate. It’s really a no-brainer for consumers AND businesses.
Take a deep breath and just let it go! 🙂
^^ Ugh, looks like an affiliate-investor just recruited another business owner come affiliate-investor who just read Lyoness ‘how to market Lyoness whilst completely ignoring the AU investment scheme’ handbook.
Cool story bro. In other news the Lyoness AU investment scheme is still alive and well.
In that having no-brain is a desirable trait for affiliate-investor recruitment?
Anybody who ignores the AU investment scheme embedded in Lyoness clearly doesn’t understand “the program”. Trust is neither here nor there.
Sorry for the English grammar. Was invited to a meeting on how to make extra cash on the side. Got a bad feeling about it but went anywhere because a friend invites me.
Took me 5 minutes to confirm it a scam. I notice that most invite folk there were middle class or own small business.
Though about joining to tap in this folk to come to my optical store. Before joining I decided to search lyoness member optical retail in other city and ask how many Lyoness member use them.
It was absolute horrible review from 3 optical store owner. All three of them hate it and regret signing on. Told me they sign on to get new clients but it turn out most of Lyoness member are looking more discount then major retail optical store.
They rarely buy anything but when they buy it usually very small item (cleaning cloth, solution). Often waste staff time and talk about how great Lyoness is at the retail store while staffs are trying to work.
The comment about spending 100K euro to purchase though Lyoness merchant makes absolute bad idea for supplied! Getting 1 percent only and the rest give to other Lyoness member and Lyoness?! It go in to the AU and you have to wait for it to mature! I purchase about 250K or more a year and 9% discount right away with each invoice.
They wanted to go through my 15K clients database and call my clients to join Lyoness. In Canada you can’t do that because of privacy act. I am not going to jail for Lyoness!!
I have to introduce Lyoness when they come in, not call/email them to introduce Lyoness. Due to trust my client have with me on optical needs, they might join Lyoness and when it collapse it would expose my optical store.
These small business owners are the types we usually get replying here about how great Lyoness is.
You saw Lyoness for what it is but alot of them have no qualms about selling out their customer base and hoping they invest in AUs under them.
They probably figure being a Lyoness affiliate investor business owners are less likely to kick them out of the store for trying to recruit the business’ customers.
Sounds shady. I know if I walked into a business and got pitched something unrelated I’d probably never go back.
You will find 11-12 other Lyoness articles here, in case you want more information.
https://behindmlm.com/category/companies/lyoness/
We’re an MLM review site, “factual reviews, follow up stories, etc.”. It means we don’t sell anything or recommend anything, we only share information.
The focus here for Lyoness have been on the recruitment system and the AU-units investment system. We haven’t focused on the cashback cards. I will consider the cashback solutions to be legitimate.
Thanks for the information. I haven’t focused on the merchant side of Lyoness earlier, so that information was new to me.
I have pointed out earlier that it will be rather controversial for a merchant to recruit his own customers into a third party opportunity (e.g. the recruitment / investment part of Lyoness). The opportunity part of Lyoness actually makes it less attractive for “normal merchants” to become members.
The problem here is you have only experienced HALF of Lyoness. You don’t seem to realize that instead of generating AUs through shopping you can also PURCHASE AUs directly from Lyoness, which makes it a suspect ponzi scheme.
Thus, it is YOU who is “don’t bother me with facts, my mind is made up”.
Please go look in a mirror, and perhaps, see what’s on the OTHER side of the mirror…
Except a shopping network is supposed to ENCOURAGE SHOPPING, and “buy some of those units” means money went straight to Lyoness, NOT SHOPPING (at a merchant like you).
Your explanation makes no sense when examined in detail.
Well things are changing. November 8th you will not be able to sign up or put down payments as a premium member. That is going to be eliminated. Loyalty benefits to create units will be eliminated.
Lyoness and MasterCard are forming an alliance effect November 8 2014. It will be 1 card with the ability to swipe at merchants and none merchants in 22 countries November 8 2014. Will be rolled out in North America in early 2015.
Shoppers will get shopping points instead of loyalty benefits at non-merchants and cashback as when they shop at a Lyoness merchant.
I’ll believe it when I see an official Lyoness updated global compensation plan document.
The whole thing, not just a summary.
Yeah, right… it seems premium membership and investment scheme will be moved to Lyconet.
No alliance but prepaid Mastercard using solutions like this one:
prineta.com/prepaid-debit-card-program-cashback-rewards-mlms-membership/
which deliveres off-shelf cashback and points collection programs for MLM’s. Lyoness was promoted as “no points, stars or butterflies as others give, but cash back” wasn’t it?
which one will go down first? Lyoness or Dubli?
Here is the truth about Lyoness. It’s not necessarily a scam.
In order to make money, you’ll first have to spend money. The initial down payment of $3,000 is basically non-refundable.
The only way the accounting units will pay off is when you refer additional members to fill your pyramid. So yes, it’s a scam if your not told the truth upfront.
The services are sold by tricking consumers into believing you’ll receive an enormous payout, but the truth is that can take years, maybe not even ever unless your referring others to fill your down-line.
I’m a former employee, not a sales rep, so I know exactly how the program works.
If I could give any advice: don’t trust Lyoness, and if you have $3,000 to waste, do yourself and the economy a favor and donate it to charity. Your only making the company richer, and not receiving any real benefit.
The only real plus to the program is to become a shopper, which you can buy giftcards and receive cash back for each purchase.
@Ronald
Whether you’re told Lyoness is a Ponzi scheme upfront is immaterial to it being a Ponzi scheme.
Every top-earner in Lyoness has invested money and made money by recruiting new investors (with new invested funds used to pay off existing investors). Who they tell and how they explain the business to them is irrelevant.
Lyonnes has started in Finland. Trainer/recruiter has a reputation being #2 in Finnish biggest scam called Wincapita”.
Lyons recruiting is all about Units and auto chips (wich they call prepayments), the recruiting speech I mean.
Now threre is 200 small shops, mainly not so “good ones”. This seems to be like religion. How they can speak for 2% kickbacks as a splendid opportunity, when at the same time You get 20-30 % rebate if You just ask 🙂
hi all, this is a fraud and pyramid scheme business.
do not believe such kind of ponzi business. i am a dam victim of this lyones i invest 3 years ago for premium member hk$30,000 and for asia accounting unit hk$108000 total is hk$1038000 but still i did not get any benefit except hk$19000.
i had send email to lyoness hongkong last week but still no any response from senior management. so plz if guys are also victim email me at (removed). i am not only one we are more then 10 people all are invest premium memeber + asia account.
very soon we are going to report hkpolice.
1) The merchant does not see 1c of the money.
2) Lyconet/MyWorld keeps everything and pays it to the Top Leaders.
3) Merchants are promised to be marketed but in certain countries like Suuth Africa there is the CEO John that is under investigation and HQ is trying to get rid of him because he has been pushing his wn agenda to enrich himself.
4) Merchants are struggling under the MyWorld and Lyconess Pyramid Scheme.