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.