ACCC lose Lyoness pyramid scheme case
Oct.23, 2015 in
Lyoness, regulation
Following a judgement hearing held a few hours ago, we can now report that the ACCC’s pyramid scheme case against Lyoness has been dismissed.
AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
Applicant
LYONESS AUSTRALIA PTY LIMITED and others named in the schedule
Respondents
THE COURT ORDERS THAT:
1. The proceeding is dismissed.
2. The Applicant (ACCC) is to pay the costs of the Respondents.
More info once the judgement is made available. Standby…
Update 26th October 2015 – Justice Flick’s judgement has been published.
The dismissal of the case isn’t so much about Lyoness not being a Ponzi scheme, such as it is the ACCC’s failure to make AU investment the focal point of their complaint.
In other words, LYONESS WON!
We’ll know more when the judgement is published.
I’d be surprised to learn Ponzi schemes were made legal in Australia today, so we’ll see what’s published when it’s made available.
shocking!
the judgement will be a great read.
Nope, merely it didn’t lose.
Sorry haters, Lyoness WON!
No surprise here, for everyone intellectually honest, that in conscience research and know what Lyoness really is!
(Ozedit: offtopic marketing spam removed)
Yesterday some people here were praising the end of Lyoness… Haters wont sleep tonight.
Oz… The intention was not to spam, but ok. I hope you start being less selective with the news published here, some very relevant.
this is what craig wotton former managing director of lyoness australia posted an hour ago:
You need to get your facts straight and you need to have a certain intelligence to fully understand what Lyoness is all about,instead of going off half cocked.
Any company that has lasted 12 years and has offices in 46 countries must be doing something right and Legal. Think about that.
How does that negate accepting investments from affiliates and paying out ROIs with subsequently invested funds?
If you’re going to “think” about it, at least be logical.
Great news! Every time I have been told I will get paid I do!
I love the shopping network and the merchants benefit a lot!
Pity about the whole AU investment scheme but. Or are you one of those merchants in denial?
given that lyoness has a complex and convoluted corporate structure, with a maze of companies spanning continents, i hope that the ACCC has not lost out for failure to provide enough evidence.
IIRC, in norway the regulators had only the marketing material of lyoness to go by, and did not have access to the full accounts of the company.
There was a news item earlier about how even the SEC are losing cases where bazillion bits of complexity are confusing the heck out the jury resulting in “not guilty” in multiple insider trading cases and apparently moved the bar higher on proving what constitutes insider trading, where passing on a “little” knowledge is apparently not enough.
SEC apparently will start going after individual fraudsters rather than taking on whole company at once, and start relying on their internal administrative law judges rather than jury trial. Can’t find the citing right now.
ACCC press release:
accc.gov.au/media-release/federal-court-finds-lyoness-scheme-not-pyramid
initial reactions of rod simms the ACCC chairman, and james o’sullivan of lyoness australia:
dailytelegraph.com.au/business/lyoness-pyramid-scheme-case-thrown-out/story-fni0d2cq-1227580170737
Facepalm.
I invest funds with Lyoness get paid a ROI when enough new investments have been made. No shopping takes place.
Double facepalm.
I sign up, I invest funds with Lyoness and I’m a member.
Of course this isn’t the “only” way to sign up with Lyoness, but by far it’s the most common method for affiliates in the business opportunity.
To hold AU investment up as illegitimate if it’s the only way to sign up, is silly.
Every dubious scheme today tries to hide behind “oh but investment / buying an expensive affiliate pack is optional”.
Sounds like another Norway “this is too confusing” ruling…
Triple facepalm.
I’ll have a followup when the judgement is published, but this doesn’t appear to be a decisive ruling at this stage.
The issue of chain-recruitment AU investment Ponzi fraud was not addressed, and the reason appears to be “a lack of evidence” presented by the ACCC.
i hope the australian judgement covers the question of how commissions are paid for lyoness AU’s, and where the money comes from.
US MLM judgements check whether commissions are paid on product sales or recruitment.
even vemma said that their ‘autoship’ was not mandatory but merely a choice, but the maximum fund flow into vemma came from the autoship.
i hope the australian judgement will tell us how much money came into lyoness australia via the AU units, and how much money lyoness earned as discount prcentage from its merchant partners.
Seems ACCC simply botched the case, IMHO.
ACCC was prosecuting Lyoness as a simple pyramid scheme and “referral sale” scheme (both are basically the same idea) and Lyoness threw enough ancillary qualifications that it no longer looks guilty enough to convict.
ACCC should have concentrated on this “future shopping down payment” thing from the beginning and hit it as a “pay to play” scheme rather than a pure pyramid scheme where people get paid for recruiting. They don’t, at least, not directly.
The fact is the “down payment” doesn’t do anything until somebody ELSE also put money into the system (either through shopping or through AU purchase / more down payments by downlines) and ACCC may have not gather enough Lyoness presentations / seminars that explained the scheme in terms of recruitment rather than shopping.
The problem then is Lyoness can throw those reps under the bus and claimed “they were abusing the system, that’s not the way Lyoness was meant to be used”.
But that’s a much better outcome than having Lyoness cheerleaders touting “we’re legal, nananana-nana!”
Sorry OZ you and others are obviously not understanding the way Lyoness works and those who brought the case in the first place!
We are a shopping club -if you don’t have a team shopping you aint going to grow in the business- fullstop.
We don’t have Investments ( your terminology) The ‘unit’s’we earn from discount vouchers are redeemed gradually. Those from others shopping points are for work done upfront in building to shop and training ones network members.
No-one loses! Those alluding to be ‘losers’ did not take the time and effort to learn the business properly or were misled by individuals who also did not have enough knowledge to share the ‘facts’.
They might be to blame- not the company. Of interest would be how many of the anti’s are with other Network marketing companies??
craig wotton former managing director of lyoness australia is majorly pissed at the judgment today:
‘judge was paid off’ is a bit too much, but i guess wotton is hopping mad.
how can any MLM scheme which has non refundable payments be Legal?
regulators and courts try to protect consumers from ‘harm’ and one of the ‘harms’ is an MLM not providing for ‘buyback’.
is there ANY top MLM company which does not have buyback?
yet, in lyoness/lyconet people can make ‘downpayments on future shopping’ which cannot be requested back from the company?
how in the world can an MLM Without Buyback be Legal unless they are selling perishables like milk or veggies? are shopping vouchers perishables?
The JUDGE in the case acknowledges exactly what you guys dismiss as irrelevant. I’ve been telling you that for months. Here’s what the JUDGE, who hear testimony and investigated Lyoness said,
He understands it; you guys don’t or don’t want to. You can put your pyramid nonsense to bed now.
This part is unclear for me:
Here in Poland beginning of Lyoness in late 2009 they’ve issued “roadmap” and kinda weaver stating that first 400 members can buy-in with $2500 only. Was Lyoness launched in Australia in the other way?
@Markie
I invest funds with Lyoness for AUs, I get paid when other affiliates do the same.
That has nothing to do with shopping. Nor does a judge’s decision change Lyoness’ business model.
@Fred
I invest funds with Lyoness for AUs and I get paid when others do the same. That has nothing to do with shopping.
@comfort_eagle
Lyoness Australia affiliates and management have represented big promises were made and broken. And of course Australia was launched with the same “premium affiliate” downpayment investment drive.
Unfortunately it looks like the ACCC didn’t present enough evidence of this to the Judge.
From another thread, how they did it in Australia.
He was recruited by someone in the UK. Money was sent to Austria. Paperwork was sent to UK. He became a UK Premium Member, but with a promise that membership would be transferred to Australia after launch.
PS. The Judgement doc is still not live. It might go up tomorrow, otherwise detailed analysis will have to wait till next week.
From what we’ve learnt so far though, this is pretty much looking like another Norway decision. The AU investment scheme obviously wasn’t as large a factor in the decision as it should have been (not enough evidence submitted by the ACCC to counter the encyclopedias of waffle Lyoness attorneys no doubt submitted).
lyoness reps are quite happy with todays case outcome, and rightly so, because a win is a win, at least until an appeal is filed.
but really, would anyone be besides themselves with glee, because they get to save 1-5% on shopping with a rather ‘limited’ merchant base?
‘woohoo! i’m so happy i get to save 1% at wallgreens! and if i haul in my neighbor, i will get a whole 50 cents on every 100$ he spends! move over bill gates i’m gonna be rich!
ha. we all know that lyoness reps are happy because they can continue their AU investment recruitment game a bit longer.
From the court:
You keep harping on the down payment side, as you have from the beginning. I have been telling you that’s one part of it and the shopping part is the other, which keeps it from being a pyramid scheme.
The judge agreed with my assertion. If you continue to harp on only the downpayment side and ignore the shopping side then you’re not being truthful to your readers; only telling part of the story and not giving the whole truth which is what the court has done.
Either that’s the case or you’re now saying the judge is an idiot and still doesn’t get it.
Which is it Oz?
As I have covered before, there were some people trying to get the jump on everyone before Australia was a Lyoness company. They were kicked out.
what happened to their money which lyoness accepted? what happened to the downlines they created in australia? were the downlines kicked out too? was all the money refunded since lyoness had no merchants in australia at the time?
heres a JUDGE who hear testimony and investigated Lyoness said Lyoness is so Ponzi-like that members contracts are not valid and Lyoness has to give their downpayed cash back without any purchase 😉
//verbraucherrecht.at/cms/uploads/media/LG_Krems_30.7.2013_6_Cg_34_13d.pdf
He understands it; you, Markie don’t or don’t want to…
But Andrew wasn’t “kicked out”. He still has a Lyconet member page, i.e. he must have remained active long enough to sign up for that member page in November 2014 (just as he described it in the video).
mylyconet.com/andrew/
It says no such thing. If it did they’d have shut down Lyoness back in 2013. Don’t make stuff up.
So, Comfort Eagle…is the Australian judge an idiot and couldn’t figure this out?
A shopping club that has a provision for people to PAY the club directly to raise their reward level (i.e. AU), bypassing any shopping to earn such. Explain that away. Nobody could, so far.
That argument only works if one cannot buy AUs, or the court had accepted that “purchase of AUs” was indeed “for future shopping”, when it was actually a self-qualifying payment (i.e. self-consumption).
This is a decision from a Court in a major Western Democracy with Rule of Law codified for centuries. You guys have a problem with that.
Markie and I have been on here trying to level the playing field and giving a balance from the one sided biased opinion spewed here while you have your finger on the censor button to delete anything that shows you are wrong.
You do some good work here but you have to sometimes admit where you are wrong and adjust your thinking. The same way Lyoness has adjusted its program to be compliant.
Lyoness has a free membership and even creating units through downpayment does not raise the reward level. You’re confusing issues.
Do you think the judge is an idiot and missed what you so cleverly caught?
Right, the judge is an idiot but YOU know the truth.
I say stop with the misstatements, falsehoods and half-truths. Stop your lying now.
The judge looked at the whole thing and made his (correct) decision.
It says so.
It’s original austrian court sentence scan. And Lyoness did not appeal, just paid the victim off. There are several judgments like that.
Do you consider these judges idiots who cant figure what is Lyoness about?
Court said:
das Geschäftsmodell der beklagten Partei einem Schneeballsystem so ähnlich ist, dass diedarauf bezüglichen Bestimmungen zumindest analog anzuwenden sind and ordered Lyoness to return downpayments to their owner.
Markie said:
It says no such thing.
Now, Markie, is the judge idiot or yourself?
I know what I said, and there are no misstatements, falsehoods, and half-truths in what I said.
The FACT is buying AU cannot be explained by you, or anyone else, to be anything other than “buying a higher rank with better comp plan”. Because that’s exactly what it is.
Lyoness is complex enough that one can be entirely legal (i.e. do only shopping), or mostly illegal (buy AU, and encourage downline to buy AU after doing minimal shopping as required) or anything in between.
What the court had decided is that Lyoness is not ENOUGH of a pyramid scheme (based on what was submitted by ACCC) to be indicted under Aussie law of “pyramid selling” as written.
I.e. You have to be “this much” pyramid scheme to be considered pyramid scheme, and Lyoness missed the threshold, based on evidence submitted by ACCC.
Whether this is the ACCC’s fault for not proving their case, or is Lyoness actually that innocent, we won’t know until we see the full judgement.
So you can stop with the “OMG Lyoness totally innocent you shudup” rhetoric, or as you said, “stop the misstatements, falsehoods, and half-truth”, when you don’t know the nuances yourself.
An individual case, not a broad-brush judgment against Lyoness. You continue to misrepresent the truth
I know all the nuances and have explained it ad nauseum and will not go through it all again with you.
The judge agreed with what I’ve written and counteracted the falsehoods you and others here continue to propagate. I say stop with that, move on to some of the real scams and do good work there.
Lyoness has been vindicated, like it or not.
So it’s not
anymore? Was the judge idiot or not?
Who are “they”, the ones who were kicked out?
Andrew Plimmer’s upline seems to be John French, Lyoness UK Limited / Lyoness Ireland / Lyoness Asia.
Rick Wahlrab (Lyoness USA) also recruited premium members in Australia around the same time.
Have they both been kicked out?
The names were found in another thread …
@Markie
That’s now how MLM works. You cannot run a Ponzi scheme, period. It doesn’t matter whatever else you attach to it.
If a Judge has justified the existance of a Ponzi scheme based on whatever else is possible (“Oh you don’t need to invest…”), then this is a catastrophic fail of a legal decision.
I’m not ignoring the shopping side, I’m saying it’s entirely irrelevant upon consideration of Lyoness’ AU investment Ponzi scheme.
@Tower5
A Judge’s decision based on a lack of evidence submitted does not change Lyoness’ business model.
If you accept investments from affiliates and pay them a cash ROI sourced from subsequent investment, you are running a Ponzi scheme.
If the Judge has failed to see that, that’s on the Australian legal system. It is what it is and doesn’t make Lyoness’ AU investment scheme any less of a Ponzi.
So your stance is another court blew it again? Norway, now Australia? These guys just can’t figure it out?
Or maybe it’s you who can’t figure it out; must be one or the other.
Your assertion is completely false; I know for a fact not everyone you mention ever brought in members from Australia, either back then or now.
Pretty much. Both openly acknowledge Lyoness is complicated, and seemingly the AU investment scheme is over their heads.
I know that headache, I’ve gone over Lyoness’ compensation plan in great detail – and it took a while to suss out the core AU investment scheme.
As for “figuring out”, what’s to figure out? The AU Ponzi scheme is there, you acknowledge it but try to justify it. That’s where we differ, as I contend nothing justifies Ponzi fraud – not even a legal decision from Australia.
Like I’ve said, we’ll know more when the judgement is published – but I can tell you now it’s not going to legalize Ponzi schemes. So in that sense yeah, looks like the Judge ignored the AU Ponzi scheme.
That’s why I asked you about it.
It started with you making a claim in post #31 about “some people” being kicked out of Lyoness because they tried to get the jump on everyone before Australia was a Lyoness company.
Vague stories about unnamed “rogue individuals” are not very believable, so I simply tried to verify your story by looking at other sources.
John P. French and Rick Wahlrab were identified in the other thread as two of those who had been active in Australia from September 2011.
Both had leading Lyoness positions — John French in UK / Ireland / Asia and Rick Wahlrab in USA.
It doesn’t meant that John P. French personally must have recruited Andrew, but he must at least have accepted that Lyoness members in the UK signed up new members from Australia.
John P. French seems to have quit Lyoness, or at least I didn’t find any official position for him. Rick Wahlrab is still active (I looked at 2 relatively new videos from him).
2 Lyconet videos from Rick Wahlrab:
February 19 2015: youtube.com/watch?v=gRVlxI1IlTg
February 19 2015: youtube.com/watch?v=S5o9_60pOLE
@OZ
46 Countries 12 years 50,000 merchants (Ozedit: has nothing to do with the AU Ponzi investment scheme. Spam removed.)
Funny I took a couple minutes and looked at the second video of Rick’s and he’s talking all about shopping creating the unit…shopping man! That’s what he’s talking about… shopping.
Shopping… or I can invest funds directly with Lyoness and get paid when other affiliates do the same.
One doesn’t cancel out the other. Ponzi fraud is Ponzi fraud.
He’s talking about Andy Hansen’s downline. Hansen was one of the first recruiters for Lyoness in Australia, in the phase that Comfort Eagle described.
That’s the phase in which there was no local Lyoness entity yet, but foreign members could buy AUs to enroll local premium members into their downline.
Only way to enroll, then, was to buy in for $3000. Pure ponzi of course.
Hansen left and started his own replica under the name Aspire. Hansen told his downline that Lyoness had conned him and them, and that Aspire was going to ethically execute the same great idea.
The other early birds continued recruiting for Lyoness, and together with corporate told the members that Hansen and his people were kicked out for misconduct.
Same happened in Italy, same happened in Austria with Bernhard Wagner.
Hansen, like Wagner and the former management of Lyoness Italy tell everyone they did the dirty work for Freidl, and then weren’t rewarded for (what they admit now is) their criminal conduct.
Will be published on Monday.
In another video on this web site, Wahlrab explains how people can become a premium member, only to add that ‘down paying $3000 is really what we do’.
He’s right about the judgment, but Wotton is a shady guy too. Had Lyoness paid him his Md wages, he would likely have been on their side now.
He also fell for MyShoppingGenie earlier, and teamed up with some shady companies afterwards.
Nevertheless, still telling everyone he’s the go to guy for financial independence – what if you went to him when he was recommending Msg or Lyoness?
How many of these merchants are aware of them being Lyoness merchants? Is Mastercard still a partner too?
Perhaps you need to tell us what you consider to be “the” truth first rather than just throwing accusations around (like you’re accusing us of doing).
really? is it really about the shopping?
in 2013 it was found that only 10% of lyoness members had used their cashback card.
this means that the income lyoness makes from merchants due to the shopping of its members, is very small.
most of the money flowing into lyoness is from the advance down payments.
we know that the AU’s bought via advance downpayments, provide a >100% ROI, based on more people buying AU’s and these ROI’s are paid out without any shopping being realized.
thus, the AU investment scheme is the MAJOR part of the lyoness scheme. [in zeek the investments in bids was the major part of scheme and was deemed to be a ponzi/pyramid scheme.
other parts of zeek like the shopping daisy were not found to be fraudulent. because the Major part of zeek was the fraudulent ponzi/pyramid, it was shut down]
the ‘complaint centre lyoness’ has this explanation about the ‘shopping’ going on in lyoness and how the scheme runs in ‘reality’:
cc-lyoness.blogspot.in/2013/05/the-lyoness-myths-3-most-participants.html
according to consumer laws in australia, pyramid schemes need NOT have ALL members paying ‘participation payments’.
australian consumer laws further provide that:
points b,d, and e, can easily be applied to lyoness.
referring to point d), the lyoness compensation plan is not clearly explained on its website. only someone who is a compensation plan expert may be able to comprehend the complexity of the lyoness compensation plan.
Does anyone know if any individual or collective has sued Lyoness for their money back (successfully or otherwise?)
Pyramid scheme or not, the fact is that Lyoness delegate all recruitment to their members, make no effort to educate them about the complexities of the system, then take no responsibility for any incorrect information that people use to convince people to sign up, be those malicious lies or honest mistakes.
I was told the $3k was a “down payment,” so I could spend it at any time (and cease to be a premium member if I chose to do so.) Was an honest mistake by a friend who thought it was true, but doesn’t help me now.
But the fact remains Lyoness wins again.
Oz and co, your whining about AU investments and ROI simply doesn’t cut it anymore. You backed the wrong horse. Move on.
Your arguments are simply shrill like now. It looks silly to all and sundry.
* Eric Breiteneder in Austria (lawyer).
* Eric Breiteneder on behalf of a consumer protection organization.
* Another lawfirm, based on the same strategy (rest of Europe)
Eric Breiteneder first got a summary judgment from the commercial court that IBR Independent Business Representatives are consumers, not businesses — that ordinary consumer protection laws could be applied.
He then sued Lyoness for that it had “failed to deliver what it promised”. He got 100% refund for consumers and 75% refund for merchants.
Later he was retained as an attorney for a consumer protection organization, in a lawsuit about Lyoness’ Terms and Conditions. 61 clauses in T&C were deemed illegal in Austria / “not understandable for ordinary consumers”.
The contract as a whole was deemed unenforceable = consumers can ask for refund without having to go through a court.
That order wasn’t final. It could be appealed to a higher court. I’m not familiar with any results there.
the ‘austrian consumer union VKI’ with its attorney Eric Breiteneder won the commercial court case which deemed the lyoness T&C illegal, and paved the way for customer refunds.
the VKI is now being helped by a process financier called Advofin, to initiate a class action suit for refunds to austrian and all european lyoness members.the total damages to lyoness could be in the range of 2 billion euro.
also, 4 independent austrian civil courts have found lyoness to be a pyramid scheme.
wiki further reports:
Here’s one link (copy and paste link).
behindmlm.com/companies/lyoness/mastercard-denounce-lyoness-no-direct-relationship/#comment-331639
I used Google translate there, but I tried to make it more understandable in some parts.
@Darren
Nothing excuses Ponzi fraud… but don’t let that get in the way of your celebrating the scamming of victims in Australia.
yeah darren L, we all know you’re in lyoness for the unbelievable, majestic, wallet busting, 2% cashbacks. right?
So does your cheerleading.
Without seeing the arguments in the judgement, you don’t even know how Lyoness won. For you to harp “OMG Lyoness all legal.
Critics shuddup” is actually MORE annoying since you’re basing your opinion on your personal opinion of what the judgement meant, rather than the legal and factual arguments (which were not available yet).
We use those definitions because they are the closest we can find.
“Pyramid scheme” simply means that it’s partly based on recruitment of additional participants. It means that it eventually will run out of people, that it will gradually become more and more difficult to get some money back.
“Ponzi scheme” simply means that it’s a fraudulent investment scheme. A Ponzi scheme CAN be based on people’s expectations of a profit, e.g. the idea “people will always shop” can be the fraudulent part — “the non-existent or insignificant profit generating mechanism” you normally will find in Ponzi schemes.
If I should give a name to it, I would have called it a “money trap fraud”, a fraud that will trap investors’ money inside multiple matrices, where the investors will need to pay more money in to get their initial investment back from the organizers.
Yeah, throw Hansen under the bus now.
There was no other way to get in this time, it was not Hansens regulations but Lyoness ones. Then rebate money was made possible to feed ponzi matrix, but it’s still ponzi.
IMO it is not important too much how close is Lyoness to pyramid scheme definition of each country legal system. More important is whether Lyoness is entitled to keep downpayments in front of disapointed mebers demanding it back.
This was real reason Lyoness launched Lyconet for – to dissolve downpayments they were ruled to return to their owners in Austria, due to typical consumer protection law violation.
Judge order saing it is pyramid could help that people to get refunded faster (if at all)but for myself it is secondary issue.
Now, if Norway ruled Lyoness was Ponzi 2012 i 2013, are Norwegian members who was enrolled that time entitled to downpayment refund as a Ponzi scheme victim? That’s more interesting.
We have some decisions in different countries but in Austria where everyones money initially go courts say members contracts are not valid and order Lyoness to give it back. We also don’t know if ACCC appeal.
Trying to identify Lyoness as either Ponzi or pyramid actually makes it more complicated. It has elements from both types, but it’s neither a true Ponzi nor a true pyramid.
I believe Eric Breiteneder had the correct strategy when he focused on ordinary consumer refund because Lyoness had failed to deliver what it promised to deliver in its marketing material. He used Lyoness’ own marketing material against it in court.
He did the same in the VKI lawsuit. He used Lyoness’ Terms and Conditions and compensation plan against it in court, as a method to get the contracts declared unenforceable.
Okay, but Lotteri- og stiftelsestilsynet said 2 years ago Lyoness was operating illegal (call it type of illegal pyramid-ponzi hybrid).
Do you think it would make getting downpayment back in Norway any easier?
No. They should use the same strategy as Eric Breiteneder = they should question the enforceability of the contracts (via a consumer organization or something similar).
Mixing in pyramid or Ponzi will only make it become more complicated and more difficult to prove, e.g. because of multiple geographical jurisdictions and multiple business entities.
Lyoness appealed it of course, and 2nd instance verdict is anticipated 2016:
ots.at/presseaussendung/OTS_20150506_OTS0022/vki-sammelaktion-gegen-lyoness-loesungsweg-fuehrt-in-die-niederlande
I believe it can be a good idea to compare Lyoness to some known Ponzi / pyramid hybrids.
ZeekRewards
Investment in VIP bids → 90 days daily ROI
Reinvestment → “growing VIP balance”
– – – – – – – –
BLGM
Investment in bid units → 99 days daily ROI
Reinvestment → “growing number of units”
– – – – – – – –
OneCoin
Investment in tokens → “grow and split” → onecoin mining
Reinvestment → “growing balance of tokens and coins”
– – – – – – – –
TelexFree
Investment in AdCentral contracts → fixed weekly ROI for 52 weeks
Reinvestment → “growing number of contracts”
– – – – – – – –
Lyoness
Investment in units → no daily or weekly ROI or growth
– – – – – – – –
In Zeek, BLGM and OneCoin, no additional investment of money from the outside was required for the investment to grow. The system itself would make the investment grow.
TelexFree was based on a different plan, “fixed weekly ROI per contract”.
In Lyoness, the investment itself will not grow. People will need to put in more money from the outside to make the total investment grow.
Lyoness is more similar to Chartfords “cashback on art purchases” (matrix based payouts).
behindmlm.com/companies/chartfords-review-fine-art-mlm/
Google translated the first part …
“A final judgment is not expected until 2016”.
Not exactly what I meant. Several recruiters introduced Lyoness to Australia. All of those bare some responsibility, but of course Lyoness should be blamed.
Hansen went on to start his own scheme under the name Aspire, which does the exact same thing as Lyoness. So at least he’s not an innocent victim.
What I did find a little strange is that Hansen and his downline were basically singled out in this case, while we see people like Craig Wotton pose as innocent victims.
These top people aren’t (merely) victims, they’re perpetrators as well.
Lyoness changed their system so often I can’t keep up. But in 2012/2013 there were monthly pay outs associated with your amount of Units and the amount of Units of your down line.
Thanks, Norway. (Re comments #66, #68, #70).
But I meant in Australia, anything that could help me?
lyoness USA had provided this explanation for reps making downpayments against future shopping [partially paid Gift Card order] in 2013:
1] why is lyoness referring to the ‘business opportunity rule’?
MLM is not regulated under the business opportunity rule, as the FTC excluded it from that rule.
lyoness should re-explain their position regarding mandatory/non mandatory purchases to reflect this.
2] in order to be an ‘active’ member who can purchase AU’s, members need to make ONE purchase of ANY value from a lyoness merchant.
you can purchase a toothbrush and become qualified to invest in AU’s!
3] lyoness does not explain how ROI’s are paid out on AU’s without the ‘future shopping’ actually being Realized.
lyoness and its representatives here, always try to present the scheme as having ‘Optional’ downpayments into AU’s.
further, the number of ‘free customers’ in lyoness may be larger than the ‘AU investing’ reps.
but the Bottomline is that the Money flowing into lyoness comes ‘Primarily’ from the AU investors, and not the shopping of the free sign ups.
file a civil suit and talk to the press.
lyoness may repay your investments to get rid of you.
lyoness USA further explained that the purchase of AU’s are not investments under the US securities laws, because prepaid gift cards are fungible consumable goods with no ‘expectation’ of profits and no ‘possibility’ of loss:
1] gift cards are incomplete financial transactions where money exchanges hands, but no product exchanges hands until some further ‘conditions’ are met.
paying and receiving commissions on such incomplete sales transactions is illegal in MLM:
2] in lyoness when more people invest in gift cards below you, you get paid an ROI, so an ‘expectation’ of profit is definitely present.
3] there is no ‘buyback’ provision in lyoness, so ‘possibility’ of loss is definitely present.
in the regular world customers may not be receive refunds on gift cards. but since MLM is an ‘income opportunity’ there are protections like buyback, to protect people from making rash decisions. the fact that lyoness does not refund AU investments is totally non acceptable.
mlmhelpdesk.com/lyoness-usa-responds-to-accusations-of-violations-to-ponzi-pyramid-business-opportunity-and-security-regulations-pt-2/
mlm-thewholetruth.com/mlm-legal-issues/mlm-coupons-vouchers-gift-certificates-and-down-payments/
i would like to clarify here, that lyoness probably means ‘no ‘expectation’ of profits and no ‘possibility’ of loss’ within the definition of ‘securities’. ie they mean the an AU ‘ITSELF’ will not increase or decrease in value, and hence it is not a ‘security’.
the ‘expectation of profits and possibility of loss’ arises from the lyoness scheme, and how it is run as an MLM.
if ever, the US decides to go after lyoness, then the FTC should litigate instead of the SEC, to avoid arguments about ‘securities’ and ‘investment contracts’.
pyramid schemes which are regulated by the FTC, have the basic structure of ponzi schemes [SEC regulation] in that they are ‘robbing peter to pay paul’, which underlies the pyramid structure of recruitment commissions.
Not automatically. They purchased a higher rank (higher AU is equivalent to higher rank in equivalent MLMs, in that the participant then is qualified for bigger share of rewards.)
Len Clements is mostly correct in calling them “profit centers”, but I think it works better as “ranks”.
It is not a direct pyramid scheme because participants can be rewarded both by legitimate shopping activities as well as AU purchases by downlines.
It is not a pure Ponzi scheme for the same reason.
It *can* be ran as a pure pyramid scheme if promoters ONLY promote the AU purchase portion, i.e. “buy AU, recruit people and also buy AU, and you can reap rewards.”
in MLM the question asked is ‘how are commissions paid?’. are they paid ‘Primarily’ on product sales to end consumers?
so, in lyoness the relevant question to be asked is how much commission does a rep earn on downline shopping and how much does he earn from AU ROI’s.
the answers to lyoness being a ponzi/pyramid scheme will lie in its fund flows and not how it’s scheme is presented on paper. ie how does lyoness function in ‘reality’.
That might be because Lyoness have always been very fanatic about explaining in the US, that they’ve got nothing to do with MLM. In other countries this hasn’t happened so much.
Canada and the US are the only countries where Lyoness provides an IDS – which is also not mandatory for MLMs.
At some point they replaced this requirement with the purchase of fully-paid giftcards for $600 I believe.
Thus Premium Members would sign up and have to order $600 worth of giftcards in order to be eligible to make partial payments of $3000.
I love Lyoness and what it stands for. I have personally helped Lyoness open other countries by buying gift cards and placing units in other countries.
YOU DO NOT “INVEST” IN THESE COUNTRIES.
It has been stated from the beginning that we have a “choice” to participate in helping to “open” other countries. You are in no way forced to put any money in at all if you choose not too.
These begruntled members certainly didn’t have a problem with it when they thought they could “BUY” their way to be wealthy without doing any work to help other people save and change their lives.
Greedy people are the ones who have to file lawsuits if they don’t get their way with something. Obviously they didn’t read the “Instruction Manual/Compensation Plan”.
There are many shopping networks that are similar in nature that give you the “Option” to be an affiliate. There is NO PONZI SCHEME HERE!
When I joined I knew exactly what I was doing. It takes time to open a country and bring onboard the merchants to create a shopping community.
I enjoy doing this and see how the communities are coming together to support one another instead of the traditional do-eat-dog competition.
Just needed to share my perspective on this also.
The legal logic from those cases may be useful as a part of a solution. But currently we don’t have any complete solution we can point to.
I posted some information in 2013 in another thread.
behindmlm.com/companies/lyoness-lawsuits-and-investigation-in-austria/
Most of the other information is spread around here and there, but I gave you a quick overview in post #68.
LEGAL LOGIC
Eric Breiteneder probably looked for the least complicated solution he could find for his clients, e.g. he didn’t bring in pyramid scheme allegations and he carefully tried to avoid making it become a dispute about contract terms.
Lyoness initial defense was that IBR Independent Business Representatives were business owners and were bound by the contracts. They could get their money back by “topping up the down payment” just like the contract said.
He then got a summary judgment that recruitment of consumers into a shopping community isn’t a type of business activity, that IBRs primarily should be seen as consumers and that consumer laws could be applied.
He then filed lawsuits on behalf of groups of clients (when they popped up), arguing that Lyoness had failed to deliver what it had promised to deliver in its advertising campaign (official Lyoness material). According to Austrian consumer laws the consumers were entitled to a full refund.
It solved the problem for more than 200 clients (in multiple similar lawsuits).
The VKI lawsuit is probably a method to simplify the process. If the contracts can be declared illegal and unenforceable in Austria, then consumers can get refunds without having to go through court.
I’m not familiar with the Advofin solution, but I believe they’re waiting for the judgment from the Austrian court to become final.
AUSTRALIA
I know very little about which defense strategies Lyoness have used in Australia. I only know that Andrew from Australia was recruited by a Lyoness member in the UK, paid $3,000 × 2 to Austria (for two Premium memberships), sent the paperwork to UK and joined as a UK member.
Lyoness has used a similar type of “multiple geographical jurisdictions / multiple entities” strategy in most other countries, trying to make it become more difficult for investors or regulators to successfully file lawsuits against it.
@Lyonessforlife
You invested funds in units on the hope that future investment in units would pay you a ROI. The gift cards are entirely incidental.
Whether investment in AUs is optional or not is entirely irrelevant.
No Ponzi scheme has ever fought off securities fraud charges by putting forth that investment was optional.
Name two that allow affiliates to invest in units and get paid a ROI when subsequent investment in units are made.
Of course you did. You’re a Ponzi scammer shill trying to defend your participation in financial fraud. *Winkwinknudgenudge* shopping is optional *winkwinknudgenudge*.
according to a report in june, 2015, VKI + advofin + eric brieteneder, are collecting details of reps injured by lyoness.
they plan to file a class action in holland after first attempting to reach a settlement with lyoness.
more information about the class action can be found at:
translate.google.co.in/translate?hl=en&sl=de&u=https://www.ktipp.ch/artikel/d/sammelklage-gegen-lyoness/&prev=search
obtainer-online.com/news/en/lyoness-case–austrian-association-for-consumer-information-vki-and-litigation-funders-advofin-join-a-common-cause.html
are you saying that lyoness does not have an MLM compensation plan in the US?
if they are paying commission MLM style, then no amount of claiming that their reps are ‘entrepreneurs’ or hiding behind the business opportunity rule will help them.
are people who lose money to lyoness, ‘Greedy’ in your dictionary?
and, a lyoness rep will have to engage a whole battery of lawyers to understand the ‘compensation plan’.
ever ask yourself why lyoness does not have some system of allowing ‘buy back’ for a certain amount of time like other legal MLM? ever ask yourself why the ‘compensation plan’ is so complicated?
It was just recruiting tactics. Internally, Lyoness toprecruiters said that MLM had a bad name and that thus Lyoness recruiters shouldn’t ever call Lyoness MLM. There were internal documents circulating (in the downline of Rick Wahlrab) in which MLM was badmouthed and Lyoness was praised in comparison (for example, no investment, no autoship, no behavior change, and so forth).
Not resorting to the ‘we’re MLM’ defense all too easily is probably one way to maintain the overall illusion.
I have followed Lyoness as a “case” since June 2012. Eric Breiteneder is the only one I know about that successfully have sued Lyoness and have got refunds for his clients.
It doesn’t mean that exactly the same method will work in Australia, but some of the ideas are worth looking at. You will most likely need to communicate some ideas to other victims / lawyers before anything can happen.
WHAT HAVE YOU DONE SO FAR?
You visited this website and asked for solutions. Have you visited other websites for the same purpose?
The reason for the question is that I’m trying to locate where to find the correct audience = Lyoness victims in Australia looking for solutions. I can post a few posts in a relevant place where people can find it, but I will not keep a discussion active.
I found this Lyoness thread in the Whirlpool forum, but it’s not very active. Thread started 3 years ago, last post 4 days ago
forums.whirlpool.net.au/forum-replies.cfm?t=2004861&p=23
It popped up among the first search results when I tried to google “Lyoness refund Australia”. I may try to post something there.
Thanks, Norway.
I’ll certainly keep all that in mind.
I’ve been looking through the T&C’s, and while the Lyoness model doesn’t allow refunds, I can sell my units.
As the people that signed me up are still signing up others, this is looking like my easiest and fastest option to get my money back. Maybe not all of it, but probably more than if I had to pay legal costs to get it back.
I’ll keep my ear to the ground though, if I hear anyone else is suing and needs numbers to make it worthwhile, I’ll jump in behind them.
Thanks very much for your research and insights.
You will probably get some offers from some of the Lyoness defenders here (e.g. Markie or Tower5). They have often talked about “seeing the value of the units”. 🙂
Hello guys, I am confused. Why you keep talking about investment and losing money with Lyoness?
As far as I remember (3 to 4 years), Lyoness offered a possibility of down payment for the future purchases (which creates an unit with some benefits). As I understand the term of down payment, it is not investment.
I am used to make down payment when I purchase my holiday trip. I pay part of it and later I pay the rest.
And as I understand, Lyoness discount vouchers work the same way (I mean, in terms of that discount). I would never call my down payment an investment. And when I decide not to travel, I would not call my travel agent telling her that I lost money because of her.
Do I miss something or can you explain it the difference, please? Thank you.
Guess I’ll give this a stab then.
That’s the investment part.
Your travel agent doesn’t pay you a ROI when you recruit new travel agents who also invest.
Because your travel agent isn’t offering a Ponzi investment opportunity. That’s the difference.
What Lyoness calls investment in the AU investment scheme is irrelevant. Funds are deposited on the expectation of an advertised ROI, which is paid out of subsequently invested funds.