Lyoness a pyramid scheme according to Swiss Court of Appeal
It’s the same old story, a Lyoness affiliate invests in Accounting Units, nobody signs up under them and so they lose thousands of dollars.
Between 2014 and 2015 a Lyoness affiliate in Switzerland invested 4500 CHF ($4510 USD).
When it became clear he wasn’t going to earn any money, the affiliate asked for a refund.
Lyoness refused and so the matter went to court.
A lower court ruled in favor of the affiliate last October and ordered Lyoness to return the invested funds.
Lyoness appealed the decision and it was passed up to the Zug Canton Court of Appeal.
On February 28th the Zug Court of Appeal upheld the original decision.
The court found that Lyoness ran afoul of Swiss unfair competition laws by operating as a pyramid scheme.
The advantage for the members is “mainly from the recruitment of other persons”.
Whoever purchases at Lyoness partner companies and collects discounts has only “marginal advantages,” the court said.
It is well-established that recruiting new investors generates AU ROIs far quicker than shopping through the Lyoness merchant network.
“Remuneration is only significant when (derived from) recruiting new members and their financial contributions.
In Switzerland this is unofficially referred to as a “snowball” business model. That is to say the system snowballs out of control as more and more recruits are required to pay off existing affiliates.
The court found that Lyoness was “redistributing funds from the base of the towards the top of the pyramid”.
This is another indication of the fact that this is an impermissible snowball system.
Lyoness created Lyconet in late 2014 and renamed shortened “Accounting Units” to just “units”. For the most part, Lyconet’s units operate in much the same manner as Lyoness’ Accounting Units.
This was done to create the illusion that Lyoness had changed its business model, as evidence in an official statement concerning the appeal court’s ruling.
Lyoness considered the judgment on the APA request to be a “single case decision in which only the voucher payment system, which had existed since 2014, was assessed.
Lyoness is also assuming that even this product, which is no longer offered, represents or represents a ‘snowballs system’, not least because of different decisions, “said a spokeswoman in a written statement.
Lyoness also emphasized that the company had already initiated an internal “change process” in 2012, in order to separate the purchasing / discount track and the sales area more closely.
“In the course of this process, which was completed in 2014, Lyoness divided its business segments into three brands, thus further defining the company’s structure.
The group now has a brand for shoppers (cashback card), one for its partner companies (cashback solutions) and one for its distribution (Lyconet), “said the spokeswoman.
As previously stated, this is pseudo-compliance hogwash. Lyoness affiliates are still investing money in units on the promise of ROI payouts, paid with subsequently invested funds.
Rather than acknowledge the decision and return the ex-affiliate’s invested funds, Lyoness has stated it plans to appeal the decision.
“The ruling, which is exclusive to Lyoness Suisse GmbH, is not final. Lyoness will lodge an appeal against this decision”, a company spokeswoman said
Presumably this is because if one affiliate who lost money wins in court, a flood of claims from other Swiss Lyoness victims will surface.
Finally OCCP in Poland anounces to finish pytamid case agains Lyoness shortly. Vice president of the Authority for press:
biznes.gazetaprawna.pl/artykuly/1041537,dorota-karczewska-wywiad-piramidy-finansowe-uokik.html
stay tuned 🙂
Comfort what happened to your old blog ?
Hi, the blog wasn’t mine, I was one of authors but with some administrative privilages.
Then, last year Lyoness started PLCC and sponsored 3 biggest soccer players teams in Poland (all with names starting with “L” 🙂
and tried to ban this article about it and some more.
As per blog platform provider, during a month Lyo lawyer sent ca 120 separate letters demands to censor different parts of the blog, even my 4yrs old comments 🙂
Anyway, we were asked for so much changes in out content we decided to hide blog temporaily and move it to another platform. Then blog owner just stopped answering e-mails and no contact I have with him since that time. So blog is only available after log-in for admins.
Then theres fanpage on fb I support nowadays, this formula is OK too, some people contribute or ask questions which is also positive.
To help them I can use webarchive of antylyoness.blox.pl where I think all answers for all possible questions concerning Lyoness pyramid can be found, a lot of sources and sure Behind MLM articles translations :).
I magaged to cover all important information on Lyconet after spin off also so in general it is all up-to-date till now, I just link it if needed…
and I still have access to blog so when OCCP issues this decision they talk about now, I will turn the blog up again for sure.
@comfort_eagle
Sounds good but let’s see if anything comes of it.
European authorities seem to have the “here’s a warning about a scam” step nailed down, but following it up with action is where they drag their feet.
The Bezirksgericht (District Court) of Hall in Tirol, Austria, has decided on May 12, 2017 in its judment 4C 229/16 p that the business model of Lyoness Europe AG, Buchs, Switzerland, is to be considered as an unfair pyramid scheme within the meaning of Art. Z 14 in attachment to § 2 UWG (Austrian Law against unfair competition).
The verdict of the Bezirksgericht, Hall in Tirol, was rendered based on legal action taken by an Austrian language trainer.
Does anyone have a link to the court decision? Thanks.
@Scott
We’re a bit spoilt in the US. Getting EU legal docs is usually difficult unless a local provides them.
@Oz
Please check and see if you can find anything about (yet another) namechange from Lyoness to Cashback World….
Cashback World? Sounds awfully generic.
@pellets
Why don’t you trie out your self mate?
Would like that link aswell! Anyone have it?
@littleolle: Can you please provide the link to the court decision! As far as I can find only “facts” is from other websites!
I mean, reffering to eachother is much for the sake! Thx!
From memory the court docs aren’t available. You have judgment numbers though so you could always rock up to the court.
A German lawyer writes: Exit possible for partners
NOLINK://kanzlei-herfurtner.de/lyoness-ausstieg-fuer-partner/
The comments under the article are very interesting! 🙂