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.