Lyoness a pyramid scheme in Italy, fined 3.2 million euro
Following a boom in local investor recruitment, Lyoness caught the attention of Italian authorities.
Italy’s Competition Authority (AGCM) announced a preliminary investigation into Lyoness in September 2018.
The investigation concluded in late December, resulting in Lyoness being declared a pyramid scheme.
As per AGCM’s investigation,
the promotion system used by the company Lyoness Italia Srl to spread among consumers a formula for the purchase of goods with cashback (ie with the return of a percentage of the money spent at affiliated merchants), is incorrect because it integrates a system with pyramid characteristics.
For those unfamiliar with Lyoness’ business model, the company uses a cashback ruse to mask pyramid recruitment. Those recruited invest in units, which pay a fixed ROI once enough new investments have been made.
Or as the AGCM put it;
(Lyoness’) promotion system, using the pretext of described advantage of purchases with cashback, actually involves the recruitment of a large number of consumers who are required, after having assumed the role of sales manager, to pay an entry fee particularly high to access the first commission level (equal to € 2,400.00) and start the “career” as Lyconet Premium Marketer.
Subsequently, they must recruit other consumers, as well as make additional payments to confirm and progress in the “career”.
Of particular note is that the AGCM investigation revealed cashback shopping within Lyoness only accounted for about 16% of Lyoness’ revenue in Italy.
The remaining 84% was sourced from direct investment in shopping units.
This is due to the fact that, by design, the amount of volume required to trigger a ROI is unfeasible through cashback.
The achievement of high levels of Shopping Points- the compensation scheme remuneration mechanism – is essentially possible only with the payment of sums of money by the participating consumers or by the subjects recruited by the latter.
According to information provided to the AGCM by Lyoness,
many tens of thousands of consumers have paid the aforementioned sums of money to enter, participate and remain in the system, (but) only a very few individuals have actually managed to achieve significant positions.
AGCM also took issue with how Lyoness presented its business model, labeling its marketing practices “deceptive”.
In addition to be declared an illegal pyramid scheme, AGCM has also fined Lyoness €3.2 million EUR.
BehindMLM began warning consumers of Lyoness’ Premium member Ponzi scheme back in 2012.
Unfortunately Lyoness manages to continue migrating to different countries once caught or local investor recruitment collapses.
Lyoness has also tried to mask the scheme by renaming “accounting units” to “shopping units”, and changing the company’s name to Lyconet and more recently, Cashback World.
At the time of publication Alexa estimates that Italy makes up a whopping 47% of traffic to Lyoness’ website. Italy is also the top source of traffic to the Lyconet website (35%).
Which country Lyoness will migrate to having lost its largest investor market remains to be seen.
Jan 15th, 2019 at 6:05 am Malthusian(Q)
Buh-buh-buh-buh-but……
…cashback?
Jan 15th, 2019 at 10:11 am Lynndel "Lynn" Edgington(Q)
Now it is time for other countries to step up to the plate and do the same and get this Ponzi shut down.
The US FTC has been provided more than enough information to have taken action against them 2 years ago and ongoing information, and for some strange reason have ignored all the information.
Conversely the US market is dead and all have lost their money, unless they want to sue Lyoness.
Lyoness can stall them and make them run out of money before it ever gets to court. Their only hope is to get a class action lawsuit approved and filed.
It might wake the FTC up and get them to finally take action. So frustrating they ignored taking action against them.
Jan 16th, 2019 at 4:09 am Soothsayer(Q)
Several layers to Lyoness. The shopping and cashback part can’t possibly be a pyramid scheme as payments are direct to the shopper and it costs them nothing for a card; free money, a percentage of the purchase in cashback, paid by the store.
It’s that other part where people can purchase spots in the system that can be considered a pyramid according to my understanding. So I wonder if the people in the US who are simply shopping will continue and just get their cashback.
That whole deal has good stuff and some murky stuff.
Jan 16th, 2019 at 4:41 am Oz(Q)
Lyoness is dead in the US and has been for some time.
The reason there’s still traffic from the US is legacy affiliate investors who position themselves at the top of new countries Lyoness migrates to.
Jan 17th, 2019 at 9:35 pm MyMind(Q)
What is the problem if you get money back? NOTHING! All people in 47 countries where CBW can be used are getting it back. The only decision is are you going to collect your own money or you will leave it to the store or the partner company.
Ponzi scheme if you buy a share of some company? C’mon… The people that has a share can always get money back of what they have invested. Just be unselfish and inform people they all can get money back with their everyday purchases.
All the informations are out. People just think they will make a quick money. No it aint going to be quick but it will be permanent.
Jan 17th, 2019 at 10:05 pm Oz(Q)
Mathematics dictates that the majority of Lyoness investors can’t “get their money back”.
Lyoness is dead in but a handful of countries. The second largest source of traffic to the Lyoness website is Greece @ 5.5% (Alexa).
As confirmed in Lyoness’ current largest market, Italy, only 16.6% of company-wide revenue is via shopping.
If Lyoness’ cashback was viable to recover invested funds, the percentage would be much higher. 84.4% of funds entering Lyoness in Italy are from direct investment into units.
And you’re going to argue with a straight face that the shopping is viable?
Furthermore cashback shopping doesn’t negate the fact that Lyoness is using newly invested funds to pay existing investors via direct investment in units.
Tell that to the investors who have been abandoned in every country Lyoness has flopped in over the years.
Jan 18th, 2019 at 2:46 am Littleolle(Q)
According to lyoness-corporate.com your down to 43 countries at the moment..
And the austian clouds maths Tell us its a ponzi.
888.888 cloud units a 1500euro (sold out)
Aprox 2.5% of stopping to investors.
Over 500k members before cloud started and just over 600k members at the moment.
After 2 years the first payment came to cloud investors a 750euro.
Is it possibole that 100k persons in austria shops for 10.000euros Evert month in 2 years? No! Not even one month. Total ponzi scam!
Jan 18th, 2019 at 7:36 am Uniteam(Q)
You’re wrong, AT Cloud had 8.888 shares.
8,888 * 750 SPs = 6,6 million SPs (Aprox.)
If you take in consideration 100k customers (no one knows for sure), for the waiting period (26 months), it’s around 3 SPs per month per customer, around 150€ in Shopping.
Jan 18th, 2019 at 7:42 am Oz(Q)
What we do know is that only 16.6% of revenue entering Lyoness in Italy was from shopping.
If cashback shopping was a viable method of running a Lyoness MLM business profitably 84.4% of revenue in the company’s largest market wouldn’t be direct investment in units.
Not withstanding 84.4% in direct investment revenue being used to pay existing unit ROIs is Ponzi fraud.
Jan 19th, 2019 at 2:55 pm MLM(Q)
43 countries, pl at sl cz is under MyWorld. You can become Lyconet member without any “investment”. Just register in lyconet for free and skip all packages.
Jan 19th, 2019 at 3:27 pm Oz(Q)
What you can and can’t do outside of the unit investment scheme doesn’t change the fact that majority of Lyoness’ company-wide revenue is attributable to the Ponzi scheme.
You can’t legitimize a Ponzi scheme with a free membership option, any more so than you can by tacking on cashback shopping.
Jan 19th, 2019 at 4:37 pm NemiRombe(Q)
In Norway in 2016, 9% purchase, 91% “investment”.
Jan 20th, 2019 at 2:29 am Pellets(Q)
You missed to cvalculate everything…
8888 cloud units – 1500 Euro a piece equals 13332000 Euro
16,6% revenue in Italy from Shopping
9% revenue in Norway from Shopping
If we take for Austria – the median – it equals 12,8% from shopping
You claim that 100000 customers have under 26 Months – spent 150 Euro each month individually – this sum equals up to…
100000*26*150=390000000
As per your (Stupid/ridiculus) claim…
Austria Cashback World would have 180000000 income from shopping ((390000000/26)*12) on 1 year
Austria Cashback World would have 6153230,7 income from Clouds Sold ((13332000/26)*12) on 1 year
Your stupid reference equals a total income on 186153230 Euro per year for this fraud
That means – you state – in percent – that Austria is having an income from sales (Your imagination on 150Euro per customer and month) on extreme 96,695%
180000000/186153230
Just a quick math to show how stupid you are – that sum is nowhere near 12,8% , not even close to Italy and 16,6%
Just to show the reality on 1 year – with 12,8% income from sales….
6153230,7/0,872=7056457
7056457-6153230,7=903227 Euro per year
Lets play with 100000 customers – that means those customers are spending INCREDIBLE 9 Euro per year on the card…
Or 0.75 Euro per month….
Fantastic figures – I would LOVE as a retail owner to participate…
(Note: Yes – sarcasm)
Jan 20th, 2019 at 7:12 am Bluesmen(Q)
LOL.
You know nothing of what you are talking about.
First you started talking about 888.888 parts, number that is obviously wrong, a basic search here at behindmlm gives the correct number: 8.888.
Second, customer clouds don’t pay in euros, but generate Shopping Points, that IF you have Discount Voucher Balance, those SPs are redeemed at 1SP=1€ rate. But, if you already redeemed your DV, shopping points go to the career plan, and you get paid accordingly (from 0.025€/SP to 0.0825€/SP). This is how their system pays, your knowledge of the comp plan is zero.
Your math is completely messed up, and no need for insults, no one is trying to convince you whatsoever.
Jan 21st, 2019 at 7:50 pm Xuxatola(Q)
I guys.
After a false new about Italian members inability to buy DVs know we have a discussion about Costumers Clouds.
(Ozedit: snip, see below)
Jan 21st, 2019 at 8:25 pm Littleolle(Q)
Dude, your talking to more than one person.
We all know that you count in sp but its easier for people to understand your scam by convert to euro..
8888 my bad but no way austra have 150euro a month from members. Back that up with sales from lyoness.
Jan 21st, 2019 at 9:33 pm Oz(Q)
@Xuxatola
There’s nothing fake about the official announcement from the AGCM.
Lyoness was fined for being a scam and is now illegal in Italy. Derails removed.
Jan 22nd, 2019 at 5:37 am Susan(Q)
lol, this blog still claiming Cashback World is a Scam 7 years later.
I was here in 2012 lol, I will check in at 2026 again to amuse myself will all the ignorance 🙂
Jan 22nd, 2019 at 5:40 am Oz(Q)
The only ignorance on display here is the notion that time legitimizes a Ponzi scheme.
It doesn’t. Neither does Lyoness’ cashback shopping.
Jan 22nd, 2019 at 8:51 am Xuxatola(Q)
(Ozedit: “what about” derails removed)
The Back-office that you put a a print screen was an non active one.
Lyconet and My World is operating and will operate .
You are wrong from 2012 until now . *Facepalm*
(Ozedit: more “what about” derails removed)
Jan 22nd, 2019 at 8:55 am Oz(Q)
A “non-active” backoffice? Gawwwd.
First up total strawman. We quoted the AGCM’s own announcement.
No idea why you’re waffling on about backoffices, don’t really care.
But not in Italy, where Lyoness was found to be a pyramid scheme and fined 3.2 million euro.
Any MLM company, scam or not, losing its primary source of revenue (Italy provides 48.7% of website traffic as I write this), has to be in crisis mode.
So I get why you keep coming back with waffle and strawman rebuttals.
I invest in Lyoness units, people recruited after me and I eventually get a percentage of their invested funds.
Ponzi from day 1. If I facepalmed every time a Lyoness investor tried to defend the Ponzi, I’d have no face left.
The irony of course being that pretty much everyone who has defended Lyoness on here over the years has since lost money.
Always fresh new gullible morons to take their place though.
Jan 22nd, 2019 at 9:00 am xuxatola(Q)
Yes inactive Back-office without the balance to buy DVs .
(Ozedit: spam waffle removed, this isn’t Facebook.)
Jan 22nd, 2019 at 9:02 am Oz(Q)
Has nothing to do with Lyoness being a pyramid scheme, getting banned in Italy and fined.
Anything further spam waffle from you will be nuked. Have a nice day.
Jan 22nd, 2019 at 10:43 pm Uniteam(Q)
Oz,
Not entering the “it’s a scam or not” discussion, there is a difference between “banned” and “suspended”. Even the 3.2 million fine decision may be appealed, so it’s not ‘yet’ final.
Anyway, if you read the AGCM report, you will see that, the regulator “fined Lyoness and gave two months to submit a new marketing plan”, which must then be approved by the AGCM. This is not ‘banning’ a company from a Country. Of course we will se what happens next and the impact of this in LYCONET Business.
Still, at the moment you can make purchases with the cashback card and add SMEs in Italy. But everything that concerns LYCONET: Premium Membership, ESP, Customer Clouds, is indeed suspended.
Jan 22nd, 2019 at 11:12 pm Oz(Q)
Oh I’m sure Lyoness will appeal. But that doesn’t change the conclusion of AGCM’s investigation, that Lyoness is a pyramid scheme and by law is banned in Italy.
Lyoness has already canned the investment scheme in Italy. Seeing as that’s the meat and bones of the Lyoness MLM opportunity, RIP Lyoness in Italy.
And yes, banning the fraudulent business model responsible for 84% of company-wide revenue nationally is banning the business. Any company that loses 84% of its revenue overnight is dead in the water.
Fianlly Ponzi investors aren’t interested in “new marketing plans”, they’ll just leave (and hopefully kick up enough of a fuss when they realize their money is gone so that AGCM takes further action).
Jan 30th, 2019 at 5:13 am Sputnik(Q)
It seems like we are dealing with many scams in Italy. Apple and Samsung (Ozedit: are not MLM companies are therefore irrelevant.)
I have been a member of Lyoness/Cashback World for 4 years and bought my first shopping voucher for R500 (South African) and a starter pack (not sure abut the name). I gave the cards to family and friends.
Not one of them has bought a shopping voucher or a starter pack, and yet I have received my R500 back AND I have made more then R2 400 from their shopping. How can this be a scam?
Why is it that people who knows nothing about network marketing think they can buy a leg, do nothing and earn money? (Ozedit: derail attempt removed)
Jan 30th, 2019 at 6:24 am Oz(Q)
Because during those four years most of the money circulating through Lyoness has been new investment used to pay existing investors.
Anecdotal experiences such as yours do not change the fact that the majority of Lyoness’ company-wide revenue is attached to their unit/voucher Ponzi scheme.
A Ponzi scheme by definition is a scam. QED.
Feb 1st, 2019 at 7:02 am mlm(Q)
just created account under italy lyconet and i can buy enterprise cloud 2 limited edition discount vouchers i.imgur.com/gsqfnoV.png
Feb 1st, 2019 at 7:10 am Oz(Q)
That’s nice… but you didn’t actually invest anything. And it doesn’t change the fact that Lyoness has been banned in Italy and fined 3.2 million EU.
Meanwhile the IP address you used to leave a comment with is from Estonia, so you’re not even in Italy.
Feb 9th, 2019 at 1:38 am Hmm(Q)
I was pulled into the lyoness card in 2015.
Shelled out a good chunk of cash to be a seller. Then I was told to shell out about 150 euros a month to maintain the seller status, and was stressed to invest into a cloud which after 3 years would pay out a lot of money.
What happened my money was suddenly discount vouchers and not cash. They are paid out apparently when you shop as a cash back. So when I use the card and buy stuff I get a drip of money from it.
Now the clouds are not the buzz. Now you can convert this into ecredit a new currency which is supposed to trade 1 to 1 euro.
To convert i have to buy gift cards then they will take my pretty useless vouchers and turn them into ecredit. But wait there is more, you cannot openly sell these before 2023 so again my money is locked into another invented value.
To convince everyone it’s claimed that this will be bigger than bitcoin with an incredible ROI. Also they will setup an online shop where you can buy almost everything and all trade will be with ecredit. Buyers use money to convert to ecredit, buy and so on.
So I’m taken back over the “new” this will be so big etc. A ton of money is going to be locked into yet another name for yet more years and many belive this is an amazing opportunity.
Anyway let me put in a couple of words more.
Why is there little shopping? Well the shops who are members are not cheap, incomplete etc. So if I use the card I actually don’t save anything. In fact I spend more than if I buy elsewhere in most cases. So I never use it as well.
Why pay 50 euros more per tire to get 2 euro back? And what about shopping point deals where you can use it to get 10% or 20% off? Only to see you can get the same discount if you ask.
And the shops who give 3% back means 1% back to you, and you might get 0,5% back from your “discount voucher” money you paid in and it takes forever to get back by letting the shop pay it back.
So I did not give more cards because I can’t say use this incredible energy company who is so “cheap” and give cash back on top when it’s almost 50% more than a non member company, they also lock you into a 1 year contract.
So I saved nothing, made actually nothing but lost because I can’t see I ever get my money back everything I put into it.
But for the ones believing, keep believing if it rocks your boat. Keep thinking a big chain will join, keep believing the next and the next with unbelievable ROI will happen.
I don’t i see this as lost cash and lost time I will never get back.
Feb 9th, 2019 at 6:25 am brian ski(Q)
Welcome to the reality of Lyoness for 99.9% of the members….
Feb 9th, 2019 at 6:27 am Oz(Q)
There’s one way; you have to recruit everyone in your country and the next few countries over as “shoppers”.
Then you might get… half or so of it back… in three decades.
Feb 9th, 2019 at 6:49 pm Paul(Q)
Uh uh! Lyoness is having some legal problems in Italy.
ilgazzettino.it/nordest/verona/lyoness_italia_diffida-4286759.html
Feb 9th, 2019 at 7:50 pm Oz(Q)
Finally. I was beginning to think everyone who joined Lyoness in Italy was a dumbass.