Lyoness found guilty of deceptive business practices (Austria)
It’s a story that’s probably familiar to many of Lyoness’ current and former Premium members.
You were told to invest thousands “in shopping”, got a bunch of worthless Accounting Units and when recruitment of new affiliates died down, you were left holding the bag.
Not all Lyoness affiliates chalk up their losses and go quietly into the night however, with one Austrian Lyoness affiliate attempting, so to speak, to return the bag to Lyoness.
The anonymous affiliate’s story reflects the usual enticement dangled infront of prospective Lyoness affiliates.
In October 2010 the plaintiff acquired three so-called Lyoness business packages for 2,000 Euros each.
The affiliate was told ‘from this 6,000 Euros he could in two or three years to make around 18,000 euros‘.
By recruiting new Lyoness affiliates who also invested in Accounting Units.
The plaintiff has also said that if he brings more people to Lyoness, he gets more money, which is why the plaintiff his partner and two friends enlisted.
The affiliate took Lyoness’ marketing representations at face value, and was upset when the company gave him shopping vouchers in lieu of a cash ROI.
For those unfamiliar with the scheme circa 2010, Lyoness affiliates received shopping vouchers equal to a fraction of the funds they invested. Large cash ROIs were paid out only upon significant recruitment of new affiliates (and their subsequent investment into units).
The case in Austria has been slowly playing out over the years, with the Vienna Commercial Court handing down it’s ruling a few days ago.
“The plaintiff did not understand the Lyoness system”, says the 31-page judgment.
“He didn’t want to receive vouchers, and was not even informed that a part of his profit should be paid with vouchers.”
In the court’s opinion,
the system of Lyoness is in the opinion in connection with the distribution of products, as the capital injections, inter alia, from purchases, coupon orders or payments arising on vouchers with partner companies.
Hence loyalty bonuses and the like are calculated as promised benefits.
Payouts are higher when the company is supplied with additional capital, such as from the applicant and when more investors participate in the overall system.
Although marginal payments arise from an affiliate’s own purchases, the majority of payment in economic terms is made almost exclusively on the recruitment of new members.
The Commercial Court went on to find Lyoness guilty of deceptive business practices under Austria’s Law Against Unfair Competition.
This rendered business conducted between the affiliate and Lyoness invalid, with Lyoness ordered to pay the affiliate €6000 EUR plus 4% interest (3 years).
Lyoness are able to appeal the decision, via request of an “extraordinary revision”.