Lyoness reveals only 21% of Cashback World cards used in 2017
One of the common rebuttals we see to Lyoness’ Ponzi scheme is the cashback side of the business.
Originally offered through Lyoness itself, the cashback scheme was rebranded as CashBack World last year.
Following the Gaming Board’s decision to ban and then uphold Lyoness’ ban in Norway, the company has filed a second appeal.
In their second appeal, Lyoness reveals some interesting statistics regarding Cashback World card adoption and use.
The problem with citing the Cashback World cashback scheme as a justification for Lyoness’ Shopping Unit Ponzi scheme is twofold;
- there is no justification for Ponzi fraud and
- what does or doesn’t happen outside of the core Ponzi ROI model is irrelevant
Since inception, the cashback side of Lyoness has served to facilitate the core of the business, that is affiliates investing in units and then recruiting others who do the same.
Bundled with that is cashback, which here and there generates additional units, which allows affiliates to receive ROI payments slightly faster.
Ask anyone in Lyoness working the unit Ponzi though, and they’d be lying if they didn’t confirm affiliate investor recruitment generates ROI much faster than shopping.
Which is important, considering that for 2017 Lyoness claimed to have 175,000 Cashback World members to 17,000 affiliates.
In most MLM companies that’d be an impressive retail to affiliate ratio. But bear in mind Cashback World membership is free and there’s no obligation to spend.
Indeed, many merchants who have signed on as affiliates hand Cashback World cards out like candy, in an attempt to push through their own units toward a ROI payout faster.
Furthermore, as the Gaming Board observed,
Lyoness has not stated how many times each individual member used their benefit card 2017, and it is unclear how many Cashback World members are still active.
2017 saw significant growth of Lyoness’ Ponzi across Italy, which began to taper off around April this year.
No doubt 2018 figures for Cashback World card usage among non-affiliates would tell a very different story, which is what the Gaming Board is getting at.
In any event, without knowing the total spend of non-affiliates on shopping, one can’t calculate how much retail money was pumped into Shopping Units.
Typically Lyoness affiliates who sign up believing they’ll be able to generate ROIs through shopping, soon realize that takes years.
It is far quicker to convince others to sign up as affiliates and invest, leading to the majority of revenue paid out on Shopping Units ROIs being sourced from new affiliates (hence the Ponzi nature of the business).
As part of their investigation the Gaming Board also requested a revenue breakdown.
Lyoness refused to provide the data and failed to ‘provide sufficient reasons for not being able to supply current accounting for the company’.
With respect to Lyoness’ operations in Norway;
Received figures from Lyoness show that revenue from loyalty cashback shopping does not provide the 17,000 Norwegian affiliates the number of shopping points they need to receive ROI payments.
According to the Lottery Authority’s assessment, the number of participants in Cashback World and Lyconet is less important in the assessment of whether Lyoness is an illegal pyramid-like sales system.
Our assessment revealed Lyoness is a pyramid-like sales system in which remuneration is paid to qualify for the opportunity to earn income, due in part to the fact that others are recruited into the sales system, and not the sale or consumption of goods, services or other benefits.
Data received from Lyoness shows that revenue from Cashback World in 2016 was limited and that revenues came from selling discount coupons and shares (units) in Lyconet.
Remember, the Gaming Board’s analysis is based on data submitted by Lyoness itself.
The Gaming Board rejected Lyoness’ first appeal on May 31st.
A second appeal was filed and again rejected by the Gaming Board on July 19th.
As per internal procedures, Lyoness’ second appeal has been forwarded to the Complaints Board for review and final decision.