Lyoness still a pyramid scheme in Italy, fined another 3 mill
Italy’s Competition Authority has once again found Lyoness to be an illegal pyramid scheme.
The company has been issued with another €3 million EUR fine ($3.6 million USD).
According to the AGCM’s January 25th press-release, Lyoness, operating as myWorld Italia and Lyconet Italia
is promoted in a deceptive and not very transparent way and has pyramidal elements constituting sales.
As noted by the AGCM Lyoness’ cashback platform is a ruse, behind which the company runs a pyramid scheme.
The investigation carried out by the Antitrust has made it possible to ascertain that the promotion scheme adopted by the two companies is only formally aimed at the diffusion of a cashback service (which allows the return of a percentage of the money spent at the affiliated merchants).
In reality, it is aimed at recruiting an ever-increasing number of appointees to whom a significant economic return is envisaged.
Despite multiple company name changes and rebranding of Lyoness’ original fraudulent investment scheme, investing in points and collecting a ROI when others do the same remains the core of Lyoness’ business model.
Pyramid schemes are illegal in Italy, and so the AGCM issued Lyoness with another fine.
The AGCM first investigated Lyoness back in 2018. That investigation led to Lyoness being banned and issued a €3.2 million euro fine.
At the time Italy was Lyoness’ primary source of new investment.
The AGCM’s investigation revealed just 16% of Lyoness’ revenue in Italy was attributable to cashback related shopping. The rest was direct investment into shopping units.
Lyoness responded by blocking access to its voucher investment scheme in Italy, after which the opportunity soon collapsed nationally.
Italian Lyoness affiliate losses were pegged at 53 million euros in February 2019.
Alexa’s analysis of traffic to Lyoness’ “MyWorld” website reveals an uptick in traffic in late 2020.
This appears to be attributable to renewed promotion of Lyoness in Italy, which currently generates 40% of total traffic to myWorld.
I’m not sure why the AGCM took so long to realize Lyoness was still being promoted in Italy. If I had to guess though it’s probably due to Lyoness constantly coming up with new company names and marketing terminology.
Whether this second pyramid scheme finding and fine means Lyoness is finally done in Italy remains to be seen.