Norway: “Lyoness does not engage in illegal activities”
Never a dull moment in this industry!
Last December the Norwegian Gaming Board launched an investigation into Lyoness. The aim of the investigation was ‘to assess whether (Lyoness) is an illegal pyramid‘.
Now, six months later the Gaming Board has concluded their investigation. Despite Lyoness’ Account Unit investment scheme however, the Board has cleared the company of all suspicion:
(The) Gaming Board has considered the business of our company Lyoness in Norway.The conclusion is now clear.
The Company does not engage in illegal activities in Norway.
At this stage the Gaming Board has only released a statement pertaining to their preliminary audit report. More details are expected at a later date.
The (Gaming Board’s) preliminary audit report concludes Lyoness (is) not engaged in an illegal pyramid sales system in Norway in violation of the Lottery Act § 16 second paragraph.
This conclusion is based on the information that the Gaming Board has about Lyonness operations in Norway today.
We’ll be back with more detailed information on the matter later.
Should be interesting to read what they based their findings on. Historically the Norwegian Gaming Board have a pretty good track record for sussing out scams, so missing the whole AU Ponzi investment scheme seems a little out of character.
Stay tuned…
Footnote: Thanks to the BehindMLM reader who sent in the news tip.
Update 21st September 2014 – The Gaming Board has now published a report on their Lyoness decision.
The conclusion may be related to separation into Lyoness and Lyconet. It happened shortly after the investigation started, sometimes in the second half of 2013 (the investigation started in May 2013, IIRC).
Is there anyone here from Europe who could call the Norwegian government and provide additional information?
What was the nature of the separation?
I would bet my nickles on the theoretical microscopic possibility to make purchases with the downpayments.
What I have heard is that Lyconet is not yet operating, that it will be launched in August.
Tex: To seperate the Cashback part from the premium membership. Lyconet will be organising the latter.
There’s probably a few, e.g. “B.F.”, “S. Holmes” and a few others are from Norway. 🙂
It’s a wise strategy to READ the report first, find out if anything is missing, and THEN send additional information. It will save time and work later in the process.
I suggest they also read up on Lyoness related threads on this blog, do some additional research, and be aware Europe appears to be more okay with no retail sales, as the recent HLF decision indicated.
Lotteritilsynet (Gaming Board) has already got SOME information from this blog.
I focused on plain, neutral basic information, some of it “extremely basic”. But I identified WHAT it was about and WHY I sent it.
Regulators and government agencies will typically need to COLLECT information directly from the party, they can’t accept vital information from random third parties as the only source.
yes , herbalife belgium , relied on the amway 1979 ruling, that as long as products are being consumed by end users , it is all right .
moving forward , even in the US , case law will inch towards this conclusion . two legs of the pyramid argument , ie saturation and endless chain have already been thrown out , and the third leg , internal consumption has been addressed by burnlounge , ie some internal consumption is commissionable .
That is PURE bunk. The laws in the U.S. are different. The U.S. REQUIRES sales to external, non-distributors, always has, always will, the EU does not. Who is going to consume a product OTHER than an user? Stop using that stupid term. We’ve covered that issue many times on this blog already.
It’s always been okay to get paid for internal consumption, as long as there is adequate external sales. The FTC overreached with BL and lost. Case closed.
The U.S. isn’t inching anywhere close to the EU. If anything, the case law is becoming even more defined and clear that retail sales must be significant part of the profit, or the MLM is an illegal pyramid.
which way the US will inch toward , is unknown to all, except time travelers . meanwhile ,you can have your opinion and i can have mine .
i agree case law is becoming more defined . instead of requiring 100% retail [omnitrtion] the US court has lowered the bar , by how much , it isn’t clear , except that 5% is the lower cut off for now . so for now , by NOT sticking to the 100% bar , we can safely agree it has ‘inched’ one step in the direction i proposed.
get the courts to stop , the FTC and the SEC to stop , and i shall follow suit . fair enough ?
while you’re at it , get EU courts to stop too .
Well done. I have also tried. In Sweden too. It is a shame, but I am not surprised. It will be interesting to read its conclusions.
The future will some day give us cred. The warning is still relevant.
your question has two parts :
1] consumption of the product ie , will the product be consumed, or wander aimlessly through the system ? in other words, is the product REALLY consumable ie valuable ? herbalife belgium says :
2] consumption of product by the end users, ie, are their enough and willing, end consumers of the product ?
herbalife belgium found :
to make a long story short : as long as ‘products’ are being ‘consumed’ by ‘end-users’ , belgium did not have a problem with herbalife, and neither should tex .
Except, in the USA, “inventory loading” and “front end loading” ARE seen as a problem, both by the DSA and the FTC.
I tried to read the poorly translated decision, and it looked like Herbalife’s defense was uncontested by TestAnkoop in the appeal trial. The court even accepted changes that had happened AFTER 2011 (after the pyramid scheme decision), not included in the first trial (in 2004).
Stay tuned for what? I can’t believe this site is still going on about Lyoness. You don’t even know what Lyconet is!
Get over it and join the leading Loyalty program otherwise stop wasting your energy.
That’s how the system SHOULD work. The regulator will need to be a neutral supervisor rather than a biased pyramid scheme hunter, or else decisions won’t be respected.
That’s why I sent rather neutral information, explaining details in the system rather than pointing out problems. And I didn’t drown them in information (there’s only 5 people handling those cases).
2 of the sources were simply about pointing out Lyoness’ homepage and list of merchants, nothing more than that, to clarify that I actually focused on the Norwegian part even if most of the material was related to Lyoness USA or Lyoness in other countries.
It’s not a wise strategy to point out hypothetical problems, e.g. Lyconet, if the report reflects the realities. When it already have made a decision, it will most likely ignore hypothetical theories.
Any new material should reflect that people actually have read the decision and have understood it, rather than reflecting people chasing their own theories.
Placed in the correct Herbalife thread (it’s probably NEEDED there), in the newest Herbalife thread (easier to find), or in any other relevant Herbalife thread?
Most relevant:
behindmlm.com/companies/herbalife/herbalife-wins-belgian-pyramid-scheme-appeal/
Newest:
behindmlm.com/companies/herbalife/fbi-launch-herbalife-criminal-investigation/
“Any other”:
behindmlm.com/category/companies/herbalife/
The most relevant thread is probably the first one, where I probably have linked to the poorly translated decision. “Poorly translated” is about legal terms / legal language, it sounded like it was written by a marketing department rather than a court.
Additional information or viewpoints can be “NEEDED” in that thread. I decided not to spend too much time on it, since the case actually is from 2004 (it has been heavily DELAYED in the court system after the trial).
@Dickie
Lyconet would appear to be an admission that Lyoness has been running a Ponzi scheme for a decade or so.
There’s only so many new countries Lyoness can migrate to before it’ll finally catch up with them.
anjali, the U.S. case law (not to mention common sense) is clear. If there are little to no sales to external customers, the MLM is an illegal pyramid. Period.
The Omnitrition is based on that concept. You are welcome to flail around otherwise and look like an idiot, but you are merely posing as an ibofb jr., intentionally trying to cause confusion.
I would bet the blog owners here want to CLARIFY issues, not CONFUSE them. Lawyers LOVE to cause confusion, it creates more billable hours!
You can’t be serious about products “wandering aimlessly through the system.” Are you suggesting there is some sort of product “hot potato” with products being shipped back and forth between different people? Absurd.
A PERSON orders them and the products are delivered to them, either for internal use, inventory, or sale to an external customer. We may as well argue about defining an “end user” as someone from earth, since that was implied in the decision, so if aliens invade and buy products, will they count as “end users?”
What if aliens just take the products without paying for them, because they have death ray guns? Are they still “end users?” LOL
How many times do I have to repeat that BELGIUM DOESN’T APPLY TO THE U.S., as there are ZERO external sales requirements in Belgium (which I think is a terrible flaw, but that’s their country and laws, not ours).
Market saturation has already been debunked as well, the Ger-Ro-Mar and Amway decisions put that idea to bed a LONG time ago, although unfortunately there are so-called experts who routinely insist on continuing to use that thoroughly debunked theory inside the courtroom, just like the FTC tried to use the “internal users shouldn’t receive bonus payment for internally consumed products” idea and failed.
What if the regulators aren’t educated enough to spot a scam? If we don’t tell them, who will? It won’t be the DSA or the MLMs.
Lyconet is not only a response to Lyoness being a fraud, it is also probably even more complex and difficult to figure out, whereas a legitimate MLM is simple – a significant part of the profit, probably at least half, needs to be from external customers.
Hogwash. Lyconet is simply another avenue to allow prospective members to sign up online under existing premium members. Anything else stated is pure fiction.
Yeah… another avenue to mask the AU investment scheme.
You can of course identify your own point of view. Most people will accept that / do that.
Regulators have rules about neutrality and other rules to make sure cases are being fairly handled. The default standard of presumption is “All things are presumed to be lawfully done, until the contrary is proven”.
RIGHT VIEW, RIGHT INTENTIONS
It’s easier if you see them as regulators / lawyers / people (all 3 of them).
* Normally it’s THEIR job (as regulators) to check something, using the correct procedures.
* They’re qualified for that job (as lawyers), at least formally qualified.
* In addition they’re also people / person. A case will typically be handled by one person most of the time, until a decision is made about something.
If you see them solely as “regulators”, you may be tempted to drown that single person (or those few people) in work. Most often it’s better to reduce your own eagerness. People simply won’t accept being drowned in work / you will only slow down the case / your information will simply be filed but not looked into.
NEUTRAL AND FACTUAL, NOT TOO SPECIALIZED
They’re qualified for the job as lawyers, i.e. they’re qualified to follow specific rules and procedures. That’s about something different than your idea of “qualified”. Relatively neutral and factual info will have better chances of being accepted.
You can add specialized info, but try to make it simple and try to give people a choice for what they will use. ACCESS to information can be more acceptable than long “reports”.
Don’t try to adjust yourself to the same level, e.g. don’t study laws to communicate that. You should communicate facts rather than legal opinions (but you can identify your own point of view).
I had quite the opposite telephone discussion with another person recently. His non-profit business helps law enforcement find and prosecute scams, most of them not related to MLM.
He told me of a story about being in Washington, D.C., in a meeting with some regulators, and while he was on his computer, they literally were using paper and pencil. He said you have to put everything on paper, or put it on paper and then mail in a thumb drive with additional information at a later time, but the bigger and more complete the original paper report is the better.
The regulators simply will NOT go online to look at things, and these people were 20-30 years younger than him. I was blown away. No wonder these scams continue largely unabated, not to mention a complete waste of my taxes.
Also, keep in mind the regulators already have the other side of the story, from the DSA/MLM lobbyists. WE provide the balance.
I’m all for providing facts, but the facts must lead to a conclusion, or they will lose to the other side that DOES provide their conclusions.
if aliens descend upon us, with the sole purpose of being endusers, i’m sure the good people at herbalife have a plan for such contingency .
herbalife could offer a round of formula one shakes free {!!} . i could stir in some strong tranquilizers . you could hop around and scoop up the deathrayguns while the aliens snooze . together , we can , and we will , avert disaster by way of deathrayguns.
besides , your career will take a quantum leap . from being “tex: mister bluster on the net” you could go to “tex: destroyer of endusers, in any shape of form” . wow.
if you don’t like the lyricism of it, blame the belgian court , the idea came from them:
you do appear to have problem with legalese , tex. first , the fatwa about using the term ‘end user’ ,and now, you’re venting about some poetic license by the belgian court of appeals . you’ve GOT to stop tex..
http://www.mlmlegal.com/herbalife%20is%20no%20pyramid.html
now tex ,i know you have a problem with lawyers [ and the FTC and the courts and MLM ,and with end users , and with …] , but i’d rather believe a lawyer with billable hours , than you [ as in – who the hell are you ?]
you DO seem limited to ‘stupid’ , idiotic ‘ and deathrayguns , so i’ll leave you to it .
probative means :
so , if herbalife were dragged to court , the belgian herbalife order would definitely be used as probative evidence to support their case . so , saying ‘belgium does not apply to the US’ is bunk .
anjali, if you think the U.S. regulators are going to move all the way from not wanting to pay bonuses for internal consumption to not requiring any external volume, and the U.S. courts are going to abandon external sales requirements because BELGIUM doesn’t require it, I’ve got some ocean front property in Arizona to sell to you.
If you want to know who I am, read my blog. I am NOT a lawyer who is looking to complicate the roadmap for future billable hours, however. BELGIUM? Did you even read and understand my simple pencil analogy? BELGIUM?
(Lyoness)
I checked lottstift.no and oep.no for updates, but didn’t find any.
A problem in this case is that most of the documents have been sealed / not available, probably as “business secrets” or something similar.
An auditing report from Lyoness seems to be available. That was all I found of any potential interest.
Ya gotta wonder what’s so secret about an AU investment scheme and a third-party merchant network.
Maybe the secret is what was submitted isn’t reflective of Lyoness’ actual business model and revenue flow.
The difference is probably that the current cases have been handled by professional law firms, not by MLM leaders.
Correspondence OUT from Lotteritilsynet to a party were generally “public info”, documents FROM a party were generally sealed.
* Internal documents were generally sealed.
* Correspondence between agencies were generally public.
* Anonymous tips (non party) were generally sealed.
* Decisions were public / published on the website.
The idea is to have a high degree of transparency, but also to protect rights. In this case and in the World Ventures case, almost all documents OUT have been sealed.
It wasn’t of any interest. It was an auditing STATEMENT rather than a REPORT, a 2 pages (short) statement from Price Waterhouse, and an accompanying letter from lawfirm Grette DA.
It’s not worth wasting any time on.
How about that? A country’s government investigated for 6 months and concluded Lyoness is NOT a pyramid scheme. Obviously your analysis missed what Norway understands…that the point of Lyoness is shopping and people get cashback when they use Lyoness and the downpayments are not a part of a pyramid scheme.
That’s what they concluded; do you think they might have dug through everything and know more than you do?
For you to continue to say otherwise damages your credibility. Keep on going after the real scammers and bad guys; you do a great job. You can leave Lyoness alone now.
It’s looking like they were either lied to about Lyconet, or are counting AU investment as the purchase of product. Which is still strange considering the majority of AU investment comes from affiliates (participants).
In any event, looks like someone at the Gaming Board dropped the ball. We’ll know more when they release their findings.
Lyoness itself though is still a Ponzi scheme.
AU money is paid in by affiliates to Lyoness, and then paid out to affiliates by Lyoness when enough AU investments have been made.
That’s pure Ponzi.
If they missed the above, then obviously not.
We have analysed the U.S. version, in mid 2012. We have also looked at a few of the cases in other countries, primarily the one in Austria.
Lotteritilsynet in Norway haven’t released any detailed info yet, so “what Norway understands” is rather vague. I only found the short notice released June 6th when I checked today, and that one doesn’t contain any details.
Sweden came to the opposite conclusion, IIRC. I haven’t looked into that case recently. Maybe Sweden know something Norway don’t?
Here’s the original text, published June 6th on Lotteritilsynets “Press release” section of its website:
“In the preliminary report …” “… Lotteritilsynet concludes that Lyoness doesn’t operate a promotional pyramid in violation of the Lottery Act §16, second paragraph”. “The conclusion is based on the information Lotteritilsynet have received”. “We come back with more information later”.
It’s difficult to interpret anything about “what Norway understands” from that short message.
So Oz you don’t care what the government of Norway concluded. The downpayments are not investments and are not a Ponzi scheme and the government of Norway rightly concluded that, “Lyoness is not doing anything illegal”. You say the Gaming Board dropped the ball. What a load of crap that is.
Don’t confuse me with the facts, eh? Is that your defense? 6 months of investigating and they MISSED IT?
I guess YOU, the ALL KNOWING OZ, who continues to make false statements about Lyoness, know more than they do. Wrong. The curtain has been pulled back and you are wrong about Lyoness.
The FACT is they concluded Lyoness is doing nothing illegal. That is what is stated in their press release…why did your translation not include that?
Your credibility is also at stake here. You’re wrong about Lyoness. You should admit it and continue your pursuit of the bad guys. Lyoness is not one of them.
Not until we’ve had a chance to see how they arrived at their conclusion, no.
Norway’s findings do not change the fundamental practice of taking new Lyoness affiliate money and using it to pay off existing AU investors.
Affiliates pay Lyoness money on the expectation of a >100% ROI. That ROI is paid out when enough new investments have been made and is funded by new affiliate money.
Those are the facts pertaining to the AU investment scheme.
If the facts have confused you and/or the Gaming Board, that’s understandable. Lyoness go to great lengths to mask their AU investment scheme.
It is what it is.
That seems to be the case. We’ll know more if they release information detailing how they arrived at their conclusion.
Asserting infallibility in their findings without knowing what exactly they were based on? Not the smartest of moves.
My analysis is based on Lyoness’ own compensation plan. The opinions of a dipshit investor waiting for his AU ROI are neither here nor there.
It’s right there, in the title of the article.
My track record of analysis speaks for itself.
Lyoness accept deposits of cash from affiliates on the expectation of a >100% ROI. This ROI is paid out of new affiliate money, subject to a criteria of enough new deposits being made.
That’s pure Ponzi.
(Ozedit: Offtopic derail attempt removed)
You don’t care to acknowledge the FACTS…the most IMPORTANT one is that the AUs you despise are created either from direct SHOPPING or from pre-paid SHOPPING. Obviously the country of Norway understands that. They concluded this correctly. YOU on the other hand refuse to do so.
I have hundreds and hundreds of AUs come into my system every month from SHOPPING. Not “investments”, not anything but by people SHOPPING; buying gasoline, renting cars, buyg groceries, getting their hair cut, going to restaurants, etc. SHOPPING. Did I make it clear here? SHOPPING.
NO ONE EVER DISCUSSES ROI dude…we create units from SHOPPING and get paid a small portion of OTHER PEOPLE’S SHOPPING. That is the FACT. You don’t know what you’re talking about and the conclusion made by a governmental agency with the FACTS prove it.
All AU investment funds are paid directly to Lyoness, and all ROIs (subject to enough new investments being made), are paid out by Lyoness.
AU investment has nothing to do with shopping.
When you consider paying Lyoness for AUs as “shopping”, the above statement is meaningless.
Of course not, that gives the game away. Have to keep up the whole “shopping” facade.
The facts, Lyoness’ own business model and compensation plan, certainly support that they are a Ponzi scheme.
Affiliates make in investments with Lyoness for AUs, on the expectation of an eventual >100% ROI.
Once enough new investments have been made, Lyoness then pay out a >100% cash ROI on the invested AU.
Facts are facts.
BTW I don’t like being called a dipshit so you should remove that comment pal.
Here are some true FACTS, not your incorrect “facts”:
There are millions of shoppers who have ZERO AUs created by what you are incorrectly calling “investments”. THEY get paid as other AUs are created behind theirs.
We have tens of thousands of merchants who have ZERO AUs as well.
You said “All AU investment funds are paid directly to Lyoness, and all ROIs (subject to enough new investments being made), are paid out by Lyoness.” FALSE. FALSE. FALSE.
AUs pay out by other AUs being created by SHOPPING.
If you fail to acknowledge this you are either ignorant or lying about this. In either case YOU have ZERO credibility and maybe need to be brought up on civil charges.
Facts are facts. You are perpetuating falsehoods. That’s a fact as well.
Here’s a tissue, pal.
Source?
The numbers have already been crunched in the comments of the Lyoness review. Anyone making any significant money in the Lyoness opportunity does so via AU investment. Lyoness’ own CEO confessed Lyoness is “all about the positions (AU investments)”.
Source?
This is as per the Lyoness compensation plan.
If you’re going to call out Lyoness as liars, you’ll have to provide actual facts.
I sign up to Lyoness as an affiliate, I deposit money with them directly for my accounting units, I recruit new affiliates who do the same, and once enough new investments have been made (subject to which level I invest at), I get paid by Lyoness (with new affiliate money).
There is no shopping involved and this is as per the Lyoness US compensation plan.
And it’s the pre-paid (whatever) that makes it a potential ponzi scheme. Which is our position all along. So what makes your point “different”?
The fact is simple: you can BUY your way up the AU levels instead of do it through shopping. Which makes NO SENSE in a shopping loyalty network that’s supposed to encourage shopping.
Explain that first, then you’ll be making some points. Else, you’re just waffling “but you don’t have to do that” whiner.
OZ: You said:
ANYONE who knows anything FACTUAL about Lyoness now knows FOR SURE you know ABSOLUTELY NOTHING about Lyoness.
I, personally, have spent TENS of THOUSANDS of dollars at Lyoness merchants.
I have, personally, met HUNDREDS of Lyoness merchants IN-PERSON. I was in Austria and saw, personally, THOUSANDS of merchants via my smartphone app and shopped at several in-person. I was, personally, in other countries in Europe and saw Lyoness merchants and shopped there, and saw HUNDREDS and HUNDREDS of others on my smartphone app.
I, personally, have HUNDREDS of Lyoness merchants connected to me.
I, personally, know SEVERAL people who have spent over $100,000 at Lyoness merchants including, for example, many who have bought automobiles at Lyoness merchants in the USA.
I, personally, have (as I said earlier) HUNDREDS of AUs created in my system EVERY MONTH from SHOPPING.
FACTS buddy. FACTS. Strange things those. Elusive to you apparently.
K. Chang…if you actually investigate Lyoness (like the Norwegian government did) instead of giving a cursory look and saying it doesn’t make sense, you’ll know why.
Your question and the terminology you use shows a complete lack of understanding actually; I don’t want to spend the time educating you; you’ve invested enough of your credibility spouting off falsehoods about Lyoness that it would be difficult to crack though your prejudice.
Are you familiar with the term “scoreboard”? That’s what I now say to you.
Cool story brah. Nothing you posted addresses the AU Ponzi investment scheme inherent in Lyoness.
They can exist in tandem, but one certainly does not cancel out the other.
Meanwhile the fact remains, anyone who has made significant money as an affiliate in Lyoness has done so via AU investment, and convincing others to do the same.
Your personal experience does not change the business or its model as a whole.
As per Lyoness CEO and Founder, “it’s all about the positions!”
Lyoness’ business model and compensation plan revolve around investing in AUs and recruiting others who do the same so that you get paid a >100% cash ROI by Lyoness.
There is no score, only the above truth.
Have you called up Lyoness to tell them they “know absolutely nothing” about themselves? It is after all their business model and compensation plan that the AU investment scheme resides.
Since you didn’t answer, I conclude you don’t know why either. I’m not going to do your work for you. “You just don’t understand” is a very lame answer, esp. when you don’t have an answer either.
@how about that?
I will (most likely) check the final report from Lotteritilsynet when it’s released, but it haven’t been released yet. Lotteritilsynet will ONLY check for violations of the Lottery Act §16, so “nothing illegal” will be limited to that.
Lottery Act §16 is about both traditional pyramid schemes and promotional pyramids. Any investigation by Lotteritilsynet will not be about other financial frauds.
It seems like you have interpreted it differently, to be about some other type of investigation?
Yet when asked why can one buy their way up the AU levels by paying Lyoness directly, your answer is:
You and your friends may be generating AUs, so why is there a way to buy AUs, which involves NO SHOPPING?
You are committing both anecdotal fallacy (MY perspective must be true because I experienced it) and illusional explanatory depth (I *thought* I knew how the system works, but maybe I don’t). However, instead of admitting you don’t know, you tried to be indignant and haughty about your ignorance.
Please go revel in your ignorance. Thanks for playing.
Obviously neither of you guys have a clue about the truth of how Lyoness works. In North America, where I live, it is IMPOSSIBLE, repeat IMPOSSIBLE, to create an AU without shopping.
Therefore there are only three possibilities:
1 you are ignorant
2 you are lying
3 both 1 and 2
Which are you?
If I say black is black and white is white and you argue with me about that, there is no reason for me to try to teach you about how Lyoness works.
You have a website that says awful, untrue things about this company and say things about respected people and even show people’s pictures and slander them, yet through what you say it is an absolute fact that you don’t know what you’re talking about.
I’m probably done with this thread. You have proven that you know absolutely nothing about how Lyoness works and anyone that knows Lyoness can see that very clearly now.
According to Lyoness’ compensation plan, it’s perfectly possible.
Deposit money with Lyoness, go off and recruit new affiliates and after enough new deposits have been made, collect >100% cash ROI.
I’m open to listening if the comp plan has changed, but you fail to demonstrate otherwise. Throwing your little insults and buzzwords around is cute, but doesn’t change the fact that there’s an AU investment scheme inherent within Lyoness’ compensation plan.
how about that, if you leave, we’ll just keep talking about how illegal, immoral, and unethical Lyoness is, and everybody reading this blog will think it is, unless you straighten us out. How about THAT? LOL
It appears to me that Norway is taking a similar erroneous position Belgium did with Herbalife, and not recognizing if there isn’t significant profit coming from sales to non-participants, it’s an illegal pyramid. Europe trusted Hitler, and look what it got them! How about THAT? LOL
Did you actually *read* your Lyoness US user agreement?
NOLINK://www.lyoness.net/US/agb.aspx
Thanks again for demonstrating your ignorance! Have a nice day!
You’re not telling the whole truth. But it IS actually correct, you must purchase $600 gift card before you can invest $3,000 in 7+3+3 AU (and become Premium member). But you don’t need to do any actual shopping other than the gift card.
Nope, there’s a fourth one: you started from a false assumption.
(Ozedit: Feel free to prove there’s no AU investment scheme in the Lyoness compensation plan, by citing said compensation plan itself. Otherwise carrying on like a pork chop is a waste of everybody’s time.)
@M_Norway
A gift card isn’t shopping. You can toss it in the bin and still collect your ROI after enough new investments have been made.
AU investment + giftcard deposit still equals a >100% cash ROI.
It was a response to the “IMPOSSIBLE, repeat IMPOSSIBLE, to create an AU without shopping” statement.
If he want to teach something to others, he must first start with teaching himself something. And I’m not talking about teaching himself to repeat some “marketing propaganda”.
@ what about that?
If you only can offer misleading information and your own exaggerated ideas, then I don’t believe anyone will be interested.
If your goal was to teach people something, then you should probably have tried to improve your own teaching skills first?
Of course, the base question is whether there is more than minimal profit from selling the products to non-participants, and I believe all of the smoke and mirrors from Lyoness is designed to conceal the fact that there isn’t, therefore Lyoness is an illegal pyramid.
Just been reading this post. It seems the comments have strayed from the original posting. What is the issue? The NGB has released their preliminary report and have stated that no illegal activity exists or words to that effect.
Let’s see when they table their findings and the basis of their report and I suppose we can assess from there, but the initial statement goes some way in allaying some concerns, notwithstanding I have yet to read to the final report.
Note: I’ll confess and acknowledge that I’m a Lyoness member.
I agree Pete and I’ve tried to convey that seeing the reasons behind the report is important.
The discussion re. the comp plan is long-standing and goes back to the original BehindMLM Lyoness review. Affiliates trying to diminish parts of the comp plan tends to creep into every Lyoness article on here.
Yes I see that Oz after reading comments here and there, re. comp plan. I can see that you have been relentlessly asking posters to explain the AU investment/unit purchase part of program which is a fair question and needs to be addressed.
You can’t use that logic on Lyoness. It doesn’t sell products.
It’s an organization for members, providing a cash back solution (electronic card, mobile phone solution), typically with 1-2% cashback (“earn 2% cashback on all your purchases”). Connected to that it also have a recruitment incentive 2 levels deep = “earn 0.5% bonus on your direct sponsored’s purchases, and 0.5% bonus on their direct’s purchases”.
In addition, it also have a rather complicated Compensation plan accepting payments from members, “down payment towards future purchases”. People can invest in “Accounting Units” in 5 “Accounting Cathegories” (AC1 – AC5) matrices, e.g. you can invest $3,000 in 7+3+3 AU and become a Premium Member, which gives you the right to invest in other similar matrix based programs (Personal Program, North American Program, International Program, etc.).
The matrices pay out “Maturity Bonuses” when you have generated enough Accounting Units. In addition, you can earn much higher rewards if you recruit minimum 4 other investors, each with minimum 1 unit (but in reality they will need similar investments like your own $3,000 investment), and they recruit minimum 4 other investors, and they recruit minimum 4 other investors, and so on and so forth.
The payouts are relatively low for a pyramid scheme, and relatively low for a Ponzi scheme, but they’re high enough to be a hybrid between both types of schemes. Madoff didn’t pay more than 10-12% interest per year, and Lyoness pay slightly more than that per matured investment.
INVESTMENTS IN ACCOUNTING CATHEGORIES
Hypothetical example where exactly 5 matrices have been completely filled with investments from investors.
The matrices are organized like this (AC1 – AC5):
AC # | Units | Cost | Total investments, “maturity payout”
——————————-
AC 1 | 70 AU | $75 | $5,250
AC 2 | 60 AU | $225 | $13,500
AC 3 | 50 AU | $600 | $30,000
AC 4 | 50 AU | $1800| $90,000
AC 5 | 50 AU | $6000| $300,000
——————————-
Accumulated SUM investment = $438,750
——————————-
MATRIX PAYOUTS
AC # | Credit | Cash | Total
——————————–
AC 1 | 675 | $198 | 873
AC 2 | 1225 | $594 | 1819
AC 3 | 2400 | $1,980 | 4380
AC 4 | 7200 | $5,940 | 13140
AC 5 | 24000 | $19,800 | 43800
——————————–
SUM | 35500 | $28,412 | 63912 (I can’t mix cash and credits)
——————————–
Cash % of investment = 6.48% ROI
Credit % of investment = 8.09% ROI
———————————-
Cash + Credit = 14.57% ROI
———————————-
CAREER POINT PAYOUTS
5,850 career pts * $4.50 = $26,325 (cash payouts) = 6% ROI
18.75% and 6.25% BONUS FROM CASH PAYOUTS
$28.412 * 25% = $7,103 = 1.62% ROI
TOTAL IDENTIFIABLE ROI
Cash rewards 6.48%
Credit rewards 8.09% ROI (can be reinvested)
Career rewards 6% ROI
Bonus rewards 1.62% ROI
——————————-
SUM ROI 21.17% ROI
——————————-
The calculated ROI is mostly paid out to OTHER investors than the ones making the investments. You can NOT make a passive investment and make a positive ROI (from the parts I have analysed here). You can ONLY make a positive ROI from the recruitment of other investors / recruitment of consumers.
It does sell GIFT CARDS, but it doesn’t sell products.
Gift cards are inexpensive plastic cards until they have been sold and have been paid for, they will typically need to be “activated” in one way or another before they can be used. They’re not products in themselves, only “empty containers” that can be filled with something of value.
That’s the normal way in business, i.e. a gift card retailer will not buy fully paid gift cards from a gift card provider. It will buy empty plastic cards ready to be filled when someone is making a complete payment, and first THEN will it pay for the “fill of money”.
COMPLETED TRANSACTIONS
A down payment towards a gift card will not qualify as a “product purchase”. Transactions will need to be COMPLETED before they can be counted as a purchase.
A partial payment will probably generate LIABILITIES, similar to the liabilities generated from investments. The partial payment will still be “owned” by the person making that payment, e.g. a court order or an agreement can potentially reverse the transaction.
A fully paid gift card will be a COMPLETED transaction, i.e. the transaction will be completed when the payment have been completed, rather than when the goods have been delivered. That’s rather normal in business, a transaction won’t need to be completed in all parts before it can be counted as “completed”.
People make payments for goods or services …
* BEFORE they receive the products
* WHEN they receive the products
* AFTER they have received the products
All 3 payment methods are quite normal in business, it’s simply how business transactions work in reality.
I have been careful not to attack methods that are quite normal in business.
Correction:
Career point payouts are actually $4.687 (closer to $4.70 than to $4.50). I used $4.50 to make it easier to calculate, rather than for accuracy.
For the 5,850 Career points generated from the hypothetical example, the payouts from Career points will be $3.563 per point ($3.56 rounded).
HOW CAN IT WORK?
Lyoness IS actually using other people’s investments to pay out recruitment based rewards. It can work if …
* enough of the payouts will need to be reinvested, e.g. in higher cost matrices.
* cash payouts increase from LOW to HIGH
* no payments are being reversed (people can’t get their investments refunded)
* if enough people fail to recruit 4 new investors.
REINVESTMENTS
Loyalty Credits can not be withdrawn as cash, they can only be used internally in the network for “purchases” = buying gift cards or be reinvested in additional down payments.
INCREASING CASH PAYOUTS
AC1 has the lowest cash payouts, 3.77%. Credit payouts = 12.87%.
AC2 has the second lowest cash payout, 4.4%. Credit payouts = 9.07%.
AC3, AC4 and AC5 have higher cash payouts, 6.6%. Credit payouts = 8%.
The Loyalty Cash payouts goes like this (AC 3):
3/3 units –> $120 (6.06% of $1,980)
5/5 units –> $180 (9.09% )
10/10 units –> $240 (12.12% )
15/15 units –> $360 (18.18% )
20/20 units –> $480 (24.24% )
25/25 units –> $600 (30.31% )
—————————-
Total cash payouts $1,980
—————————-
Note:
Those cash payouts will require minimum 4 direct recruited to qualify.
“NO REFUND”
Lyoness clearly had a “no refund” policy for the down payments. That’s a factor that separated Lyoness from legitimate business methods, e.g. from “lay-aways”.
FAILURE TO RECRUIT
In a “4 x infinity” matrix, 75% of people will fail to recruit the required 4 people in a “best case scenario” where everyone recruit exactly 4 other people.
Most people will fail to qualify for most of the payouts. That’s how the system can work / avoid being drained for money. It will be drained for money if the investments are being reversed, if Lyoness will need to pay back people’s down payments.
Just some Lyoness fans reading more into the decision than there is, and try to use that as “Haha!”
Two caveats, “according to Norwegian law”, and “at this time”. Subject to translation errors, of course.
The Lyoness supporters, of course, ignore the two caveats and instead read it as “Lyoness has always been and will be legal everywhere”. Which is clearly NOT proven.
In other words …
* the first 5+5 units generates 15.15% (of the $1,980 cash payouts)
* the next 5+5 units generates 12.12%
* the next 5+5 units generates 18.18%
* the next 5+5 units generates 24.24%
* the last 5+5 units generates 30.31%
That should illustrate the idea of “increasing cash payouts”, one of the conditions needed to avoid being drained for money.
Most Ponzi and pyramid schemes have systems in place to protect against being drained for money. Lyoness is no exception from that rule.
M_Norway, thanks for making my point. LOL
I didn’t. Product purchases will normally NOT generate any ROI, but the AU down payments will (if you recruit additional investors). So I pointed out that the logic about external sale would be rather useless.
In Lyoness, rewards will primarily be earned from the recruitment of additional investors, making similar down payments as oneself (e.g. the $3,000 down payment to become Premium Member). The members don’t sell anything (other than the opportunity itself).
* Merchant members do actually sell their own products through their own stores, but non merchant members don’t sell anything.
Gift cards != products. A fully paid gift card is a “container for unfulfilled transactions”. A partially paid gift card will be a type of “contract” or “agreement” rather than a type of “product purchase”.
Are you saying that Lyoness is legal, illegal or just incomprehensible?
You did.
I said, “Of course, the base question is whether there is more than minimal profit from selling the products to non-participants, and I believe all of the smoke and mirrors from Lyoness is designed to conceal the fact that there isn’t, therefore Lyoness is an illegal pyramid.”
Then YOU said, “Product purchases will normally NOT generate any ROI, but the AU down payments will (if you recruit additional investors).”
And the other long, intricate posts were the “smoke and mirrors” instead of sales to non-participants. The truth is simple, the lies are complex.
I am saying Lyoness is incomprehensible in an effort to cover up the fact that it is illegal.
None of those options. I didn’t focus on legality, only on some factual information about Lyoness’ system itself.
Lyoness doesn’t have any retailable products, so it won’t make any sense using standard MLM logic like “internal vs external sales”. The gift cards are retailable, but they’re some type of “payment service” rather than some type of product. Partially paid gift cards will neither qualify as products nor services.
Lyoness’ primary commercial service is “discount agreements” = agreements with merchants to offer members a discounted price on purchases.
The AU system isn’t really a type of commercial service. The primary function of the AU system is to distribute money among the participants, from the bottom to the top in the system, from new investors to old investors with a downline.
Only if you’re really desperate. 🙂
When you already know the company doesn’t sell any products, then the idea of “profit from selling the products to non-participants” will be rather irrelevant to use.
Lyoness will earn SOME profit from member purchases = the merchants will pay a percentage to Lyoness too, similar to the cashbacks they pay to the members when they purchase something.
Rewards derived from merchant payments should normally be legitimate enough, similar to any other types of external sources for income (e.g. similar to profit from sales to external consumers). The merchants will be “external” compared to the other members.
Rewards derived directly from other people’s investments (or from partial payments) should normally be illegal.
Maybe it’s time to analyze Lyoness a different way: who gets the money?
Money flows to Lyoness 4 separate ways: merchant fees (paid by merchant), shopping (paid by merchant), direct AU purchase (paid by participant), direct gift card purchase (paid by participant).
Money flows OUT of Lyoness 2 separate ways: payment for the giftcards purchased (to the merchants), and benefits paid out (to participants).
The direct gift card purchase can be safely ignored as it’s roughly 1 to 1. Lyoness is strictly middleman for this. Profit margin would be quite low, usually no more than 10%, probably closer to 5%
So majority of income would be from merchant fee, merchant benefits paid through Lyoness, and direct AU purchase by participants.
Given the relatively low fee charged, merchant fee would be minimum and can probably be ignored.
Indeed, most of Lyoness literature emphasizes that the benefits generated for the participants are from Lyoness’ equivalent of downlines, and the more AUs one has (whether purchased or shopped) the more levels “down” will be shared… esp. when they generate AUs (through shopping or purchase)
Purchase of AU is essentially buying in at a higher rank rather than starting from the bottom. However, if everybody is buying in rather than shopping, then you have the equivalent of Glenn Turner’s “Dare to be Great” where people are told to make money, they need to find people who will buy in the “lessons” and go find more people who will do so, making it a pyramid scheme.
However, Lyoness’s “innovation” is this is restricted to probably a minority of the participants. The majority probably treat it as a true shopping loyalty program. Yet none of the proponents can explain WHY would a shopping loyalty program would allow you to BUY a higher shopping rank (i.e. AUs) without shopping. Lyoness had further tried to obfuscate the issue through sales requirements i.e. you need to buy at least $600 in giftcards to buy AUs.
Regulators pretty much have to identify where did the EXTRA money came from toward the participants when it’s NOT from the merchants. And only a fully audit / forensic accounting can figure out how much loyalty credits are generated, how much is really from merchant contribution, and how much is from AU purchases.
The shopping component is mixed thoroughly with the potential pyramid scheme component, making it difficult for regulators to pinpoint the problem area.
We have actually analysed it like that, i.e. we have recognized that SOME units will be generated through purchases (benefits paid from merchants). But the problem is all the units generated from down payments. 🙂
We can probably ignore the $600 gift card purchase. It doesn’t generate any commission, but it will generate a small sales profit for Lyoness. Its main purpose is probably to make people able to say “It’s IMPOSSIBLE, repeat IMPOSSIBLE, to create an AU without shopping”.
There’s 3 methods to generate AU Accounting Units.
METHOD 1 = DOWN PAYMENT (FROM NEW INVESTOR)
$3,000 down payment will generate 7+3+3 AU in AC1, AC2, AC3. Those units will generate some commissions to multiple people in the investor’s upline.
METHOD 2 = GENERATE UNITS THROUGH SHOPPING
Shop for $150,000, and it will generate the same number of units (7+3+3) if the Loyalty Benefits are 2% (a rather average percentage, neither high nor low). Those units will generate similar commissions to multiple people in the investor’s upline.
Lyoness want us to believe that this is the most commonly used method to generate units.
METHOD 3 = REINVEST LOYALTY CREDITS
It will be similar to down payments, except for that you won’t need to bring in any “fresh money” from the outside. You can reinvest “internal funds”. That method will only make sense if you have received that type of payout (if you have recruited the minimum 4 direct, and have “cycled” some of the matrices).
it’s basically “rollover”… Keep the money in the system for promise of bigger payout later.
Maybe we can apply the Howey Test to it?
I have noticed, from what appears to be non-members, make statements that are not reflective of reality. This is not a direct criticism, it’s just the nature of this discussion. The posts seem overly negative towards Lyoness.
From my own experience – and I’m not here to promote Lyoness or recruit anyone – I have found a different experience with Lyoness. I am interested though, when the final report is handed down in Norway, as to the details of their conclusions.
As far as I’m concerned, Norway is irrelevant, at least to those of us in the U.S., as it is probably using the same flawed logic Belgium used with Herbalife, i.e., no external customers needed. And like Belgium, if that country wants to allow what is considered an illegal pyramid to operate in their country, so be it, but this has ZERO impact on Lyoness’ legality in the U.S.
The above complex discussion AGAIN confirms Lyoness is an MLM operating as an illegal pyramid (in the U.S.), as most of the profit paid to distributors comes from financial “investments” of new participants, and NOT from sales to external customers. It is simply the same horse with different stripes.
The truth is simple, lies are complex.
I have mostly referred to numbers from a spreadsheet, and to information from Lyoness Compensation Plan USA, July 2012. I can correct details if people can point out specific errors or misrepresentations.
The spreadsheet partly used hypothetical scenarios, e.g. to calculate the ROI and to calculate the ratio of failure to recruit 4 other investors. Hypothetical scenarios will NOT reflect realities, they are “best case / worst case” methods.
Ok, please let us know, for us abroad, when the US authorities run up a similar investigation as the NGB.
oep.no (Public Electronic Post Journal) has a new list of documents published June 12th and June 13th, Doc #54 – Doc #72. They’re mostly about corrections to the final report from lawfirm Grette DA. I counted it to be about 14 corrections.
Some examples (from lawfirm Grette DA):
Doc 72: Down payment isn’t consideration, as the law sees it.
Doc 71: Legal Opinion
Doc 70: Some elements in the judicial assessment …
Doc 69: Some elements in the judicial assessment …
Doc 64: Motion to seal information
Doc 55: Number [of] Premium Members
The preliminary report is Doc #39, finished April 9th 2014.
Documents from the Swedish authority Lotteriinspektionen have numbers #33, #34, #35, dated March 21 2014.
I checked Lyconet superficially. It seems to be active in Europe (including the Scandinavian countries). The network marketing activities, including the AU system, seems to have been moved to Lyconet (it’s mentioned in the Wikipedia article, last paragraph of “Legality”).
http://en.wikipedia.org/wiki/Lyoness#Legality
I checked whether Lyconet was active on the internet, active in one of the Scandinavian languages, or indirectly pointed towards that geographical region on websites. It clearly is active as MyLyconet.com, and it clearly was mentioned on a Danish website.
According to a comment in a Norwegian forum Lyconet is not yet launched in Norway. The question is: Has the recruitment part ever been officially administered through the Norwegian company Lyoness Norge AS?
Different frames of reference, much like “4 blind men touching an elephant” each thinking what he touched is the whole elephant. 🙂
So…. get invested for being a Ponzi scheme, move Ponzi scheme to a different company name and off you go?
Oh dear.
Sounds like The Gaming Board needs to investigate Lyconet then. How long before Lyconet2 pops up after that’s announced though?
It would probably be a wise idea to read the report first.
A negative report (in the meaning of “not a pyramid scheme”) doesn’t need to lead to negative results.
Norwegian laws and the EU UCP Directive.
When the EU UCP Directive was implemented in existing laws, it ended up like this:
* The main rules –> Marketing Control Act
* Annex 1, rule 1-13 –> Directive against Unfair Trade Practices
* Annex 1, rule 14 –> Lottery Act 🙂
* Annex 1, rule 15-30 –> Directive against Unfair Trade Practices
The main rules and 29 of the 30 rules in the Directive are all handled by the same Consumer Protection authority, the Consumer Ombudsman (with the Marketing Council as a complaint board).
forbrukerombudet.no/english
Rule 14 is the rule against promotional pyramids. It was added in the same paragraph as traditional pyramid schemes in the Lottery Act, as an extension to an existing rule, a single rule handled by a different authority (Lotteritilsynet).
EU UCP Directive:
https://webgate.ec.europa.eu/ucp/public/index.cfm?event=public.directive.show
A negative report may simply lead to that the case may be handled by a more correct authority. I don’t see that as a problem. The Consumer Ombudsman have much better international connections, primarily inside the European Union.
I actually recommended Lotteritilsynet to let the Consumer Ombudsman analyse some aspects of the case, e.g. the down payments, in late May 2013 when I sent them some material.
I don’t follow. Why would Lyconet need to be investigated? I have a Lyconet account.
@Pete
“Entrepreneurial” has been misused in place of Ponzi scheme.
What exactly is “entrepreneurial” about shopping any way? 😉
Lyconet. Accounting units? I’m lost. Can someone elaborate for me please? How are AUs linked to Lyconet? I’m at a loss…
It’s probably better if you elaborate? I only did a very simple search to see whether it was ACTIVE, and whether it was active in EUROPE, and whether it could be active in SCANDINAVIAN COUNTRIES. It tested TRUE on all 3 tests, but that was all I checked.
It seems to be about replicated websites promoting the opportunity, as mylyconet.com/username/subpage/
It seems to be rather general “don’t mention any details” marketing, “landing pages” for other types of internet marketing. The search method site:mylyconet.com only brought up 3,200 search hits, so it hasn’t been made very active.
Correct. It’s to promote the loyalty program and enable me to sign up prospective members as I have it also. I don’t understand where the AUs, stated earlier, come into it with Lyconet.
@Pete
Straight from the Lyconet FAQ:
Anytime you see “partial payment for gift card orders” in Lyoness literature, replace it with “Ponzi investment amount + $600 participation fee”. That’s what affiliate payments to Lyoness function as.
Lyconet: The Lyoness AU investment scheme is alive and well.
Icing on the cake, taken from the same FAQ:
Why?
Lololol. Too bad about the business model.
Affiliates pay money to Lyoness on the expectation of a >100% ROI, paid out once enough new investments have been made. Lyoness just take new affiliate money and use it to pay off existing AU investors.
Lyconet has nothing to do with AUs. Get informed before state nonsense! Lyconet is to recruit and to promote the Lyoness shopping network.
So uh… what part of “Straight from the Lyconet FAQ” does not compute?
If you think official Lyconet documentation is nonsense, that’s fine. But don’t misrepresent Lyconet, that’s deceitful. Your downline investors deserve better.
Most AUs are generated by Lyoness members shopping. For those AUs you may get cash. The “Partial Payment for a Gift Card order” AUs will only get you Home Depo, or Subway, or whoever’s Gift Card you chose from their website. NO CASH.
Love how he moves the goalposts when he’s caught out…
Blahblahblah Lyoness don’t release the figure of AUs generated via direct investment so don’t try to pass off bullshit as statistical fact.
Furthermore, they can’t release any accurate statistics because *winkwink nudgenudge* compliance calls on them to disingenuously refer to AU investment as “shopping”.
And finally, “generated”. How many AUs are generated is not as important as the ratio of which AUs are actually paid out on, ones created via investment or merchant network shopping.
If I had to guess, I’d ballpark the ratio at at least 80% invested AU payouts vs. shopping.
Pays out a >100% cash ROI, when enough new AU investments have been made. It’s in the Lyoness compensation plan, go read up on it.
(We’ve had this conversation god knows how many times with Lyoness affiliates now)
I mentioned it in post #86, in a quote from Wikipedia. The Wikipedia article about Lyoness popped up as one of the first search hits when I googled “Lyconet business” or “Lyconet opportunity”.
I both linked to that article and quoted from it, so it shouldn’t be THAT difficult to identify the sources.
I have already identified that the wisest strategy is to read the report first, and THEN look into different “theories” about a reorganized system.
And your proof of this is what, exactly? Or is that simply an ASSUMPTION by you?
Remember, you said it, you prove it. Don’t try to flip it and try to make us prove it for you, unlike that other lazy guy above “too busy to explain it”.
So is Lyoness following state laws?
And you can always sell the gift certificates at a discount for cash… Here’s five options, usually you get at LEAST 65% of face value, up to 92%.
NOLINK://money.usnews.com/money/blogs/my-money/2012/01/06/5-places-to-sell-unwanted-gift-cards
When Lyoness is introduced in a country, almost all AU will be generated from down payments. We have asked several people about it, up to “Career level 7”.
You will get cash payouts if you recruit the minimum 4 directs, and they make down payments.
You can also reinvest the Loyalty Credits (make down payments) and get cash from the units the reinvestment will generate. It will only make sense if you have a downline of some size, but it is possible.
@Oz, I can only see the FAQ you refer to on Lyoness not on MyLyconet. Can you please provide the direct link.
And of the FAQ points you refer to from Lyoness website, which part of it is illegal? I’m now really curious.
There’s a FAQ link on the top right next to the country flag (I used US).
Legality is for courts to decide, but the Ponzi part is where they accept investments from affiliates and use that money to pay off existing investors. The whole AU investment thing they try to pass off as “partial payments”.
No I cannot spot a link where you suggest.
Also, when banks take deposits and use these funds for lending would this not be seen as a Ponzi by your view?
You can’t see this link?
Cmon dude.
And Lyoness is not a bank, so what banks do or don’t do is irrelevant.
“Deposit” and “use these funds for lending” are banking activities rather than something that belongs in a shopping community. But in Lyoness, the down payments are more similar to “deposits” or “pay to play” than to any type of commercial activity.
“Deposits” should normally not generate any commissions to recruiters. They do generate rewards in Ponzi schemes, but they don’t generate commissions in banking. And banking activities will require specific licenses to be legal.
A shopping community can clearly not “use funds for lending” either. Shopping is about “exchange of values”, e.g. goods for money, not about depositing funds. Ponzi and pyramid schemes are about depositing funds, but shopping isn’t.
THE NORWEGIAN REPORT
I will check that report when they publish it. Lotteritilsynet has a relatively limited jurisdiction, limited to one single rule about traditional pyramid schemes and promotional pyramids.
I will check the report specifically for how the down payments have been interpreted, e.g. for the types of sources used. And I will potentially ask them to collect additional info from non-party sources, e.g. some facts about gift cards.
Yes I see the link now. Thanks. But when you click on it it clearly states that it relates to Lyoness not MyLyconet. This is purely a link and clearly marked as FAQ/Terms for Lyoness.
Now with the section you highlight I still don’t see where it’s stated that any law is being broken. Can you please explain which parts in your view are screaming with Ponzi and why?
I’ve read in your earlier posts that you claim buying AUs – your words investment – is a Ponzi process but I fail to see how this is? You sign up members and you receive a commission/kick back or whatever you wish to name it.
You use the word ROI. I can tell you, if I’ve signed up members or businesses that brings in say over $200,000 you bet I would want a return greater than my $3,000 I’ve spent. I don’t see the issue.
You’re kidding, right?
It’s the same shit dude. No matter how much “multiple websites” and other garbage they wrap around it, there is only one Lyoness MLM business opportunity (complete with AU investment scheme). One FAQ to rule them all.
Lyoness using the same FAQ on both websites only highlights the psuedo-compliance sham attempt Lyconet is. Smoke and mirrors all the way with this company.
Ponzi schemes are illegal the world over.
The parts which refer to the AU investment scheme. Affiliates invest money with Lyoness and once enough new investments have been made, Lyoness pays the affiliate a >100% cash ROI.
See the Lyoness compensation plan (Account Unit levels) for more information.
Lyoness take new affiliate money and use it to pay off existing investors. No shopping is involved (all money is deposited and paid out with Lyoness), so requiring mandatory AU investment quotas before ROIs are paid out gives the game away.
This is false. The AU investment scheme side of the business requires said members to invest money before ROIs are paid out. They then must also recruit new members (or get existing ones to re-invest before ROIs are paid out.
Running parallel to this is the shopping network, which affiliates such as yourself repeatedly attempt to try and obfuscate the AU investment scheme behind.
Lyoness take new investment money and, when enough new AU invests have been made, use that money to pay off existing investors. Whether you convince new investors to drop $200,000 into the scheme is neither here nor there.
Yes pay existing members but not all receive money at the same time. If everyone made a run on bank deposits like in Europe during the GFC the banks shut up shop. They can’t handle it. But with Lyoness. If membership sign ups cease then payouts cease. They don’t keep happening.
Hence why stats show only about 5% of members make serious money and others make up the numbers. Nature dictates that majority of humans sit on their backside expecting money to grow on trees.
Anyway, more new members more payouts. Premium members cease so do the payouts you allude to. I still don’t see the issue. Maybe I’m missing a crucial point, maybe not.
Of course not, all AU positions require a fixed number of new investments to be made after them. This happens sequentially and favours earlier investors, as with all Ponzi schemes.
Whether AU positions are paid out simultaneously or sequentially is irrelevant, where the money comes from and the conditions in place before a ROI is paid out is what matters.
The flow of money is identical to that of a Ponzi scheme. Affiliate money goes into Lyoness, new affiliate money comes in and once that new money hits a specified amount, a ROI is generated and paid out.
Trying to justify the Ponzi aspects of Lyoness using banks is a strawman argument.
The problem with Lyoness is the Ponzi scheme, not who else might or might not be doing the same.
You mentioned earlier you were familiar with the Lyoness review comments. Come on now, there’s over 1200+ comments from Lyoness affiliates bringing up the same excuses and justifications.
Correct, just like every other Ponzi scheme out there. No new affiliate investments = collapse.
And frankly I’m not surprised you can’t see the point here (hint: close your wallet and start to think beyond your own hip-pocket). You did afterall have trouble seeing that big FAQ link, and that was right infront of your eyes.
And one more thing:
It’s important to note that these 5% (unverified statistic) are those who invested heavily themselves, and then convinced others to do the same. Shoppers might generate a significant number of units, but payouts wise – anyone who makes “serious money” in Lyoness invests in AUs and recruits others who do the same.
I’ve been saying this since 2012 on here.
Yes at least I’m prepared to address the AU part of it head on even if we don’t agree.
But you need to be clear in relation to MyLyconet. You know full well that Mylyocnet is an avenue for premium members to sign up new members directly online. Not an instrument to hide the AU element.
And the FAQ link you mention clearly states its purpose when you click on it. So we agree that MyLyconet is an online vehicle to sign up new members online. Nothing more, nothing less.
Now with Lyoness, yes there is an AU purchase element. And yes it may have a Ponzi smell about it to some but that’s like saying Apple are crooks because they don’t pay their fair share of tax in my country. Are they within the law? Yes.
As can be said for Lyoness. Lyoness does not live or die on the AU element. Ponzi schemes do that’s why all Ponzi schemes have a shelf life. The AU element is a smart add on by Lyoness. It’s a waste of time for smart thinking people but not illegal and not a Ponzi for the reasons just provided.
And you’re wrong about the people making serious money are the AU payers. I know this first hand to untrue.
When you say Premium members, all you’re talking about is the $3000 or whatever it is package deal.
It’s no different to signing up and investing in the units through Lyoness.
And it’s not like there’s a separate comp plan, backoffice or AU position structure, it’s all the same thing.
You want to argue it’s a recruitment tool, be my guest. What do you think newly recruited Premium affiliates do when they sign up though? Hand over money to Lyoness.
Same shit dude. This is just psuedo-compliance nitpicking.
You can bring up all the irrelevant comparisons you want. At the end of the day Lyoness/Lyconet operates as a Ponzi scheme, there is no justification for that.
And of course the system relies on AU investment. That’s why when Lyoness enters a new market the sourcing of AU investors is first and foremost. How do you think Lyoness started up? They attracted core AU investors and went from there.
Country to country the scheme spreads, building a base of AU Ponzi investors and then pretending like the shopping network is the business.
Please. Freidl was telling affiliates Lyoness “was all about the positions” before you even joined. It was always the core. The shopping network was built around the concept of paying existing investors with new investor money.
You missed the second part, AU investors who convince large numbers of people to invest in AUs, who go on to convince large numbers of people to invest in AUs etc. etc.
Those are the top earners in the company (5% or otherwise).
If members shop through the network they can make more money than someone just signing up members. I know this to be true because I shop over 100k in the last 12 months and I’ve earned more from someone I know with over 6000 in their lifeline.
I have a handful in my lifeline but maybe with MyLyconet I will have more. But I’m not going to sign up $3,000 members. It’s a waste.
Why fill Lyoness bank account and let them earn extraordinary interest? The key is the shopping. And hence why I receive grey shopping units from offshore shoppers. They are paying out weekly. I get these because I’m a premium member spending over 100k annually. None of this rubbish 3k but that’s not illegal or Ponzi.
I know you don’t believe it but there are many discerning members making big bucks off the back of their shopping. It’s true. Really.
See here:
Heard it all before chief. What affiliates can and can’t do doesn’t negate the basic Ponzi core mechanics of the AU investment scheme.
Whether you think it’s a waste or not is neither here nor there.
If Lyoness really was all about the shopping, why offer AU investment at all?
Because in reality, as CEO and Founder Herbert Friedl states, Lyoness is “all about the positions!”
And finally, I think we can all agree dropping $100,000 through the Lyoness merchant network is hardly average. Your situation likely represents a fraction of a percentage of Lyoness affiliates. Great for you, useless for statistical analysis.
I still maintain that in my estimation upwards of 80% of Lyoness AU ROIs are paid out on AUs created by direct investment.
They offer AU because it fills their bank account and people are stupid in doing it. But they understand like most numbers men, that the majority out there pay in $3,000 and don’t actively sign up dozens of members hence why the ROI as you put it at over 100% islimited to a few. That’s why no Ponzi.
Many put in but few qualify for the >100% payouts. Lyoness is laughing but there is no illegality or Ponzi.
Of they were paying every new premium member >100% then yes a straight out Ponzi. Buy they don’t as most premium members don’t qualify. Does that make sense?
Do you think that so many premium members complaining would actually complain if they earned >100% return? They complain because they don’t. Hence again why it’s not a Ponzi….
so that they can pay off existing investors. What else is new?
This is a Ponzi scheme and negates the entire merchant shopping network.
That it exists at all is all that matters. Nothing justifies a Ponzi scheme.
Affiliate investors not being able to recruit new affiliate investors does not define a company as a Ponzi scheme. Its business model does.
That Lyoness has an inherent aspect to their compensation plan by way of AU investment is damning enough.
As I said, there’s over 1200+ comments in the Lyoness review with bullshit excuses and justifications like this. All shot down.
Make up all the strawman arguments you want, Lyoness still operates as a Ponzi scheme.
Not recruiting enough new affiliate investors to hit a pre-determined new investment amount does not negate the Ponzi investment nature of the business.
Anyway, I think we’re done. “Ponzi schemes aren’t illegal because…” is a rather fruitless topic to go round and round in circles with.
You acknowledge there’s a Ponzi scheme within Lyoness and whatever else comes after that doesn’t matter.
It’s there and I’m glad you finally came around. I could have told you no amount of excuses or strawman arguments would justify the scheme… but I figured after reading the review you’d have been well-aware of that.
Obviously not.
(Ozedit: “Ponzi schemes aren’t illegal because…” is a rather fruitless topic to go round and round in circles with.)
Pete, you are missing a crucial point. Ponzi schemes and illegal pyramids look great, until they collapse. Lyoness just hasn’t reach that point, yet. It will. Hopefully the government will step in first to minimize the damage.
Madoff didn’t pay more than 10-12% ROI per year.
The rewards in Lyoness are too low (in my opinion, described in post #66) to immediately identify it as either Ponzi or pyramid scheme. You will need to look at other factors too, not only the rewards.
I checked those other factors in 2012, e.g. I looked at where down payments were used in other businesses and for which reasons. It’s not a generally accepted payment method, but it’s being accepted in SOME scenarios.
* reserve the right to buy a unique product
* order a unique product that has to be manufactured
* parts for reparation of a product
* lay-aways for standard products
The last point is about that some customers prefer to buy products that way, in partial payments and with the right to cancel the deal for a minor fee. That’s the only example where multiple down payments are accepted.
The 3 other points are about financial risks and costs, if the buyer decides not to fulfill the transactions and pay for the unique product / parts ordered for a specific purpose. All of them are rational and defendable, they’re not for profit transactions but have the primary function of distributing some financial risks from the seller to the buyer.
The down payment in Lyoness doesn’t meet the same conditions.
* gift cards are not unique products (they’re not even products)
* there’s no financial risks (gift cards are typically ordered in hundreds per order, for the cost of the plastic cards or for free).
* there no risk of loss if a customer cancel the order.
When a business has a rather odd system that normally wouldn’t have been accepted by most rational consumers, it will normally be for a reason.
The reason can probably be found in existing laws (there’s no law regulating payment methods like that in detail, the market is able to regulate itself), and in how the missing regulations can be interpreted by someone looking for loop-holes.
People looking for income opportunities are not rational consumers, they will accept nearly all types of odd solutions as long as the opportunity promises to pay rewards.
I checked oep.no today. A preliminary report was published June 6th 2014, but it is not publicly available. Lawfirm Grette DA filed an “extension of deadline to reply to the report” 5 days later.
Both doc #39 “Preliminary report” (April 2014) and doc #74 “Preliminary report, v2” (June 6 2014) have been sealed / excluded from public view. That indicates that the final report may be sealed too.
The report will probably become an “Ancient Mystery”, similar to Stonehenge (“why would any rational being suddenly decide to build a ‘henge’ there?”).
And your sample size is how many? Vs. how many Lyoness members?
Your margin of error is so large you can drive a starship through.
So it’s not a Ponzi if nobody complains?
So if I kill you today and hide your body, and nobody knows you’re dead, I did not commit a murder?
That makes as much sense to me as Pete’s “explanation.”
You must recruit minimum 4 people (investors) to qualify for most parts of the compensation plan. And they must recruit 4 people (investors) each before you can make any profit from your own down payments.
You can of course SLOWLY make enough money from units generated through shopping, but the minimum requirement is to recruit minimum 4 people.
The down payments won’t make any sense if you don’t plan to build a downline of some size. The identifiable ROI from 5 completely filled matrices (AC1-AC5) is around 21% (cash and credits). I analysed it in post #66.
* CASH, matrix payouts 3.77 – 6.6% (the 3/3 5/5 etc. payouts)
* CASH, matching bonus 0.94 – 1.65%
* CASH, Career points 6 – 6.25% (payouts from total volume)
* CREDITS, matrix payouts 8 – 12.86% (maturity payouts 35/35 etc.)
If you don’t recruit minimum 4, only the CREDITS will be available from down payments, e.g. you can have many people in a downline making down payments but you will not qualify for the other payouts if you have less than 4 directs.
None of which has anything to do with sample size or margin of error.
Note:
Those numbers were about “it doesn’t make any sense making down payments if you don’t plan to recruit minimum 4 direct”. It was a hypothetical example calculating the payouts to ONE person only.
In a best case scenario where everyone recruit exactly 4 new investors making $3,000 down payments each, the payouts will be much higher. Generally it will be people in direct upline who makes most money from down payments.
In a 1 4 16 64 downline (you = 1, 4 direct, 16 indirect, etc.), number 1 will make more than the 4 directs, the 4 directs will make more than the 16 indirects, the 64 won’t make anything before they have qualified by recruiting 4 each. People in direct upline will make most money.
You will find a copy of the Lyoness USA compensation plan here:
cdnlarge.lyoness.net/downloads/pdf/us/info/lyo-apendix-us.pdf
It’s an old version, I believe, but it was the first one I was able to find.
1. Cashback
2. Friendship bonus (0.5% bonus on other people’s purchases, 2 levels deep)
3. Loyalty Cash (“maturity payout” when a matrix is filled)
4. Loyalty Credits (same as #3, but payout in Credits)
——- 4 directly recruited required —–
5. Loyalty Commission
6. Loyalty Partner Bonus (18.75% and 6.25% matching bonus)
7. Bonus units (in 3 different programs)
8. Unit rebooking (free unit in next Accounting Cathegory)
9. Volume Commission (commission based on your entire downline)
10. Volume bonus (based on your Career Level), $1.50 or less per Career point (1 career point cost $75).
Lyoness premium member was arrested for cruel murder in Gratz.
Article is in German, you will need Google translate
http://www.lyoness-geschaedigte-plattform.at/viewtopic.php?f=2&t=1868&sid=f88ad040cb1325a53eb35572ed6d0b22
Does the murder have anything to do with Lyoness explicitly? I’m thinking this is probably offtopic.
Apparently victim found out his money (80.000 Euros) were gone from his account. He was killed in order to hide the theft. Both killers worked for the Bank in Gratz.
One of them was involved with Lyoness as premium member and was actively promoting it online, and obviously needed the money, since he stole it with his accomplice. Even went that far to kill for the money.
I agree this doesn’t have direct connection with Lyoness but still shows what some of the members (or one-two of them) are ready to do.
I talked with Lotteritilsynet (on the phone) just now.
The preliminary reports have been sealed temporarily as “not finished reports” (correctly requested by lawfirm Grette DA). They do contain some “business secrets”, but parts of the reports will most likely be available after Friday June 27 (estimated date) if anyone request copies. Some parts will be sealed = business secrets or other information exempt by law.
I will wait till they have published information on the website / wait till the information have become available through oep.no, because it allows for anonymous requests.
DOC #72 “Down payments are not consideration according to the law”
That’s one of the points they disagree on. Lawfirm Grette DA have claimed that the down payments are not considerations (payments from participants to become Premium Members). Lotteritilsynet see it as a payment of that type (the $3,000 part of the $3,600 payment is seen as a consideration). In Norwegian currency, it will be NOK 16,000 out of the NOK 20,000 is seen as consideration.
I will potentially posts SOME posts designed as “additional info meant for regulators”, e.g. some compensation plan details and some info about gift cards, and some calculations. That’s needed to avoid confusion e.g. about the different currencies and different markets.
(About the compensation plan in post #137, “additional info designed for regulators”. The point by point description will allow me to identify more correctly WHERE in the compensation plan we identify specific problems).
More details about the compensation plan:
I don’t think anyone have criticized those two points, they’re both about cash backs.
Loyalty Cash is the “maturity payout” if your units have been generated from shopping.
Loyalty Credit is the “maturity payout” (final payout) if your units derives from down payments. As a sole investor with no downline, you may potentially receive some spillovers from people in directt upline, but you will need to pay for most of the units yourself.
ROI (as Credit if the units derive from down payments):
AC1: $5,250 investment –> Credit 675 payout = 12.86% ROI
AC2: $13,500 investment –> Credit 1275 payout = 9.44% ROI
AC3: $30,000 investment –> Credit 2400 payout = 8% ROI
AC4: $90,000 investment –> Credit 7200 payout = 8% ROI
AC5: $300,000 investment –> Credit 24000 payout = 8% ROI
Note that accounting units will generate payouts to multiple people (in upline), they’re all sharing the same “lifeline”.
That’s why it doesn’t make any sense making down payments if you don’t have clear plans about recruiting minimum 4 other investors, and about helping those 4 to recruit 4 new investors each.
The passive investor idea simply won’t work. It will have a function if you qualify for the other payouts and have a downline of some size, i.e. the credits can be reinvested and generate cash payouts for many people in your own upline / downline, including yourself.
Reinvestments like that are typical in Ponzi schemes, reinvestments of any type of back office funds into additional investment units.
Loyalty Commission is about CASH payouts, when you and people in your upline or downline have generated a certain number of units in 2 binary legs (3/3, 5/5, 10/10, 15/15, 20/20 and 25/25).
CASH PAYOUTS:
AC1: $12 + $18 + $24 + $36 + $48 + $60 = $198 (ROI 3.77%)
AC2: $36 + $54 + $72 + $108 + $144 + $180 = $594 (4.4%)
AC3: $120 + $180 + $240 + $360 + $480 + $600 = $1,980 (6.6%)
AC4: $360 + $540 + $720 + $1080 + $1440 + $1800 = $5940 (6.6%)
AC5: $1200 + $1800 + $2400 + $3600 + $4800 + $6000 = $19,800 (6.6%)
Loyalty Partner Bonus is a “matching bonus” from the Loyalty Commissions received by people in your downline, 2 levels deep.
* 18.75% from your 4 direct
* 6.25% from your 16 indirects
These ones will not involve any direct payouts, so I haven’t focused on them. The 3 different Accounting Unit programs are
* “Personal program”
* “National program”
* “International program”
Volume Commission is based on CAREER POINTS generated in your entire downline. Each point will generate $4.687 to SOME PEOPLE (you, upline, downline), they will each get their own fraction of the $4.687 per individual point.
ROI = 6.25% cash.
$75 unit = 1 Career point
Volume Bonus is based on your entire downline. Each person with a downline that generates minimum 200 Career points, 2 months in a row, will receive up to $1.50 per Career point as “Career Level bonus” for 6 months.
Career level 1 $0 (100 points required)
Career level 2 $300 (200 points required)
Career level 3 $750 (500 points)
Career level 4 $1,800 (1200 points)
Career level 5 $4,500 (3000 points)
Career level 6 $12,000 (8000 points)
Career level 7 $30,000 (20000 points)
Career level 8 $75,000 (50000 units)
“TYPICAL PONZI”
* Loyalty Credits (point 4). The Loyalty Credits can be reinvested in additional accounting units, e.g. in the other programs.
* ALL other parts where “payouts” are being paid to “internal accounts” and are not being paid OUT from the system within reasonable time.
Electronic transactions inside a system are only “empty promises”. They don’t NEED to be backed up by real money, only a fraction is needed to cover withdrawals. That fraction might come from new investments.
Loyalty Credit –> purchase account = a PROMISE to allow people to purchase gift cards or make reinvestment.
Purchase account –> gift card purchase = some money will need to be used paying for the gift card, to honor the promise.
Purchase account –> reinvestment = no money is needed, Lyoness will accept its own empty promises as payment for new units. It will also generate new payouts of empty promises. People with downlines of some size will typically reinvest credits and try to get cash.
* Money IN –> Accounting Units = no money required to back up the investment, only a fraction of the money will be required to cover potential withdrawals.
“TYPICAL PYRAMID SCHEME”
* It won’t work as a passive investment scheme for a single investor = it won’t generate positive ROI if you don’t recruit the minimum 4 and they recruit their minimum 4, and so on.
* Payouts are directly tied to investments from people in direct upline or downline. Ponzi scheme investments can be “pooled” in a “pool of money” from all the investors, while pyramid scheme investments typically can be identified as “units” or “positions” belonging to specific investors.
Some additional information to Lotteritilsynet – about additional investments people can do when they become Premium Members.
MLMhelpdesk.com has a detailed “report” from an MLM expert, posted as 2 screenshots near the end of an article:
mlmhelpdesk.com/lyoness-america-violating-pyramid-ponzi-business-opportunty-security-regulations/
The MLM-logic used there is rather confusing, e.g. insisting on seeing the Accounting Units as “profit centers”. I believe some of the logic (and math) will be flawed because of that.
The information of interest is point #8, it has some information about the OTHER matrix based programs offered by Lyoness.
* Personal Program = the one visible through the compensation plan, with $3,000 investment to become Premium members (plus $600 gift card purchase)
* National Program – will accept 3 times the investment, $10,800.
* International Program – will accept 3 times the investment.
When Lyoness plans to enter a region or a country, Premium Members in some of the old countries are offered to invest in “marketing campaigns” (buy accounting units in new markets). The people joining after themselves in that local market will fill up the matrices and generate payouts.
Checking the Norwegian market in June 2013.
I randomly checked 20 out of the 60 merchants registered in the Norwegian market.
* 10 were located outside Norway, merchant ID number 459000xxx
* 10 were Norwegian, merchant ID number 449000xxx
* In June 2014, some additional ID numbers are also being used, e.g. 109000xxx, 45300xxx
I didn’t identify WHICH country those non-Norwegian merchants were registered in, I only checked whether there were investors from foreign countries investing in a marketing campaign in the Norwegian market.
I have mostly focused on the known information = the compensation plan and the down payments. This additional information may potentially fill in some blank spots (it was completely unknown to me), about the more unknown parts of the program.
Specific information to Lotteritilsynet – about GIFT CARDS – related to Doc #72 “Down payments are not considerations according to the law”, from lawfirm Grette DA:
I asked some general questions to a “Narvesen” owner (franchise) in 2012 about payment methods for gift card like products (he didn’t sell gift cards, but he did sell comparable products like train tickets, mobile phone preload cards, lottery tickets like “FLAX”, etc.).
“EMPTY CONTAINERS”
The general answer was that all electronical products were “empty” until they were bought by a customer, the store first paid for them when the product were paid for by end users. They didn’t BUY those products as “loaded products”, the products were first loaded (“activated”) at the time of purchase by a customer.
That answer applies to nearly all “container products”.
* A gift card is simply a “container for unfulfilled transactions”
* a train ticket is simply a “container for a train ride”
* a lottery ticket is simply a “container for potential winnings in the lottery”, etc.
“Containers” are generally empty when delivered to retail stores. They will first be “filled” with the service (or be “activated” for that service) when the transaction has been completed. That’s the NORMAL method in business. Second hand “containers” will of course be “filled” or “activated”, if sold from one end user to another.
The containers are needed to make the services retailable as some type of “physical product” that can be sold through a store, but the container doesn’t have any other functions in itself. The correct definition is probably “empty containers” as long as they’re stored, and “containers for unfulfilled transactions” once they have been sold to an end user.
“Flax”
I got some additional info from another source. “FLAX” from Norsk Tipping (lottery) will be based on estimated sales for 1 month, and will be received in 100′s (100, 200, 300, etc.).
They will be registered IN to the store when they are received each month, the store will “partially activate” them before they can be sold to end users. They will be finally activated when they’re sold. He wasn’t sure about the payment process, but it’s probably based on monthly invoices “net sold this month”.
LYONESS
Lyoness members have made several claims about the down payments and how they’re assigned to specific gift card purchases, i.e. the idea of partially loaded gift cards.
The idea will make absolutely no sense in business. Most businesses will prefer to avoid binding up money in products, e.g. to protect their own cash flow (“don’t pay money OUT before you have got money IN”).
Most businesses will prefer to handle gift cards as “inexpensive, empty plastic cards” they can store in an unlocked drawer, rather than storing the cards in a safe as valuables.
But Lyoness may actually sell SOME gift cards as “preloaded and activated”. It doesn’t make any sense, other than that it can be used as “proof” for something. It has other types of “proofs” that don’t make much sense, that are only used to add some fake “credibility”.
GENERAL INFO –> TRY TO GET SOME BETTER INFORMATION?
I only managed to get general info from the people I asked (one “Narvesen” owner, one employee).
Forbrukerombudet (Consumer Ombudsman) have gift cards and similar payment methods mentioned in its “2014 Agenda”, section 1.2:
It’s generally much easier for any “correct authority” to collect correct information from businesses than it will be for me as a private citizen, so I didn’t actually try to get more than general answers.
More additional info designed for regulators. Numbers are based on the compensation plan explained in post #142.
PONZI, PYRAMID, HYBRID OR SOMETHING ELSE?
PONZI
The arguments AGAINST Ponzi scheme is that Lyoness simply won’t work as a passive investment for a sole investor, it will NOT generate a positive ROI if people don’t recruit a downline.
The arguments supporting a Ponzi scheme conclusion are about several “signatures” and “characteristics”, and by pointing out that investment motives are about EXPECTATIONS of a profit rather than about calculations.
Once you have recruited a downline, the passive investment idea will start to work, in that the people you have recruited will follow you into other matrix based programs.
“Characteristics and signatures”
a. Investment motives
People pay money IN to Lyoness, with the expectations of earning a profit, based partly on their OWN invested amount, partly on other people’s investments, partly on profit derived from discount on purchases.
It doesn’t really matter how realistic that idea is, the primary motive is about the opportunity to make a profit. The down payments won’t make any sense from a consumer perspective.
b. Investment in virtual investment “units”
The use of virtual, non-valuable investment units is one of the key signatures of fraudulent investments. The accounting units themselves don’t hold any monetary value or commercial value (they can neither be sold to investors in an ordinary market, nor be sold to consumers in an ordinary market).
The only “value” they hold is the potential empty PROMISE of paying monetary rewards if a number of new investment units are being paid for (directly, indirectly), payment with cash or credit. The costs of producing those units are close to ZERO = no intrinsic value.
c. Non-monetary payouts which can be reinvested:
Most payouts will go to internal accounts, as PROMISES to pay something later. Some of the promises can be withdrawn as cash if requested. Some of the promises can only be used to purchase gift cards or be reinvested in additional investment “units”.
d. Using new investors’ money to pay old ones:
Lyoness does clearly use new investors money to pay old ones, if the old ones have recruited the minimum required.
e. Non-existent or insignificant income source:
The basic sales pitch is “people will always shop” = the investors are expected to earn a profit from their own and other people’s normal purchases.
It would probably be fine if EVERY payout to investors derived from sources like that, rather than from other investors’ investments. But Lyoness is clearly using funds paid in by new investors to reward the old ones.
The legitimate profit source (consumer purchases) is far too insignificant to work properly, but does it make enough profit from other legitimate sources to support the payouts?
f. Defense arguments:
* “Lyoness is not a financial institution”
* “Down payments are not investments”
PYRAMID
The arguments AGAINST pyramid scheme are about the relatively low rewards offered by the program. Participants must recruit minimum 4 other participants to get access to most of the payouts, and they must recruit 4 investors each before the first investor will have any profit from his investment.
4 directly recruited:
If we assume people are qualified for all parts of the compensation plan right from the start (including point #5 – #10), 4 directs ($3,000 investment each) will only generate some minor payouts:
AC1: $12 + $18 + $24 + $36 = $90
AC2: $36 + $54 = $90
AC3: $120 + $180 = $300
————————-
Total: $480 (13.3% – 16% ROI)
————————-
4 directs + 16 indirects:
An additional 16 indirectly recruited investors ($3,000 investment each) will generate a small profit (mostly in Credits). The pyramid scheme will start to get profitable once people have recruited some minimum numbers of other investors and shoppers.
4+16+64 recruited:
Here it’s clearly profitable, and pays out a significant profit both in cash and credits. It isn’t solely about the amounts invested after one’s own investment, the rewards will become more and more profitable higher up in the system.
CONCLUSION?
It points in the direction of a Ponzi/pyramid hybrid variant, but I will need to bring in some other factors.
The other option is “legitimate consumer community”.
STATUS OF THIS CASE
“Read the report first”
I will first need to read the report from Lotteritilsynet, the parts of it that eventually will be publicly available. I will not add any information if they already have analysed information similar to the one I have.
“Identifiable factors”
I decided to break Ponzi scheme theories and pyramid scheme theories down into identifiable factors, rather than using simplified logic about “investments”, “pay to play” and “ROI”. I also covered some of the defense arguments, the arguments pointing in the opposite direction.
“Jurisdiction issues”
Lotteritilsynet have a very limited jurisdiction, it can ONLY analyse potential pyramid scheme issues. It may not be the correct authority in this case.
NEED TO DO
“Lyoness as a consumer community”
I will need to analyse that too, how it makes sense for a consumer to make those down payments.
“Laws versus realities”
I will need to focus on the realities. Trying to analyse laws and make the realities match those laws will typically lead to rather constructed theories.
Lyoness has done the same mistake, e.g. looking at the lack of laws regulating down payments, and constructed theories about that down payments are completely legitimate in business (e.g. “not investments”).
“Payouts”
The expected profit derives from more than one source.
* from OWN investment
* from other people’s investments
* from discounts on personal purchases
* from discounts on other people’s purchases
I will need to specify the different sources more clearly, using some mathematical examples.
“Compare Lyoness to other Ponzi/pyramid hybrids”
A method like that may potentially make some details become clearer, easier to understand. People will typically “see” things in specific ways, it has clearly been reflected in arguments that people are focusing primarily on MAIN identifiers, e.g. high profit offered or other main factors.
It may be easier to identify the AU investments as “virtual investments” if they can be compared to other similar systems.
“Boil it down to something simple”
I will need to boil it down to something that clearly can identify potential legal issues and point to solutions.
It’s generally fraudulent if Lyoness is using money from SOME investors to pay other investors, if all of them are dependant on money coming in from new investors to get their investments back.
It will be fraudulent even if Lyoness use customers money to pay out rewards to other customers, “enriching the few at the expense of the many”, even if the losers potentially can get their money back over time through personal purchases.
“Boil it down to something simple”
The down payments can be boiled down to whether they’re some type of investment or some type of commercial solution.
Investment?
* There needs to be a transaction of valuables (money)
* [transaction] from the investor to a third party
* for the purpose of earning a profit [on the transaction]
* [a profit] which arises from a “profit generating venture”
* rather than from the person’s own legitimate work
It boils down to whether people are making those down payments because they’re eager to buy gift cards, or if they’re making those down payments with the expectations of earning a profit from the transaction.
Profit generated from legitimate work is not the same type of profit. “Legitimate work” doesn’t include the activity of recruiting other consumers into a Ponzi or pyramid scheme.
Commercial solution?
Down payments CAN be found as a part of normal commercial activities. The normal function is to distribute some financial risks from the seller to the buyer, and to act as an incentive for the buyer to complete a commercial transaction.
* Risks?
The AU units cost nothing to produce (no intrinsic value), they’re worthless in a normal market. People buy them because of their own expectations of a potential profit arising from the purchase rather than for the value of the units themselves.
* Incentive for the buyer?
The down payments can clearly act as incentives for buyers to complete the purchase, but it doesn’t make much sense for a consumer to make any down payment agreements in the first place. Gift cards are not something people will need to “reserve” the right to buy.
Report will be published in September 2014.
Before quoting the press release, it mostly contained “fill”, so I won’t bother to translate the whole press release (it’s written in local language for Western part of Norway, so it will probably be difficult to auto-translate).
IMPORTANT PART
Lyoness has documented that more than 50% of the revenue (or units) derives from merchants. I’m not sure about that conclusion, I will translate that part directly.
SOME GENERAL INFO
Pyramid schemes are about 4 parts:
1. Pyramid-like distribution system
2. Payment from participants (consideration)
3. Possibility to earn income that derives from other participants’ consideration.
4. That income must primarily derive from recruitment based activities, rather than from sale or consumption of goods or services.
I used “income” as a direct translation.
The logic is similar to the one used in the BurnLounge case, e.g. to the Omnitrition / Koscot test. That court used the expression “unrelated to sale or consumption”, “but it doesn’t mean completely unrelated to sale or consumption”.
Both the organizer (company) and the participants are some types of participants. For Lyoness, the merchants will also be some type of participants.
From lottstift.no (original press release, Norwegian):
lottstift.no/blog/2014/06/27/endeleg-tilsynsrapport-i-lyoness-i-september/
If Norway law is similar to Belgium, I wouldn’t be surprised if it is found to be legal, as Herbalife was found to be legal in Belgium.
However, unless there are significant external sales to customers, this is an illegal pyramid in the U.S.
Then it may be time to analyse it …
The press release used the general term “income” both for revenue and rewards, and it didn’t specify anything (e.g. gift card purchases versus product purchases).
* 20% of the money from upgrading to Premium Membership will be used towards buying gift cards ($600).
* 80% will be down payment ($3,000).
* Merchants pay for memberships and units too?
What I can conclude here is that it probably has been a lot of doubt about the decision. The first preliminary report was released in late April 2014, the second one in early June 2014, and the final report is estimated to be finished in September 2014.
They have the same basic rules, but implemented and enforced differently.
* Belgium has a court based system, and specific to Belgium is Commercial Courts (special civil court, with specific and limited jurisdiction). It will be party against party (e.g. company v company, or consumer v company), not government agency against party.
* Norway (Sweden, Denmark) have Administrative systems = government agencies making decisions. It will neutral agency against party, and a neutral appeal board.
The type of court system you’re looking for is rather rare. It’s more common in criminal organizations than in other structures.
M_Norway, I didn’t know I was looking for a type of court system, I was just making a generic comment.
I pointed out some specific problems in post #90 about how some rules had been implemented and were organized between different authorities. Sweden and potentially Denmark most likely have similar problems.
Belgium is a different system, so I can’t say anything about that. Wikipedia had some info about how the court system was organized
Rule 14 will be less effective without the main rules, so it has actually been organized to become less effective “for some reason”.
The first reason was that rules against promotional pyramids already were in place in another law = BOTH traditional pyramids and promotional pyramids can be found in Lottery Act §16 (with fines / punishments in §17).
That solution doesn’t make much sense other than for bureaucrats and legislators.
The second reason is that the idea of organizing it that way was based on multilateral treaty between Scandinavian countries, dating back to the 1990-ies or earlier, where they all had it organized that way.
Thanks for all of the details, but I have little interest in European law.
I thought you were looking for “systems” that could be effectively used to shut down companies you don’t like? 🙂
The main “system” I am looking for right now is a group of people to work together to be more effective, and frankly, they are few and far between. Most only want to plunk on a keyboard all day long.
@M_Norway
Sounds like they might have swallowed the gift-cards = purchase crap.
Also I imagine they overlooked the >100% cash ROI paid out. Lord knows we’ve had umpteen Lyoness affiliates themselves swearing black and blue it doesn’t exist until it’s pointed out to them in the comp plan.
@Oz
I have too little information to analyse WHAT they might have swallowed, but at least they didn’t swallow the down payments. They have most likely accepted the initial gift card purchase, but there’s nothing wrong in that (from a neutral point of view, they don’t have any strict “MLM rules” to follow).
There’s the following options here:
1. Accept the result
2. Point out other consumer protection issues
3. Point out Ponzi issues
4. Bring in more information about the pyramid scheme issue
Option 1 should be the default option. They have actually followed a 50% rule = “it’s NOT a pyramid scheme if more than 50% of ‘something’ derives from sale or consumption”. The ‘something’ shouldn’t be revenue alone.
Option 1 can work well with all the 3 other options, and it can also work alone.
Consumer protection issues belongs under a different authority’s jurisdiction, and it must have clarified potential pyramid scheme issues first before it can look at a case. I actually suggested to let the consumer protection authority look at different aspects of the case first, in May/June 2013.
Before bringing in more information, e.g. option 3 or 4, I should probably look at the rules they will need to follow, e.g. how the rules are meant to be interpreted.
It doesn’t (pay out >100% ROI), for a sole investor (not counting spillovers from upline here). It gives the EXPECTATIONS of a >100% to people based on the idea “everyone will shop”, but it doesn’t really pay that well if you don’t have a downline.
It pays out most of the payouts to people in upline. If you down pay 35 + 35 units yourself in AC1, the cost will be $5,250 and the ROI is 675 Credits. It will heavily disfavor passive investors without a downline.
The minimum requirement is “recruit 4 people, each of them with minimum 1 unit in one of the accounting cathegories”. At least one or two of them will need to build a downline if you want to make a profit. In reality, you will need downlines both “above” and “below”.
I don’t think they have overlooked potential Ponzi scheme issues either. “Fictive values” is a well known component in pyramid schemes, we have simply identified it as something specific to make it easier to identify.
Damn those >100% ROI.
I bought some shares recently and sold out with a 220% ROI. Call in the authorities.
I love Lyoness.
Here’s some of the rules, or actually “background information”.
Proposition no. 97 (2004-2005), About the Law amending the Law of 24 February 1995 No. 11 relating to lotteries, etc. Translated source
4.1 Classical pyramid schemes
4.2 MLM and Network Marketing
4.3 Mixed types (promotional pyramid schemes)
It’s not worth reading, but it might be worth having a quick look at it from a neutral point of view, e.g. to see that it’s “balanced” between what’s legal and what’s illegal. You must look specifically for that type of information to see it.
Norwegian source, leading to the main page (“menu” / “list”).
regjeringen.no/nb/dep/kud/dok/regpubl/otprp/20042005/otprp-nr-97-2004-2005-.html?id=400841
NOT A CLEAR CONCLUSION
The conclusion in this case is not a clear one, and that’s probably WHY the final report has been delayed 2 times. Lyoness has several red flags, but the law is clear about that a 50% rule CAN be used as a defense argument (to show that it’s actually about real business purposes).
He didn’t say positive ROI was illegal? You misinterpreted it.
Your investment in shares was probably a legitimate investment, where the ROI derived from a business venture or financial investment. Shares in a company is a type of “financial investment”, a method for a company to raise funds from a financial market.
Effective people? You won’t find them here. 🙂
“Be more effective” is normally about getting more results from the same amount of energy, or about getting the same amount of results from a lesser amount of energy. I don’t see anyone like that here, they all need to put in a significant amount of energy to get any results. 🙂
BTW, you forgot to mention WHAT (which results do you expect to improve by following that idea?).
I’m trying to understand this mess in its simplest form. Are they calling the gift card a product? People are making down payments on those in advance? In the mean time, recruit enough people making down payments and make a ROI?
Should a gift card that’s “loaded” be considered a product? Or only after it’s redeemed? Do I make more money off recruiting enough people with down payments than actually redeeming the card (turning the card into a real product) and collecting a percentage off of actual shopping?
Nope, they immediately mentioned (when I called them 4 days ago) that the reports had been delayed because of disagreements about details, specifically about the down payments.
Lyoness attorney claim the down payments are not “considerations” (payment from participants for the opportunity). Lotteritilsynet has the opposite conclusion, “there’s no exchange of value in those payments”.
The $600 gift card purchase has been accepted as “exchange of values”, but they didn’t accept the $3,000 down payments.
You are blathering on about efficiency NOT effectiveness.
I would have missed a follow up point if I had used the exact definition. It wasn’t meant as a definition in the context where it was used.
@Max
Were those shares in the Lyoness MLM business opportunity?
If so, then by all means call the authorities. Lyoness aren’t registered to sell securities.
@M_Norway
All Ponzi/pyramid hybrids require the recruitment of new investors to pay out. The money doesn’t just materialize out of thin air.
Only if people want to withdraw money as cash. Internal payouts can continue almost forever. Look at BLGM?
The money doesn’t (materialize out of thin air). But all the internal payouts do. They will materialize out of “proprietary formulas”, “Chinese penny auction customers”, “panel exchange programs” and other ideas.
I think we’re getting into a Hoss/M_Norway hair-splitting here. 😉
Ponzi generally do not require members to recruit (i.e. as a part of criteria of getting paid), while pyramid schemes do. A hybrid would not not make it a requirement, but worded as a “bonus” if they do.
In reality, money do not materialize out of thin air. However, as M_N said, the “funny money” (i.e. empty obligations) can grow out of thin air.
ASD, Zeek, TelexFree, all have HUGE obligations and few real assets to pay them with when they collapsed. It basically became a game of blinksmanship: will you take your money and run now (withdrawl)… or leave it in and take the risk of it collapsing before you can take it out?
The problem is the scammers are holding all the cards… They know the *real* numbers behind the scenes and can exit at their leisure.
By all means lets get into it.
What do you mean “only if people want to withdraw money as cash !” Do you think they join to count internal payouts until the end of forever? No…..eventually they want their money out.
If nobody wanted to withdraw cash they might as well buy an impregnable steel lockbox, put money inside and and throw away the key. Who does that? Who doesn’t want real money back?
Whether a company fabricates numbers out of thin air does not change the fact that….
Pay OUT…. Generating fictitious account balances is not paying out.
I have used a spreadsheet to calculate and simulate payouts (from the AU investments), so it’s not about hair-splitting. Hair-splitting is typically about unimportant details, not about important ones.
Post #137 is a list of the components in the compensation plan, with a
“——- 4 directly recruited required —–”
to clearly separate between different parts of it. Post #142 has the details.
Down payment units will qualify for point 4 only = Credit payout of 675 credits when people have filled the binary matrix with 35 + 35 AU in AC1, for a total cost of $5,250. ROI (in credits) 14.86% for AC1 = net loss of 85.14% (but you will probably receive a gift card).
If you have recruited 4 people, you will qualify for cash payouts too.
5. Loyalty Commission (4 directs required)
6. Loyalty Partner Bonus (minimum 1 of your 4 directs must have recruited 4 people, or else there won’t be any commission to earn the bonus from)
9. Volume Commission (you will need a downline of some size)
10. Volume bonus (you will need a downline of some size)
I have a post waiting for moderation, explaining some parts of the compensation plan.
We have many different descriptions of the Accounting Cathegory system, but very few are detailed.
It’s probably a 2xinfinity matrix, where everyone in an entire upline / downline will fill in units in the same part of the matrix.
* people you have recruited yourself will fill in units in your part of the matrix.
* a few spillovers from upline will end up in your part of the matrix
Vikinged gave a fetailed explanation in post #181 (in the Lyoness review article):
behindmlm.com/companies/lyoness-us-review-cashback-and-investment-returns/#comment-85433
Other people have given similar descriptions, calling it “lifeline” “where everyone is working together generating units for eachothers”.
EXAMPLES – RECRUITING 0, 1, 2 OR 4 PEOPLE
If you don’t recruit anyone, you will not have anyone generating units for you either. Your part of the matrix will be a dead end road. A few spillovers may come from your upline, but they will soon find out that you’re not very profitable, and they will most likely place their units in more profitable parts of the matrix.
If you recruit only 1 person, only the left or the right part (above or below in Lyoness) of your matrix will be filled. That won’t lead to any payouts.
If you recruit 2 people, one on the left side and one on the right (above and below), they may potentially fill out both sides of the matrix for you and lead to a maturity payout. You will not get any maturity payouts if one of them fail to generate units.
If you recruit 4 people, filling the matrix will be less important because you will qualify for other payouts too. You can still get maturity payouts even if 2 of your directs fail to recruit or fail to generate units in other ways.
No, of course not, You probably misunderstood what you meant to say or something.
Reads clear enough to me, but whatever you say M_
@hoss
You can get paid out in Ponzi points :). It’s not cash but it’s still a pay out.
And usually someone at the top is withdrawing something at any given time. The main Ponzi pimps are usually first to withdraw their seed once the recruitment commissions kick in.
Nope, I didn’t. I have even checked Wikipedia for interchangeable uses, and they’re clearly accepted in some cases. They’re not SYNONYMS, but one can describe a specific aspect of another.
You can test it against the opposite statement, e.g. “Effectiveness has NOTHING to do with the energy used to produce the desired result”.
It wasn’t meant to be interpreted as a definition in the context where it was presented. People might still try to interpret it that way, but that doesn’t make much sense if I already have told them something else.
It can be boiled down to a question about rationality.
Cough cough B.S.
“Effectiveness has EVERYTHING to do with the energy used to produce the desired result”. Like I said, try to quit blathering.
You have understood it correctly. Ponzi schemes don’t need to be about REAL payouts, they can be about ILLUSIONS of payouts and even about EXPECTATIONS of payouts in the future.
So most Ponzi schemes won’t require you to recruit anyone, the recruitment part is simply an added bonus for recruiters.
In Lyoness, the recruitment is highly REQUIRED. It won’t pay out anything if you don’t recruit (or don’t pay for all the units yourself, directly through down payments or indirectly through shopping).
When dealing with authorities, I will need to describe it as correctly as possible. They won’t swallow vague ideas.
“Invest $3,000 and wait for >100% ROI” is highly simplified, it won’t work at all. It will fail miserably if you test it in a spreadsheet or on a paper.
“Invest $3,000, recruit some people and wait for >100% ROI” can actually work, but it doesn’t give a very good description. The idea is still too simplified, and it’s actually more misleading than factual.
Since the second description actually CAN work, it isn’t directly incorrect either. But it will fail critical analysis, e.g. if a regulator is trying to analyse it that way. I will need to describe it more correctly than that.
Such a statement is at odds with your previous statement….if you care.
What are the new investors? Spectators?
If there are no REAL payouts it not a Ponzi. Its a nothing an null a void….chuch bingo played for toothpicks.
The money makes it REAL. The other crap is just window dressing. Without the money changing hands there’s nothing happening. Its a kindergarten dance with the parents smiling stupidly.
I suppose there’s a differentiation to be made. These new Ponzis add that third layer of virtual BS, which can prolong things with the whole re-investment of virtual earnings.
Ah I’m supposed to be taking it easy this weekend. Next week kicks off my summer vacation to expect a lot of review to go up.
You probably misunderstood something once again? I gave you some suggestions you could check or test it against.
* Wikipedia, for interchangeable uses.
en.wikipedia.org/wiki/Effectiveness#Related_terms
* Test it against something opposite (you didn’t).
* Test it against the context.
* Test it against some rationality ideas.
* Test it against sense of humor (I had fun when I added that one)
* Test it against reality.
Simply test it against something OTHER than your own ideas. I gave you a Wikipedia link as one of the methods you could use. I have already said that they’re not SYNONYMS, “but one can describe certain aspects of another”.
Note that I immediately described why I didn’t use exact definition there (it would miss a follow up point), and I immediately identified that it wasn’t meant to be interpreted as a definition.
So with the $600 gift card, the merchant has received money already and issued a card in exchange. With down payments, money goes ONLY in to Lyoness corporate from affiliates. The merchant has not yet and may never see any of that money, I’m assuming??
Trying to understand what, how, when, and if merchants get money guaranteed from shoppers,.
Fully paid gift card = “exchange of values”. A gift card is a type of service (if you don’t use too strict rules). I have used rules THEY (Lotteritilsynet) should be familiar with, rather than trying to make them accept MLM logic.
It’s not accepted like that in MLM logic, they will see gift cards as “cards containing money” = not commissionable in MLM. Companies have been shut down because of that, e.g. some e-Gold opportunities.
All types of payment methods can be considered “normal” in business. But giftcards are only empty plastic cards until they have been fully paid.
Merchants will typically pay for gift cards they sell AFTER the card has been sold to a customer. The card will be “registered” or “activated” when the customer pays for it. If the merchant sell 25 gift cards ($200 each) in a normal month, he will most likely receive a monthly invoice each month, AFTER the gift cards have been sold to consumers.
Until the consumer have paid for the gift card, it’s simply an empty plastic card.
I posted some info in post #144, but I used other examples than gift cards. I used examples where Lotteritilsynet is the regulatory authority, where they easily can get information.
Of course I did. You weren’t paying attention.
That’s not important. If you feel that was a meaningful test then I can clearly accept that idea. You have most likely understood the main point anyway.
Note that the most relevant test was placed first in the list of “suggested test methods”, the Wikipedia link. Some of the others were added for joke, I didn’t expect any response at all to any of those.
If you mean a Lyoness member purchasing such a card, money either goes from Lyoness to merchant first, then Lyoness then sells card to member for a small handling fee, or Lyoness can simply hold the cards (in consignment) until one was paid for by a Lyoness member, then the money is paid to merchant (for activation of the card). The former usually gets a discount for cash up front.
If money went to purchase of units, Lyoness got the money. Merchant never see any of the money until the member accumulate enough units for redemption (into whatever form that’s permitted, gift card or cash).
Which is where it makes no sense: that money is sitting in Lyoness account doing nothing until it can be redeemed. Few people will shop enough to generate many units. You need to recruit a LOT of people to generate units through shopping… Unless you convince them to put money in… like you did. Which is where it starts to look like a pyramid scheme.
Or it can be thought of as similar to “quickstart” programs in several MLMs where you can directly buy a rank above the lowest level… Without doing any “sales”. In Lyoness, you can buy your way to more rewards, without shopping. THAT is where the suspicions are.
“Eventually they want their money out” doesn’t mean the Ponzi scheme will need to pay money out to the investors? The investors will of course WANT their money back with the expected ROI, but …
Real payouts are needed to create confidence in the program, to show people that the program isn’t a fraudulent one. But it doesn’t make much sense for an organizer to pay money OUT, they do it because it’s needed for some reason in how the program has been designed.
Most Ponzi schemes will have a DELAY between money IN and money OUT. The false “profit generating mechanism” can be investments in farmland units, forestry units, green energy, bio oil production or other long term projects. They don’t pay anything out to the investors in the first few years.
Madoff most likely had an initial delay, i.e. that he only accepted long term investments from solid investors. He most likely had a delay between withdrawal requests and actual payouts too.
Ponzi schemes will only need money coming in from investors when other investors want to withdraw money. They can pay out false profits (internal payouts / reinvestments) for very long time and still be accepted.
I rest my case. Thank you for proving it for me.
Oz: All Ponzi/pyramid hybrids require the recruitment of new investors to pay out. The money doesn’t just materialize out of thin air.
AUs are down payments on cards of “value” which is Lyoness’ argument to avoid Ponzi, yes?
What I’m trying to get at is,
A gift card isn’t an exchange of value UNLESS the merchant sees the money.
I’m unclear about their definition of “fully paid” and “activated”. Do either of these guarantee money to merchant? Or must they wait for it to be redeemed at store?
Can a merchant be circumvented and never see money? Not ripped off, just non the wiser and out of the loop.
If Lyoness argue the intent of the “down payment” is to get to a fully paid gift card, what does “fully paid” exactly mean?
Maybe my thought process is barking up the wrong tree? I’ve read the thread but there’s a lot of info to comprehend. I personally feel that different ways of explaining things will CLICK differently to some people. Maybe this is the case with lotteritilsnynet….and me:)
@Hoss
I have pointed out that people also can accept ILLUSIONS and EXPECTATIONS. We will simply need to look at the realities.
Illusions are created out of thin air, and so are expectations. They don’t need to be fueled by money, they work just as well if they’re created out of thin air.
How did you think your own ideas and expectations were created, other than out of “thin air”? 🙂
It is best NOT to speculate what did lotteritilsnynet think of Lyoness until we see the full judgment report. Leave the speculation (“Lyoness is in no way illegal”) to the other side.
WE have not only been speaking of illusions but how Ponzi/pyramids operate. Don’t get off track.
Nobody would promote or invest in these schemes unless there was real money involved. To argue that ponzis/pyramids only need illusions to flourish is absurd. They MUST have invested money to drive them forward. If someone is willing to believe illusions while another pockets the actual REAL money that is one thing but to contend that no REAL money is needed at all on any level is utter nonsense. The zeek receiver is not attempting to clawback illusions is he? No. He is going after real money. That should tell you how simple minded your thought are.
@Hoss
Of course there’s money involved (from investors), or else they wouldn’t have been Ponzi schemes.
It’s the PAYOUTS that can be replaced by illusions, expectations and vague promises. It works just as well as real payouts if people believe in it, because the brain often can be unable to separate between illusions and realities.
People can CLEARLY accept illusions. That’s exactly how Ponzi schemes work. They wouldn’t have been profitable if they had replaced the illusionary payouts with real monetary payouts.
BLGM show that people will accept illusionary payouts for many months. If a scheme doesn’t pay money OUT it won’t have any desperate need for money coming IN either.
Zeek Rewards was one type of Ponzi scheme, where real payouts actually had a function. You can’t base your ideas on a few examples you personally have SEEN, you must look at a bigger part of the reality.
Real payouts in Zeek were probably 10-15% of the fake ones, so it does only poorly support your theories.
Illusions are created out of thin air, typically from factors people have seen themselves (or have heard of, or otherwise are familiar with), where they strongly believe in certain ideas (often they won’t even TEST their own ideas for alternative explanations).
Zeek was based on people’s ideas about how profitable penny auctions are, based on their ideas about the difference between the price for all the bids used compared to the price of the items. It was backed up by some other illusions, e.g. illusions about money.
We all know it wasn’t really true, people have mostly been able to correct their flawed ideas. Some “strong believers” spent a very long time before they managed to adjust themselves to the reality.
This line of analysis has been beaten to death. Its banal. There is a qualitative difference between Real Money payouts and illusory account “activity.” If you are unable or unwilling to make a clear distinction between the two your analysis is not worth reading.
OK 85% to 90% of the account activity was bullshit. They weren’t money payouts at all they were accounting gimmicks. Got it. Move on.
It’s really all about common sense. Most others companies are doing the same.
Just as an example, I am a member of a MLM company as a distributor and if no one in my organisation orders, regardless of whether I order or not…….I get nothing. My upline does and so does the company……in my opinion that is more of a ponzi/pyramid scheme than Lyoness is.
Unfortunately this company has some products that I prefer, that’s why I am a distributor. I should have become a preferred customer and although I would get NO MONEY back, I may get an extra product here and there. Although my sister, who is a preferred customer tried that and didn’t succeed.
Maybe you should stick that in your pipe and smoke it all you know-alls out there.
At least as a Lyoness member, I have received Cashback and loyalty benefits from all my own shopping. I love this concept and I believe that this is a way that people who are struggling to make ends meet are able to save on their purchases. This, for them, is a win/win!
There are over 4 million members in Lyoness and only about 2.5% are looking at it from the business point of view. Get real folks! This is for everyone!
Lyconet Member (like a distributor in other companies) earns money from their shopping and the shopping of people they recommend. This could be quite substantial if you put your head down and the ‘proverbial’ up and get busy recommending.
NO ONE ever has to make partial payments if they choose not to. You can easily earn without that!
Lyoness Member (like a preferred customer) saves money. Which do you want?
That sounds like a product-based pyramid scheme (no retail).
Lyoness accept investments from affiliates and once enough new subsequent investments have been made by a downline a cash ROI is released. That’s a Ponzi scheme and doesn’t at all sound like what you described (which after reading the rest of your
commentmarketing spiel is likely just made up).You wouldn’t get any money back had you of not marketed the opportunity/products. That’s not what customers do.
If you only cared about the product, the preferred customer wholesale discount would suffice.
Why? The logic you exert makes no sense. The evident empty space in your head might do with the sticking of a brain in there.
Try it, let us know how it goes.
Neither of which have anything to do with investing in AUs (paying money directly to Lyoness), recruiting others who do the same and then collecting a cash ROI (paid out directly by Lyoness).
The choice offered to participate or not doesn’t make it any less of a Ponzi scheme. Now you’re just regurgitating the usual derail’esque justifications we commonly see from the Lyoness affiliate crowd.
But it isn’t, and never is. Anyone who’s ever made significant money in Lyoness has done so by investing heavily in AUs, and then recruiting others who have done the same.
The first part, without the attached Ponzi scheme. Lyoness have had a decade to get rid of their Accounting Unit investment scheme, why haven’t they?
Because, as Founder Hubert Freidl states, Lyoness is “all about positions, positions, positions!”