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10-09-2011, 13:57   #1
sirreally
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Lyoness being sued by former employee for allegedly operating pyramid-style business

Link to story here
Direct link to audio report here

EUROPEAN BUSINESS WEEK | 09.09.2011 | 16:30
Lyoness: Shopping community or pyramid scheme?

Austrian-based company Lyoness was established in 2003 as a referral-based 'shopping community'. Holders of the Lyoness card get discounts when they shop at businesses that recognize it. The money shoppers save is paid into their account. It sounds simple. But consumer advocates aren't so sure. Now a former Lyoness employee is suing the company for allegedly operating a pyramid-style business.
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12-09-2011, 10:44   #2
JD Dublin
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OP do you have more information on this? the article in question is very short and there is almost no information, just some speculation.

I have used Lyoness, and the main disadvantage is that you have to pay upfront for gift cards to use subsequently in shops e.g. Tesco. Its not like a normal loyalty card, and TBH for the effort involved its hardly worth the measly 1 - 3 % you get off the groceries - talk about every little helps.

But it does not seem like an out and out rip off.

Do you have more information you'd like to share?
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12-09-2011, 11:18   #3
sirreally
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Originally Posted by JD Dublin View Post
OP do you have more information on this? the article in question is very short and there is almost no information, just some speculation.

I have used Lyoness, and the main disadvantage is that you have to pay upfront for gift cards to use subsequently in shops e.g. Tesco. Its not like a normal loyalty card, and TBH for the effort involved its hardly worth the measly 1 - 3 % you get off the groceries - talk about every little helps.

But it does not seem like an out and out rip off.

Do you have more information you'd like to share?
The story summary is very short, but the audio report is quite detailed - have another look at my original post. The main question marks about the Lyoness scheme are around its benefit (or possible lack thereof) to what they call Business Partners, who are required to pay up to €2,000 up front in order to participate, i.e. to become loyalty partners and/or distributors of the loyalty cards.

I tried to find out more about this, including in this thread, which was rightly closed by a mod, as it ran its course without ever really getting to the bottom of a scheme so complicated that I have not found a single person who has been able to fully understand or explain it.
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12-09-2011, 13:02   #4
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Sirreally yes that is a good discussion - why was it closed?

Anyway, you are quite right, it doesnt take a genius to work out that getting back .5% from your members will take years to get back your €2,000 upfront cost, unless you recruit thousands to shop in the scheme.

To get your your initial €2,000 back you need to have spending in your group of €400,000. If you have other kickbacks maybe the amount of spending is lower, but nevertheless thats a lot of money. Taking average groceries in a household would be €200-250 for a family of four, and only a portion of that goes to Tesco or other 'partners', €400,000 is a lot of spending to be done in your group.

Therefore after you have parted with €2,000 the pressure is on you to make sure you recruit the members.

A telephone company ( call them Company E ) had a similar system, where you bought in to the system by paying €750 upfront, and most of that money was funnelled back up to the people that had created the pyramid. Your as a 'distributor' got 4% of the phone bill back ( working from memory now ), which equated to €18,750 in phone bills. Given that the average phone was €45 per month thats 34 people you have to sign up ( and keep for a year ) before breaking even on the €18,750.

Last edited by JD Dublin; 12-09-2011 at 13:05.
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12-09-2011, 13:24   #5
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I assume it was closed because it descended into sniping back and forth, with nothing new being added to the discussion (I thought it was quite a heavy-handed move actually, but maybe that's the policy around here).

What you say about recouping the initial investment is right, but the scheme is much more complicated than just commissions on downline purchases. Apparently the €2,000 can be spent on vouchers with other loyalty partners (not all at once). I heard that they also claim that investors can take their money out at any time. My main concerns were (and still are) as follows:

1. What financial rewards are being offered to those recruiting new business partners into the scheme?
2. What guarantees are in place that all investors can get their money back if they come looking for it?

If those who recruit new business partners are being paid a commission directly from the €2,000 investments, then it stands to reason that these investments may not be fully protected and ring-fenced for spending by (or refunds back to) the investors.

It will be very interesting to see what happens with this court case.
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17-09-2011, 09:41   #6
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re: get out clause

We are in a similar situation and looking to extract our 4000 euros from Lyoness but they are wanting to charge us 25% plus 17.5% of this in taxes.

We have been involved in Lyoness UK since day 1 in the UK and to date we have not received a penny in over 3 years.

Can anyone hear who the lawyer is or who the client is as I cannot find them on google to contact them.

Thanks,
Chris
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19-09-2011, 10:12   #7
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Hi Crisdo98 can you expand on your experience in dealing with Lyoness - it may help others who are thinking of getting involved at the level of retailer.
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19-09-2011, 17:07   #8
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Can anyone hear who the lawyer is or who the client is as I cannot find them on google to contact them.

Thanks,
Chris
The lawyer's name is Eric Breiteneder. Here are his contact details:

Breiteneder Attorneys at Law
WALFISCHGASSE 5
A - 1010 WIEN

T +43 (0) 1 512 98 88
F +43 (0) 1 512 98 88 88
office@breiteneder.pro
www.breiteneder.pro
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19-09-2011, 21:30   #9
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Looks like your previous thread was closed down - curiouser and curiouser. Anyone else out there have any experience in dealing with Lyoness?
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20-09-2011, 11:41   #10
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Originally Posted by sirreally View Post
The lawyer's name is Eric Breiteneder. Here are his contact details:

Breiteneder Attorneys at Law
WALFISCHGASSE 5
A - 1010 WIEN

T +43 (0) 1 512 98 88
F +43 (0) 1 512 98 88 88
office@breiteneder.pro
www.breiteneder.pro
Fantastic.. thanks for this.
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07-10-2011, 00:52   #11
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Wrong facts

Cristo98, funny that you are waiting over 3 years to get your 4000 back from Lyoness in UK. They only opened their office there in 2009 - 2 years ago. They dont charge to give you back your money. The only way to get your money back it to spend it with a Lyoness partner shop. How did you manage to "invest" 4000 if you didn't know what the rules of the business were? If you set up any traditional business for 4000 and then decided to stop - would you expect your money back? With Lyoness you can get it back - through shopping.
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07-10-2011, 09:32   #12
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Cristo98, funny that you are waiting over 3 years to get your 4000 back from Lyoness in UK. They only opened their office there in 2009 - 2 years ago. They dont charge to give you back your money. The only way to get your money back it to spend it with a Lyoness partner shop. How did you manage to "invest" 4000 if you didn't know what the rules of the business were? If you set up any traditional business for 4000 and then decided to stop - would you expect your money back? With Lyoness you can get it back - through shopping.
We were approached in 2008 to become part of the first 100 people to join Lyoness and form Lyoness UK. Once 100 people join then the paper work begins. We were promised all sorts of riches by investing early.

The 'system' was explained to us over and over and in theory it is very, very good however it has its flaws which have become apparent only over time. One of the major flaws is the following (i'll use Hungary as an example):

There are many investors who have a single unit in Hungary who have either neither shopped using Lyoness, found it too difficult to use their Lyoness card/vouchers and/or have never introduced a business partner into the system. Using Lyoness system it states that regardless of whether you shop, your friends shop or whether you invite others to join that the 'matrix' will continue to grow regardless because people in your upline will always shop and the 'first available position' will automatically be filled in.

Unfortunately this may take decades as the example above is of Hungarians, who are friends of ours, who simply purchased a single unit over 5 years ago.

A second example is of another Hungarian who did indeed work on it and signed up 2 directs. These 2 directs worked extremely hard over the next year and when the first lady looked at her lifeline she could see that the 'top half' of her matrix had over 200 positions whereas the bottom had 'Zero'. The reason for this is that it is widely used in Hungary as a pyramid system as this is the fastest and easiest way to excel within Lyoness. Go to Hungary, see how many places you can actually use your card.. you'll be dumbfounded that it is extremely difficult to buy anything other than petrol as a few selected stations and Kika. Again, if Lyoness worked as their 'system' states that this lady would have her bottom line automatically fill up as 'people will always shop'.

It doesn't take a mathmetician to work out how much we have to spend to get back our €4000 so let's do it conservatively and say 8% (or which only 6% can come from your investment). In order for us to 'shop' our investment off we would need to spend €66,666!

Mind you that this is another or the misconceptions when we signed up and it was vaguely said when we asked about 'Can we take out our money in an emergency'? the answer was 'No, but you can shop it off'... How on earth in an emergency can we spend €66K.

Only yesterday I spoke with Ivana in the Lyoness UK office who stated that the 'compansionate grounds' admin charge is 25% however they may be able to reduce it to 17.5% (which I'm clearly not happy with paying).

The general terms and conditions have chopped and changed so many times over the past 3 years yet we have never been given a change to cancel our involvement.. if this was a telecoms company they would need to advise you of changes and allow you to accept.

Lyoness is run by cowboys and anyone looking to invest should do a lot of homework and read as many post about it as possible.

Oh, and 'Lyoness Sensation' was on last month and yes a shedload of people turned up to worship their ponsy scheme... How many members are their of their 'Elite Level X' squad are there??? I'll tell you; there is 100 who have achieved the highest level.. that's 100 people out of 2,000,000+ so now you try and tell me that it's not the little people making the fat kids at the top rich?
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07-10-2011, 09:54   #13
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Hi Crisdo98 can you expand on your experience in dealing with Lyoness - it may help others who are thinking of getting involved at the level of retailer.
With regards to getting involved as a retailer it's up to the business whether or not they feel they are getting value for money.

When we signed up it was 'free' for business partners to join and 'free' to give out the card. Since then this has changed a great deal. It is now £1800 for any business to become a partner and they must also spend either £400 or £650 on a £15 ebay scanner or a 3G magnetic card reader (also for this price Lyoness UK will kindly send you some stickers and crappy photoshopped posters).

Lastly you are encouraged to purchase some leaflets at £1.70 of which they suggest 100 should be suffice. All up your looking at a minimum of £2370.

Their SME presentation will try to convince you they have a huge marketing tool. This is so not true and they do not have the ability to target demographics as they suggest. When I contacted them and said that I'd like to do a campaign with my business I was told that they cannot do it OR that they can maybe look at my proposition and see if they can put something together.

In the last 2 years the only marketing emails have been to advise of new partners and the occassional reinforcement of their major partners like 'Skype' who have now decided to split ways with Lyoness (actions speak louder than words).

Having said that though, SMEs are at a much better advantage to the general investor as they can indeed sign up their customers for a card albeit it will cost the SME £1.70.

My website is good and I get good business through it and provide a great personalised service however not a single customer has ever come from Lyoness recommendations. I was of the impression that when I asked for a maildrop to go out to UK Lyoness customers (all 2000) that there was a plan to offer this in the future 'for a fee'. SME presentations will tell you that this is all inclusive and you can request this when you are doing promotions.

They've no idea how to use twitter or facebook as a marketing tool in the UK (having said that, an individual has taken LyonessUK's twitter name who runs self-help seminars and is a Lyoness business partner.. this just goes to show you the ethos of Lyoness investors).

Don't be fooled that Lyoness is a 'family' .. every one is in it for themselves.

My wish is for someone to set up a new company using the good parts of Lyoness and simply make it ethical. There are many competitors:

www.quidco.com
www.cashbackcard.com
www.pouringpounds.com

I'd suggest contacting these guys to see if they've had any success with Lyoness info@pewshamchinesekitchen.co.uk

Last edited by crisdo98; 07-10-2011 at 10:01.
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20-10-2011, 20:41   #14
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LYONESS A GREAT OPPORTUNITY

My name is John J May and I have been around network marketing for 24 years as well as owning my own N.M company in the U K. I am a born skeptic and have done due diligence on this Austrian operation and I can truthfully say IT IS THE BEST OPPORTUNITY I have seen in all those years. This gives the average person an above average opportunity to build a distributorship that in time will pay dividends. I have to smile when I hear the objection that only a minority are making very large sums of money as this economic reality is true for ANY commercial enterprise. The FACT is two million have joined to SAVE MONEY from shopping which beats "points" hands down any day. I shall continue to recommend this excellent opportunity as ISME and the SME organisations have recently done. Skeptics there shall always be but malicious disinformation is a travesty of the truth and the truth is; Lyoness is saving money for millions in over 30 countries and for those who wish to make a career of it I say, you could do worse but you wont do much better.
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21-10-2011, 15:08   #15
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