Norwegian appeal committee confirmed the ban on Lyoness by decision of 27 January 2019!

Lyoness Europe AG and Lyoness Norway AS appealed against this resolution, lastly due to “procedural irregularity and disproportion”. The authority confirmed the resolution on 27 January 2019 according to which Lyoness’ entire business is an illegal pyramidlike trading system in accordance with § 16 (2) of the lottery law and announced that the ban of 31 May 2018 remains valid. ( publication authority )

In its evaluation the authority states, that Lyoness/Lyconet System has a pyramidlike structure and is solely aimed towards the acquisition of new customers via the cashback sector. Participants are promised to receive an income which is generated by the shopping community Lyoness and its pay-ins into the Lyconet section. The low revenues from sale or consumption of goods, services or other advantages is of little importance.

“The authority evaluated the activities of Lyoness in detail and the conclusion is clear. The Norwegian authority expects that Lyoness will comply with the decision and stop any activities in Norway,” said the senior consultant of the Gaming Authority, Monica Alisøy Kjelsnes.

The official version of the decision is in preparation and will soon be published on the website of the appeal committee’s secretariat.

Saving the best for last: Lyoness itself is “shocked and surprised” by this decision.

Lyoness: Following Norway, Italy now also prohibits Lyconet practices!

The Italian competition authority (AGCM) adopted a decision (19 December 2018) – as the Norwegian competition authority did before – showing that Lyoness/Lyconet’s business practices are wrong (incorrect/irregular) and now prohibits its dissemination and continuation. Amongst others, investigations are currently still in progress in Poland.

Page 35 of the Italian decision: (Decision Italy 19.Dec. 2018)

DELIBERA (Decision)

a) che la pratica commerciale descritta al punto II del presente provvedimento, posta in essere dalle società Lyoness Italia S.r.l., nella qualità di professionista ai sensi dell’articolo 18, comma 1, lettera b), del Codice del Consumo, costituisce, per le ragioni e nei limiti esposti in motivazione, una pratica commerciale scorretta ai sensi degli articoli 20, 21 comma 1, lettere b) e c), e 22, nonché dell’articolo 23, comma 1, lettera p), del Codice del Consumo e ne vieta la diffusione o continuazione;

  • è the practices of Lyoness Italia S.r.l. infringe Article 20,21 (and so on). Their practises are therefore wrong (uncorrect/irregular).
  • è since their practices infringe Article 23 and prohibits their dissemination and continuation.

First, a fine of 3.2 Mio € was imposed, which could be seen as a warning shot. Significantly more serious are the findings of the investigations that are similar to Norway’s findings. This is no surprise since the structure and procedures of Lyoness are the same in all countries.

After the conclusion of a long inquiry, the competition authority (AGCM) stated that:

The promotion system for the purchase model “Cashback” Lyoness Italy S.r.l. uses, is incorrect, because it is a pyramid scheme/snowball system, which the Consumer Protection Act classifies as a definitely misleading business practice.

The system revolves around a fee-based discount card with which consumers can “save money” in certain stores. Only the leaders of the Lyoness system yielded high profit rates with the members’ “careers”.

The promotion system used the advantages of the Cashback system just as a pretext and in fact, banked on the recruitment of a high number of consumers as their sales representatives. “After they have ‘joined’, a very high ‘entry fee’ is requested for reaching the first commission level and the start of their ‘career’ as Lyconet Premium Marketers. After this, the marketer has to recruit other consumers and has to make further payments for their ‘career progress’”, said a spokesperson of the authority.

Within the inquiry, it was it has been found that the Cashback system in fact has a secondary position within the economic turnover of the Lyoness system, namely 16%. The remaining 84% are achieved by the sale of Lyconet products! So much for the so-called “purchasing association”. It is only possible to reach a high level of Shopping Points (the compensation mechanism of the payment plan) if the participating consumers or persons recruited by them make further payments. As it has been noted, several ten thousand consumers made these payments to become included and to stay in the system. Only a few people were effectively able to reach relevant positions.

“The regulation authority further noted that methods with which properties, conditions and time limits of the system were presented, are misleading. The different aspects have neither been explained at events nor on the websites. Also, some necessary indication on distance selling contracts, as for example information on the right of withdrawal, the place of jurisdiction and dealing with complaints are missing on the websites.”

Lyoness Italy now has two months left for submitting a new marketing plan that has to be approved by the AGCM. Several Italian Lyconet presidents asserted that they already have implemented all points criticised by the resolution and that they “have received an ‘OK’ from the AGCM”. After consultation with the AGCM, this assertation is incorrect. The AGCM did not receive anything or authorise anything like that. Right now, purchases can still be made with the Cashback card and SMEs can still be added. But anything concerning Premium, ESP, Cloud, EC1 and EC2 (the main source of income) is prohibited. (We already know all this from Norway!)

Lyoness reacts with long known “crisis wording”, the criticised Lyconet business practices are not mentioned:

“Dear Lyconet Marketer, (Google-Transalte) 

In the context of the requests of the competition authority (AGCM) to Lyoness we would like to inform you, that we have heard the decision of the AGCM. We are more than surprise by this latest decision and will of course take all necessary legal measures.

We note that took suitable measures after the beginning of the AGCM inquiry in September 2018 and that we reacted to the authority’s objection immediately. We were therefore even more astounded about the latest decision, which is not plausible for us in any way, even if the changes of the system already made are being regarded. In the whole world, Lyoness is a company that meets the requirements as shown by the closing of proceedings in Austria.

Lyoness is an international purchasing association with 11 million members and more than 120,000 partner companies. In Italy, more than 1.5 million members are daily receiving benefits from more than 25,000 related companies that are feeding tens of millions of purchases back into the community of related companies every month.

As already mentioned, we will oppose this decision at the appropriate places. We can count on a team of competent lawyers and competent independents (super partes), who are supporting our view. We are confident that, like in Austria, we will reach a positive outcome. Therefore, our members will still receive benefits from their purchases and the loyalty program will still be provided to small and medium-sized enterprises.

Of course, we will keep you up-to-date.

With best regards, Lyoness Italia S.r.l.”


December 2018 is the month of decisions on Lyoness in Italy and Norway.

The Autorità garante della concorrenza e del mercato, also known as „Antitrust“ or AGCM, is the national Italian Competition Authority.

On December 18, 2018, the judgement on whether Italy rates Lyoness as a snowball system or not, will be passed. The Situation seems to be quite similar to Norway. In the field of „Cashback-World“ Italy is in fact the strongest market. A fact, which does not improve matters concerning Lyconets strategy of distribution and acquisition of new „sponsors“.

On December 11, 2018, Norway will decide whether its national Competition Authority made (formal) errors in the prohibition proceedings. If this is not the case, the decision on Lyoness in Norway is final and the restricted permission for the Cashback business will be withdrawn.

I will be informed of these decisions immediatly

INTERSPORT Germany forbids Cashback-World the use of their logo!

INTERSPORT is the biggest medium-sized mail order business group in worldwide sports retail. Under, 5800 locations in 65 countries are united under the umbrella of the IIC-Intersport International Corporation GmbH, the purchasing and management corporation of the Intersport group. In 2014 they generated a turnover of EUR 10,5 billion. With market shares of around 36% in Germany and over 20% in Europe the IIC GmbH is the world leader in sports retail.

Like numerous other renowned companies, INTERSPORT Germany was listed at Cashback World with its own company partner ID. The fact that they only were voucherpartners was hardly ever mentioned. Only a few people would recognise that this circumstance did not permit the use of the INTERSPORT logo under trade mark law.

Upon request the following was notified by the INTERSPORT headquarters:

E-Mail (recieved) from 10-01-2018

„There has never a cooperation between the INTERSPORT Germany eG and the Lyoness Europe AG. Also the Lyoness Europe AG was not authorized to use the INTERSPORT logo under trade mark law. After you pointed this out we stopped selling INTERSPORT vouchers tot he Lyoness Europe AG. Due to an injunctive relief the INTERSPORT logo is not longer displayed by Lyoness.“

Best regards from Heilbronn

INTERSPORT Deutschland eG

press officer in corporate communications

Time and again, it has shown, that several affiliates obviously are on the Lyoness management board’s pay roll. Also, the continuos denials of renowned companies are illustrating clearly, how low the revenue at Lyoness (Cashback World) must be.

If these enormous turnovers actually existed, large high-revenue companies would certainly be willing to be listed at myWorld/Lyoness (Cashback World).

Lyoness General Terms and Conditions! EU directives apply in the Austrian Supreme Court’s judgment!

The Austrian High Court judgment passed on the Lyoness General Terms and Conditions (case ref. 10 Ob 45/16i of 18 May 2018) already cite EU directives in the statement of grounds for the judgement on pages 8/9.

From the Austrian High Court judgement, 2.1.2:

Any unclear or incomprehensible contract term in the general terms and conditions or contract form is null and void according to the Austrian Consumer Protection Act (KSchG) §6 para. 3.

This legislation implements the 93/13/EEC directive of the Council of Europe of 5 April 1993 on unfair clauses in consumer contracts, thus regulating what is referred to as the transparency principle in consumer transactions.

The purpose of this legislation is to enable customers to gain reliable information on their own rights and obligations in executing a contract from general terms and conditions or contractual components.

A typical consumer shall not be deterred from enforcing his or her rights due to inaccurate or unclear representation of their contractual position or any unjustified obligations imposed on the consumer.

The transparency principle includes the recognisability and comprehensibility of a clause as well as the obligation to inform the other party of certain legal consequences.

Any consumer affected must be able to assess the resulting financial consequences based on accurate and coherent criteria to the consumer. The transparency principle always assumes the use of terms whose meanings a typical consumer can (easily) determine.

my World/Lyconet! Von „Länderpaketen“ über „Costumer Cloud“ zur „Enterprise Cloud“.

Mit Lyconet hat die Klägerin 2014 die sog. Customer Clouds ins Leben gerufen. Vertragspartner ist nach wie vor die Lyoness Europe AG. Die von Lyoness angebotenen Customer Clouds funktionieren auf die gleiche Art wie die Rabattgutscheine, mit dem Unterschied, dass die Rückzahlung auf dem Umsatz von Mitgliedern außerhalb des Netzwerkes des Mitgliedes beruht.

Es gibt mittlerweile folgende Clouds: Austrian Customer Cloud, South East 1 Customer Cloud, South East 2 Customer Cloud, Italian Customer Cloud, Polish Customer Cloud, Nordic Customer Cloud, Slovakian & Czech Customer Cloud, Spanish and Portuguese Customer Cloud, German Customer Cloud.

Die Clouds entsprechen den früheren Länderpaketen, nur das Wording hat sich geändert.

Bei den Länderpaketen gab die Klägerin vor, auch in anderen Ländern eine Einkaufsgemeinschaft aufzuziehen. Durch das Investment sollten den Kapitalgebern automatisch die in den betreffenden Ländern (bzw. Kontinenten) gewonnenen neuen Lyoness-Kunden zugeteilt werden und die Investoren sollten an den Einkäufen der internationalen Kunden mitverdienen. Dazu müsse man nur ein Businesspaket erwerben und könne dann in diese „Boom-Märkte“ investieren. In periodischen Abständen wurde ein Länderpaket nach dem anderen angeboten, wie beispielsweise Amerika (I und II), Middle East & Africa, Asien, Indien, Brasilien, Mexiko, Südafrika usw. usf. Es gab Buchungszeiträume und um möglichst vorne dabei zu sein, sollte man die Länderpakete auch entsprechend früh zeichnen. Im Gegensatz zum Businesspaket sei die Anwerbung von Mitgliedern nicht erforderlich, das könne man im Ausland ja auch gar nicht.

Die Realität sah aber anders aus: Bei allen Investments mussten auch weitere Kapitalgeber angeworben werden, um einen Gewinnanspruch zu haben, wodurch das Schneeballsystem perfekt ist.

Detto bei den Customer Clouds:

Der Investor der Customer Cloud heißt nunmehr “Sponsor”. Der Ausdruck Sponsor ist in diesem Zusammenhang sogar richtig, weil die Zahler nicht rückzahlbare Zahlungen an Lyoness leisten   und somit Lyoness sponsern. In dieser Cloud sollen sich Lyoness-Mitglieder befinden, welche Einkäufe (worunter vor allem auch Zahlungen an Lyoness fallen) tätigen und von diesen Einkaufsumsätzen soll der Sponsor eine prozentuelle Vergütung erhalten. Die Cloud, also die Summe ausgewählter Lyoness-Mitglieder, soll sich aus Kunden der Lyoness Website und Kunden diverser Kooperationen zusammensetzen. Doch welche Kunden zu einer Kooperation zählen, ist unbestimmt und nicht objektivierbar. Was Kunden der Lyoness Website sein sollen, ist völlig unklar. Die Cloud ist somit jedenfalls – wohl bewusst – eine unbestimmte Größe, da nicht einmal konkret definiert ist, welche und wie viele Mitglieder sich in ihr befinden sollen.

Die Clouds sind somit mit den bisherigen Länderbeteiligungen völlig ident, denn da wie dort soll der Einzahler (Investor, Sponsor) durch Leistung eines Kapitaleinsatzes an den Einkaufsumsätzen der Lyoness-Mitglieder in bestimmten Ländern bzw. einem bestimmten Pool mitverdienen.

Die Kunden der Clouds sollen durch ihre Einkäufe Shopping Points (SP) produzieren und das daraus resultierende SP-Volumen wird anteilig auf alle Sponsoren (teilnehmende Marketer) verteilt.

Der springende Punkt an diesem DKT-Spiel ist, dass die Sponsoren über Anzahl der Kunden und auch Händler (sog. Partnerunternehmen) getäuscht werden. Die Sponsoren leisten Zahlungen an Lyoness, da ihnen vermittelt wird, dass eine enorme Zahl von Kunden bereitsteht, welche bei einer ebenso großen Zahl an Lyoness-Vertragshändlern einkaufen werden.

In diesem Pool sind dann etwa

  • Mitglieder des Cashback World Programms
  • Kunden aus White Label-Kooperationen
  • Kunden der Key-Account-Kooperationen
  • Kunden aus weiteren Kooperationen

Also mit einem Wort ein unbestimmter und unbestimmbarer Kundenkreis, an deren Einkäufen der Sponsor der Customer Cloud mitverdienen soll.

Jedenfalls kosten diese Clouds natürlich Geld, wobei völlig unbestimmt ist, welche Gegenleistung man erwarten darf.

Voraussetzung für die Teilnahme an der Cloud ist der Erwerb eines sog. Limited Edition Discount Vouchers. Der Preis pro Limited Edition Discount Voucher beträgt € 1.500,00 pro Stück. Es gibt eine limitierte Auflage sowie Zeichnungsfristen. War bei den Länderpaketen das Businesspaket Voraussetzung, muss man nun den „Limited Edition Discount Voucher“ (Rabattgutschein) vorab kaufen, um teilnehmen zu können. Der Erwerb des Limited Edition Discount Vouchers berechtigt zur befristeten Teilnahme an der Customer Cloud.

Lyoness übernimmt keinerlei Gewähr über Umfang und Ausmaß barer und unbarer Vorteile, die durch die Teilnahme an der Customer Cloud entstehen können.

Zusammenfassend muss daher festgehalten werden, die Vouchers für die Customers Clouds sind nichts anderes als die Fortsetzung der Anzahlungen in Länderbeteiligungen. Die Einzahler werden über Anzahl der Kunden und Händler und über die Gewinnchancen getäuscht, damit sie einen Kapitaleinsatz leisten.

Bereits bei den Länderpaketen wurde passives Einkommen versprochen, wie sich allerdings herausstellte, mussten allerdings weitere Mitglieder vom Kapitalgeber oder dessen Lifeline angeworben werden, damit eine Gewinnberechtigung bestand.

Auch bei den Customer Clouds im System Lyconet verhält es sich nicht anders. Die Sponsoren müssen selbst weitere Sponsoren anwerben, damit sie Vorteile aus dem System erhalten.

(Quelle: RA Dr. Fromhold)

Enterprise Cloud 1 (EC1)

Im typischen Lyconet-Wording wird alles als noch großartiger und als noch nie dagewesen dargestellt. Diese modifizierte “Super-Cloud” übernimmt jetzt die bestehenden Cloud’s mit einer Laufzeit von 8 Jahren, der Cloud-Inhaber hat kaum eine Chance dem zu entkommen und auch hier wird suggeriert, dass es quasi keine Verluste geben kann.

Bei der neuen EC1 wird zunächst 48 Monate angespart, dann weitere 48 Monate im System belassen und schon hat man eine Menge an Geld verdient. Nach diesen 8 Jahren wird dann weiterhin monatlich ausbezahlt, unter der Bedingung, dass man mindestens 50 SPs monatlich an Einkäufen schafft oder ESP aktiv hält!

Ab Juni werden alle bisherigen LEDVs nicht mehr angeboten und die wenigen noch verfügbaren LEDV fließen in eine noch großartigere Global Enterprise Cloud! Hierzu zu einem späteren Zeitpunkt mehr!

Natürlich werde ich hier wieder sehr viel Kritik und Beschimpfungen von “Lyconet-Jüngern” erhalten, aber vielleicht schafft es ja einer der Kritiker einmal, mit nachvollziehbaren belegten Zahlen, die nicht von myWorld/Lyconet selbst verfasst wurden, gegenteiliges zu belegen.  


Lyoness must stop illegal pyramid activty!

On 31 May 2018, the Norwegian Gaming Authority made the decision in which Lyoness was notified that it must immediately cease all operations of, participation in and extent of its activity in Norway, as it is in violation of Section 16 second paragraph, cf. first paragraph, of the Lottery Act.

In a supervisory case against Lyoness, the Norwegian Gaming Authority has assessed whether its business activity in Norway is a pyramid-like sales scheme in which consideration is paid for the possibility of gaining an income specifically derived from the recruitment of others to the scheme, and not to the sale or consumption of goods, services or other benefits, cf. the Norwegian Lottery Act Section 16 second paragraph.

The Norwegian Gaming Authority concludes that Lyoness is an illegal, pyramid-like sales scheme pursuant to Section 16 second paragraph of the Lottery Act.

The Norwegian Gaming Authority has based its assessment on the fact that Lyoness’s earnings in Norway are specifically derived from the recruitment of participants and not the sale or consumption of goods, services or other benefits. Participants who purchase discount vouchers, shares in customer clouds, gift vouchers, marketing material and seminars from Lyoness do not receive goods, services or other benefits that correspond to the value that has been paid, and the payments can in reality be seen as consideration in return for participant status. Lyoness has not been able to document that the company’s earnings are specifically derived from the sale or consumption of goods, services or other benefits, rather than the recruitment of others to the scheme, cf. Section 16 third paragraph of the Lottery Act.

The unlawful conditions have not ceased after the Norwegian Gaming Authority sent notice of its decision to order the activity to cease. Lyoness has made objections to the preliminary notice, but the Norwegian Gaming Authority does not find that these objections give grounds for changing our assessment of Lyoness as an illegal, pyramid-like sales scheme.

On this basis, the Norwegian Gaming Authority made the decision in which Lyoness was notified that it must immediately cease all operations of, participation in and extent of its activity in Norway, as it is in violation of Section 16 second paragraph, cf. first paragraph, of the Lottery Act.

This decision is aimed at myWorld Norway AS (previously Lyoness Norway AS) and Lyoness Europe AG, but it will also affect around 152,500 Norwegian participants and 1,000 Norwegian loyalty companies that Lyoness has stated are included in the sales scheme.

The decision entails that Lyoness must immediately case all its activities in Norway, except for the part of the decision that is given suspensive effect until the deadline for appealing expires (see below). The decision entails that all recruitment by and all payments from Norwegian participants and loyalty companies to Lyoness, Lyconet, Cashback World and myWorld must cease. Furthermore, marketing of the business, use of advantage cards and sales of discount vouchers, shares in customer clouds, gift vouchers, marketing material, seminars etc. must cease. Lyoness must also suspend all payments of discounts, bonuses and commissions to Norwegian participants.

This decision does not prevent Lyoness from paying back what the participants have paid up to the time of the decision in return for discount vouchers and shares in customer clouds, and that have not actually been paid back in the form of redeemed discount vouchers. Neither does the decision prevent Lyoness from paying back what the participants have paid in return for marketing material and seminars up to the time of the decision. Lyoness may also pay out discounts that the participants have earned from their own purchases from loyalty companies up to the time of the decision.

The Norwegian Gaming Authority has, with hesitation, concluded that parts of the decision will be given suspensive effect until the deadline for appealing expires in three weeks, cf. Section 42 of the Norwegian Public Administration Act. Suspensive effect is granted for existing participants’ use of advantage cards and any actual payment of discounts that individual participants earn through their own purchases from existing loyalty companies. In its conclusion, the Norwegian Gaming Authority has stressed the fact that there is limited administrative practice and case law in the area.

The Norwegian Gaming Authority requires prompt, written confirmation that the violation has ceased, cf. Section 16 fourth paragraph of the Lottery Act. Lyoness must also state whether it will continue the part of its operations for which suspensive effect has been granted until the deadline for appealing expires, and whether it will request that the decision be given further suspensive effect.

The Norwegian Gaming Authority asks Lyoness to inform all Norwegian participants and loyalty companies about the decision and its consequences as soon as possible. We ask in particular that Lyoness send the decision to the 11 Norwegian participants that the Norwegian Gaming Authority has addressed directly in the case, and that Lyoness has assisted in connection with presenting documentation. The Gaming Authority asks Lyoness to confirm that it has informed its participants and loyalty companies, and to inform us of how this has been done. We also ask Lyoness to inform the Gaming Authority of what action the company will take towards Norwegian participants who have paid money to Lyoness and who have not received any goods, services or other benefits equivalent to the value that has been paid.

The Norwegian Gaming Authority finds reason to emphasise that we take a very serious view of this case. From when the Norwegian Gaming Authority first initiated a supervisory procedure against Lyoness in 2014 and up to the time of the decision to order a cease in business activity, the Norwegian Gaming Authority has received many credible tips with troubling information about the business activity that Lyoness and some of its Norwegian participants operate in Norway.

Lyoness has stated that it takes the criticism from the Norwegian Gaming Authority very seriously and that it has implemented measures to ensure that its business is run in accordance with the intention of creating an international shopping network. Lyoness has also implemented measures to prevent individual participants from giving incorrect information about the sales scheme, and some Norwegian participants have also been given a refund.

The Norwegian Gaming Authority recognises that Lyoness has implemented actions to rectify and limit undesirable consequences of its business activity. However, the implemented actions do not change the Norwegian Gaming Authority’s assessment that Lyoness is an illegal, pyramid-like sales scheme pursuant to Section 16 second paragraph of the Lottery Act. Nor have these actions, in the Gaming Authority’s view, been sufficient to rectify the negative financial and social consequences that the business activity has caused several of the participants and their families. We make particular reference to the fact that Norwegian participants have paid hundreds of millions of Norwegian kroner to Lyoness without receiving goods, services or other benefits equivalent to the value that they have paid. Some individual participants have also made payments of hundreds of thousands of Norwegian kroner. A very high number of participants have made such payments after receiving incorrect information from other participants in the sales scheme that these were savings and investments that would generate a ten-fold return in just a few years. Several participants made such payments after being recruited by family members or friends.

Throughout the supervisory process, the Norwegian Gaming Authority has received repeated, credible reports from a significant number of people that young people and vulnerable people with poor finances have spent their savings and taken out loans for the purpose of investing in Lyoness. Young people have left their studies to work for Lyoness, and many family relationships and friendships have suffered because of the business. The Norwegian Gaming Authority also notes that Lyoness in its marketing has tried to make its business appear legitimate by referring to several large, well-known national and international companies and by giving incorrect information about partnership agreements that Lyoness supposedly has with these.

Based on the tips received in this case, the Norwegian Gaming Authority also finds grounds to inform e.g. the Norwegian Consumer Authority, the Norwegian Tax Administration and the Financial Supervisory Authority of Norway of the decision, as we see that this case raises questions regarding breach of the Marketing Control Act, tax legislation and financial legislation.

History to “Norwegian authority unmasks Lyoness in trial to close down the company”

It is typical for Lyoness to play down in an “initial assessment” the decision by the Norwegian regulatory authority. As a matter of fact, Lyoness has been targeted by the Norwegian regulatory authority already since 2013, which I have also reported on in blog entries of June 6, 2014 on this website.

The Norwegian authority is unmasking Lyoness by making it clear that the shopping community with their Cashback Card is used as a “mask for the acquisition of new marketers” for the Lyconet business, which is Lyoness’ real source of revenues. The revenues from newly acquired “Lyconet marketers” and sales of the Clouds, which used to be country-, business- and premium packages, constitute with a share in revenues of more than 90% Lyoness’ main source of income.

“The competent authority, which can be literally translated as ‘lottery authority’, has announced in publications on January 11, 2017 a formal decision to prohibit any business activities by Lyoness in Norway. The reason is that the authority has concluded that Lyoness is an illegal snowball system and pyramid scheme. Lyoness can avoid this formal decision, which would entail criminal charges, by discontinuing its operations in Norway within four weeks.

In the 16-page publication, which can be retrieved under the following link (but only in Norwegian), the authority explains that merely less than 10% of Lyoness’ revenues in Norway in 2016 emanated from the sale of goods and services. The lion’s share of revenues was generated by selling shares in “customers clouds” and “discount vouchers”, which participants can supposedly use to take part in future purchases. In fact, payments to members are being financed through the acquisition of new participants for the system. So, it is a classical snowball system and pyramid scheme, which is illegal according to §16 of the Norwegian “Lottery Act”.

Through this decision also Directive 2005/29/EC concerning unfair business-to-consumer commercial practices is implemented, meaning that there is a standardized regulatory framework within the EU and the EEA on this matter (source: attorney Dr. Schöberl/Vienna).

This decision was based on “documents submitted by Lyoness itself”. It will be interesting to observe in what way the Norwegian Lyoness victims will be indemnified.

Regulatory authority shuts down Lyoness & Lyconet in Norway!

In a 16-page decision, the Norwegian regulatory authority “Lotteri- og siftelsestilsynet” (publication by the Norwegian authority) has classified the companies Lyoness Norway AS and the “new variety” Lyconet as illegal pyramide schemes and snowball systems and has demanded that the companies cease all business activities within four weeks.

Should Lyoness Norway AS and Lyconet not comply with this request before the due date or not make a statement duly justifying their failure to comply, the companies might be closed ex officio and respective charges might be pressed.

The classification of Lyconet as an illegal pyramid scheme and snowball system coincides with the current proceedings involving Lyoness Europe AG. The parent company keeps claiming at public events and in the media that the company has “repositioned itself” and that “it has learned from its past mistakes”. However, Lyconet has already been classified as a snowball system by final court rulings in Switzerland. Judgement from the Canton of Zug (EV201642) of September 20, 2016. Quote: Lyconet is working with what they call “customer clouds”, meaning that payments are made which could be “multiplied” in the future through purchases in the respective countries. So, on the whole it is the same principle as the old Lyoness country packages and it is therefore a snowball system.

The Norwegian, German and Swiss authorities do not let themselves be fooled or deceived by Lyoness/Lyconet. Any interventions by the Lyoness General Counsel Dr. Reif and his “sorcerer’s apprentice” Mr. Zotter have ended at the Austrian border. The Austrian judiciary, which is clearly exhibiting “Nigerian patterns of behaviour”, should take the Norwegian objectivity as an example.

“No one should be surprised if Lyoness/Lyconet comments on the shut-down of the company in Norway that they had been planning a discontinuation of their business activities in Norway anyway.”   

Lyoness Europe AG forced by court to provide explanations. Does Lyconet classify as a “snowball system” in Austria too?”

A trial at the Commercial Court of Vienna on January 12, 2018 (Case no. 11 CG 75/16s-23) did not go too well for Lyoness Europe AG.  As a reaction to my reports (Mastercard lie, PUMA trademark infringement etc.) and the publications in the Austrian media, Lyoness AG Europe has filed a suit against me on account of defamation according to $ 1330 ABGB. But it seems that the proceedings are not going too well for Lyoness and the attorney Mr. Zotter couldn’t do anything to save the situation.

Right in the beginning, the judge played a YouTube video entitled “How does Lyconet work?” and asked Lyoness attorney Mr. Zotter if Lyconet is a marketing strategy of Lyoness Europe AG, which was confirmed by Mr. Zotter. Consequently, the judge shared his preliminary view that if Lyonet “works” in a similar way as Lyoness, the accusation of the company being a snowball system might be “historical”.

In this respect, Lyoness Europe AG was instructed to provide a detailed written report about the legal structure of Lyconet within eight weeks. Furthermore, it needs to be clear from this report if Lyconet also charges participation fees.

However, Lyconet could not exist without Lyoness and the other way round. Lyconet was founded among other reasons, because the damaged Lyoness members were dealt with according to the Consumer Protection Act, which was inconvenient for Lyoness. Under Lyconet, however, all members are considered marketers and self-employed entrepreneurs and are therefore “easier to handle”. But it seems that this is now also “off the table”.

LYONET has already been classified as a snowball system by a Swiss court ruling (Case no. EV 201642) of September 20, 2016 in the Canton of Zug (in force since October 20, 2016). Excerpt from the ruling, Section 4.1.1.:

After entering into an agreement with Lyconet, the member becomes an independent Lyconet marketer. The distribution and use of the loyalty program is promoted through the acquisition of new members and support of existing members, the acquisition of new marketers and support of existing marketer, as well as the acquisition of new SME partner companies and support of existing SME partner companies. In return, marketers receive compensation according to the Lyconet Compensation Plan (act 5/1, preamble, paragraphs 1.1 and 1.3). It is therefore a distribution system based on the snowball principle. Furthermore, Lyconet is working with what they call “customer clouds”, meaning that payments are made which could be multiplied in the future by purchases in the respective countries. So, on the whole it is the same principle as the old Lyoness country packages and it is therefore a snowball system.

If a few Lyconet marketers confirm in writing that they were asked to seek more marketers and SME partner companies, the requested statement by Lyoness Europe AG is something to really look forward to.

What started as a lawsuit against a journalist, could now have a boomerang effect for Lyoness Europe AG.

The proceedings have been adjourned indefinitely.