New Swiss judgement of 4 June 2019! Legal disaster for Lyoness!

To begin with, here is the best phrase from the current Swiss judgement (Country Court of Werdenberg-Sarganserland, reference number: VV.2018.82-WS1ZE-HWI). The judgement shall be enforceable.

“The lack of transparency of the defendant’s (Lyoness) business model does not mean that its unfairness is not detectable. In this sense, the unfair snowball system is transparent.” Or in short: “The only thing that is transparent concerning Lyoness is the snowball system!”

The currently legally binding judgement (reference number VV.2018.82-WS1ZE-HWI) of 4 June 2019 of the Swiss court notes:

Already the minutes of hearings recorded the statement of the Swiss Lyoness lawyer Adrian Bieri: “Furthermore, the […] plaintiff’s allegation, that Lyoness was operating a snowball system, will have devastating consequences for the reputation of Lyoness, in case of an approval of this legal action.”

With the judgement of 4 June 2019, the court did approve the action and did not let itself be blinded by the lawyer’s weepy objection. In this case again, the court decided in favour of the plaintiff and imposed a five-figure amount of CHF. Furthermore, it was clarified once more that Lyoness is a snowball system.

The worldwide reputation of Lyoness already is, to put it in the words of the Lyoness lawyer, so “devastating” that this judgement may hardly carry any weight. The deception of the bought sports sponsorship anyway only works for people who think that power simply comes from the socket.

The plaintiff had registered himself as a private person and his company with Lyconet and had agreed to the new Terms and Conditions and the Lyconet Agreement including the Compensation Plan. The grandiosely announced participation in a worldwide dealer network once more turned out to be pure “Lyoness propaganda”.

This also shows the increasing dissatisfaction and disappointment of the SMEs. As soon as the forecast sales are not emerging and questions are being asked, the global company Lyoness quickly becomes silent towards its members. But as soon as a new idea for filling up the coffers is concocted by Lyoness’ creativity department, Lyconet marketers will pounce on the SMEs using the tried and tested wording “…now everything is going through the roof”, “whoever is not taking part right now, is going to miss a lifetime opportunity” and so on. By the continual renewing and advancing the Terms and Conditions and the implementation of further Additional Agreements, SMS are more and more getting enmeshed in an opaque network of contracts. Apart from numerous Austrian courts, Norwegian and Italian authorities, once more that is also the view of the Swiss courts.

With the judgement of 4 June 2019, the court states:

(Notice: Within the excerpts from the 26-page judgement text, we will add the company’s name “Lyoness” to the word “defendant”, so that even the self-proclaimed “Lyconet Chief Manager” Ede Buser will understand it! It will be rather interesting, how he is going to interpret this judgement towards his followers via his fake website www.basel-lyconet.ch.)

……According to Article 2 UWG, every business practice, that is deceptive or violates the good faith principle and affects the relationship between competitors or between providers and customers, is unfair and unlawful. According to Art. 3 (1) lit. r. UWG, a person is in particular acting unfair, if he/she offers the supply of goods, the payment of premiums or other services on terms that mainly imply a benefit obtained by the recruitment of further people and to a lesser extent by the sale or consumption of goods or services (snowball scheme or pyramid scheme)…..

Starting with page 15 (and others), the court further notes:

…..Despite the theoretical bisection and the mostly confusing information in the Terms and Conditions and the Additional Terms and Conditions, the economically relevant payment depends on the payments of new members of the defendant’s system (Lyoness)…..

…..Thus, there is a redistribution from the pyramid’s base up to its top. This is demonstrated by the remuneration structure of the business model which almost exclusively comes from a member’s Lifeline. The Lifeline of a member consists of the new members he/she recruited (2nd level) and the members recruited by them (3rd level)…..

….. After the 3rd level, the Terms and Conditions and the Additional Terms and Conditions draw an artificial barrier and try to disguise or shorten the pyramid structure inherent to the business model. And so is written in the Terms and Conditions, that no friendship bonus can be obtained for other indirectly recruited members. “Other indirectly recruited members” are the members acquired by indirectly recruited members and so on. In other words, the member will not obtain remunerations for payments made by members lower than the 4th level of his/her Lifeline…..

….. The generated advanced member bonuses are not paid out by the defendant (Lyoness) but can only be used within the System of the defendant (Lyoness) by converting them to so-called units that can be used for purchases at partner companies in the form of vouchers. The use of the vouchers for purchases at partner companies effects the remuneration of the upper levels of the member who purchases. The system ligation of the defendant’s services (Lyoness) effects the dissolution of the artificial barrier between the 3rd and the 4th level and allows the money flow from the base to the top. …..

…..Only for the sake of completeness, it should be mentioned, that all new recruited members are contracting with the defendant (Lyoness) respectively the initiator of the system, which makes the system of the defendant (Lyoness) a snowball system in the proper meaning of the word. As a summary, it can be stated, that the first offence prerequisite of Art. 3 (1) lit. r. UWG is fulfilled……

…..The lack of transparency of the business model or its remuneration structure is a further indication of the existence of an unfair snowball system according to Art. 3 (1) lit. R.UWG. Both the business model of the defendant (Lyoness) and its remuneration structure are opaque. The opacity touches not only individual components, but rather also their overall structure respectively their economical interaction.…..

…..In summary, the business model of the defendant (Lyoness) is an unfair snowball system, pyramid scheme or Ponzi scheme according to Art. 3 (1) lit. R. UWG…..

….. Contracts closed on the basis of an unfair snowball system are ethically unacceptable…..

…..The business model as a whole is unfair…..

Note: If one compares all previous judgements, it has to be stated that judgments are becoming more concrete and that the so-called improved or adjusted Terms and Conditions and Additional Terms and Conditions, Lyoness uses to eliminate the problem, are only giving them a little more time. An appeal may be lodged against this judgment.

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