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 https://lottstift.no/wp-content/uploads/2018/01/Lyoness-varsel-om-vedtak-med-palegg-om-stans-av-virksomheten-i-Norge-jan2018.pdf (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.


Fraud against members at „Macao Cloud“ – The State Office of Criminal Investigations of Vienna is investigating Helmut Freydl

The State Office of Criminal Investigations of Vienna – Department EB4, Economic Crime Unit – is investigating Helmut Freydl (case no. 5 St 42/17d) in connection with Lyoness Austria GmbH and their event “Elite Seminar with Eric Worre” in September 2013 at the Wiener Stadthalle.

 According to this, in the summer of 2016, a Swedish Lyoness marketer discovered an algorithm/assignment process at Lyoness regarding the international booking of ESP Units of all marketers from “L”-countries from the career level “2” onwards. The top-secret information was that on that day ONLY the Seebacher line should benefit from the Swede’s knowledge. In order that all Seebacher marketers who were not at the necessary career level (like most of them) could enjoy the benefit of going through the different units quickly, they had the possibility to purchase a kind of “license”. 200 Euros were charged per person for an upgrade to the career level 2. However, nobody in that group has received a confirmation of payment for this “license fee”, although a great deal of money has been spent.

All relevant documents/receipts available to us have been forwarded to the police.

These fraudulent activities are being carried out under the pretext of finding ever new ways of taking more money out of the pockets of people – and in this case the faithful Lyoness sheep –  while at the same time disregarding other Lyoness managing departments.



Has the „Lyoness Golf Open“ contract, which was valid until 2020, been terminated prematurely!

Golf Open Event GmbH and Lyoness are now also parting ways regarding “Lyoness Golf Open”, although the contract was valid until 2020. In proportion to the nature and seriousness of the offense, Lyoness has furtively left Golf Open Event GmbH as a sponsor/partner and has disappeared from all relevant websites. As of 2018, “Lyoness Open” will be replaced by “Shot Clock Masters”. Congratulations!

We all remember that in the spring of 2015 the “ÖGV Cashback Card” was promoted and advertised together with the 100 000 Golf Club members as a “long-lasting partnership”. But only one year later (in the beginning of 2016), the ÖGV CashbackCard as a co-operation between the ÖGV and Lyoness was withdrawn.

For a snowball system like Lyoness/Lyconet, the “Lyoness Golf Open” was a convenient platform for advertising purposes.  

Actual market presence. Lyoness uncovers its own lies.

Lyoness likes to falsely take all the credit and lists on its website between 70 000 and 75 000 distributors and partner companies. At first glance, this number is truly impressive, but the reality looks somewhat different.

Of these 70 000 to 75 000 “partners” only 50 630 retailers really exist (source: Lyoness website as of 9th of September 2017), 40 761 of which accept the cashback card and only 9 202 of them have an online shop. What seems to be a lot at first sight is actually nothing in comparison with international standards. Many of these partners are listed somewhere on an “affiliate marketing website” and don’t even know that they are stated as “official” trading partners to the detriment of third parties. on the website of Lyoness, which has been convicted by a final judgement as a snowball system. But this is a strategy which Lyoness uses to canvas for clients. They show off with numbers and effectively display the names of well-known companies on their website. So, Lyoness is using the brand awareness of large companies to canvas for clients for the “distribution of Lyconet”. Lyoness is perverting the cashback principle in order to generate revenues from the distribution of the clouds.

We have contacted many of these partner companies in Austria, Germany and Switzerland to inquire directly. It turned out that a much larger number than expected of these “business partners” didn’t know about any partnership and said that they were not willing to enter into a partnership with Lyoness.  Some have even announced that they will take legal steps against Lyoness. Understandably, because who would want to be associated with a company which has been convicted as a snowball system by a final judgement? It’s a fact that Lyoness is increasingly losing its most important partners with the highest advertising appeal (Mastercard, eBay, Triumph, Puma etc.) and there are less and less options for the purchasing group.

This is particularly apparent in the case of the praised “Lyoness future markets”, like the USA, Asia and India. In the USA, there are approximately 26 million companies (source: usa.embassy). According to the Lyoness website, Lyoness has in the USA only 2 858 “partners”. When comparing these numbers, it becomes clear that the market presence of Lyoness in the USA is downright ridiculous. India, as one of the largest countries in the world with 1.2 billion inhabitants, has been presented by Lyoness in 2012 as a future BOOM market. At the moment there are 139 companies in India which are listed on the Lyoness website as partners – a meagre number for this promising market. Interestingly, Lyoness published already back then (in 2012) in their advertising mail an “important note”:

“Until the official market entry in India, which will be announced by Lyoness well in advance, it is strictly forbidden to recommend the Lyoness loyalty program in India. Any activity in this respect by a member in India, undertaken before the official opening, will result in the termination of the membership.”

This indicated already that back then it had long been known that in India the distribution of country packages was illegal, but still Lyoness continued to sell them. To this day, Lyoness is only registered in India as a “private limited company” for the purpose of “bookkeeping”. How many million Euros has the executive board of Lyoness made through the “country package India”, money which has been divided among several foundations etc. And in what way do members who invested in the India package years ago benefit from this nowadays? Not at all! In total, 139 small retailers have been generated in India – a country, which had been announced in a grandiose manner as a promising future market – and even these retailers do not seem to be legitimate according to current legislation. The currently offered clouds, which are presumably even more fraudulent, have failed, just like the previous country-, business- and premium packages due to Lyoness being a snowball system. Lyoness members who are still hoping for “passive income” will lose out once again.

Many Lyoness victims have fallen for the promising advertising messages by Lyoness – the following is only a small excerpt.

“Our successful start in the Middle East/United Arab Emirates has given us a first impression of the vast market which is awaiting us. Thanks to the growing business team, first trading partners are already joining our Lyoness network!” (2011)

“India constitutes a sixth of the world’s population and ranks among the fastest growing economies in the world! An incredible future market for Lyoness, which is already being developed!!!” (2011)

“Last chance for a consistent and sustainable participation in the Asian market with 4 billion consumers.” (2014)

“South Africa – a soaring regional economic power! Especially in South Africa, many impressive advancements have been set in motion. Various big, significant industry leaders in a few important key industries are already relying on the Lyoness loyalty program and are offering to the excited members thousands of cashback points, so that they can make use of the shopping benefits.” (2013)

“Lyoness has had a successful start in Brazil. So, the more than 200 000 000 inhabitants of Brazil have from now on the opportunity to enjoy the shopping benefits….Since the start of the Lyoness activities in Brazil, hundreds of points of acceptance have been available to all Brazilian members…The objective is to provide within the next weeks and months a comprehensive shopping network which meets the requirements of millions of Brazilians.”

Lyoness has promised its clients to establish itself in these countries and to build a network of distributors. But the current numbers of distributors are and will probably remain meagre. In Thailand there are currently 238 Lyoness partners, in South Africa 481, in Brazil 581, in Qatar 32, in UAE 69 etc. (as of 9th of September 2017). Often in the lists compiled by Lyoness itself, not even contact details are stated, so their capacity as authorised distributors is questionable. In any case, it is very unlikely that in these bars, shops and beauty salons any meaningful shopping revenue can be generated which could be distributed among the investing members.

Perhaps Lyoness could explain to its members how the company manages to cover its fixed costs through revenues from the cashback business. No Nobel Prize in Maths is required to answer this question, because it is simply not possible.

Lyoness changeover to the 2014 General T&Cs is illegal according to a final judgement!

The Court for Commercial Matters in Vienna has stated in a final judgement of August 16, 2017 that the changeover to the new General T&Cs was illegal.  The plaintiff could only view the 2014 General T&Cs after clicking on them. By this verdict, the plaintiff has also been adjudged her investments including interests minus the compensations she has received.

An extract of page 8 of the verdict shows how sneakily Lyoness has coerced its members:

“Objectively, the plaintiff did not have the possibility to become aware of the new General T&Cs when she switched to a new system which had been initiated by the defendant. The defendant did neither present the new General T&Cs to the plaintiff after the findings, nor did she have any other opportunity to read them before the changeover to the new system. The General T&Cs from 2014 have therefore not become subject matter of the contract between the two parties.”

Source: Verbraucherrecht.at, BGHS 16.08.2017 5 C 587 16h