TV broadcast in Austria. Lyconet is a Ponzi Scheme!

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TV broadcast of 26 February 2020

Finally an Austrian TV station has found the courage and describes Lyoness / Lyconet as what it is. Already on the 9th of december 2017 the Austrian’s Civil Lawyer confronted with Lyoness at ORF . At that time Lyoness was already classified as a Ponzi Scheme, and the controversial Lyoness General Terms and Conditions convicted by final judgment (5 R 212 / 16g) from January 18, 2017.

Many thanks to the TV-Format „Der Tag“!

Only a few minutes after the publication we were sharply criticized by unteachable Lyonese: “An email has now been sent to Lyconet. Let’s see how long the video is still available” “Lyconet will outshine Amazon in two years” “Lyoness & Lyconet = world domination”, “You should get your face bashed in, I’ve been there for three months and I’m only experiencing good things” etc. etc… just to publish some of the witty comments from Lyonese.

myWorld/Lyoness: Open letter to Oscar Sousa Marques, Regional Director of APAC

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Dear Mr. Marques, 

We acknowledge your official release to BECM Inc., again noting that the phrase “the left hand doesn’t know what the right hand is doing” could not be more apt with respect to myWorld/Lyconet/Lyoness. The representations in your letter compares well with “cave paintings” as you lose yourself in untenable, easily refutable accusations. Like your predecessor, your statements and accusations are UNTRUE, MISLEADING and DAMAGING.

I have already officially requested the company several times to contact unsatisfied members in order to find a solution that all parties can agree to. Unfortunately, your company has either completely blocked this suggestion for the most part, or offered unacceptable settlements tantamount to outright rejection. Note that a company was planned to take on what was referred to as “inherited liabilities” with a Viennese lawyer a few years ago when Lyconet was in planning. This project was obviously given up for the sake of a multilevel marketing scheme that generates at least 90% of total income of Lyoness/Lyconet and/or myWorld group according to the last current official assessment.

We obviously approach larger companies listed as partners with their own corporate IDs on the Cashback World website. Every member can and should do this as doubts are more than justified in many cases. Experience has shown that larger alleged partner companies have only been listed through obscure affiliate programmes on the Cashback World site without the companies knowing of any direct cooperation or partnership. Examples: Allianz, ERGO, BMW Bank, BAWAG BANK, etc…. we would be happy to publish the original letters from the respective PR offices of these companies.

You write: „On the contrary, all proceedings referred to by Ecker and Co have either not been pursued by the authorities or have been terminated. „The trial before the Federal Court of Australia ended on October 23, 2015 with a resounding and unconditional judgement that Lyoness Australia was NOT operating an illegal scheme““ In Austria, too, the Higher Regional Court of Vienna confirmed on April 12, 2016 that Lyoness does not operate a chain or pyramid scheme within the meaning of Section 168a of the Criminal Code.“

This claim makes no sense. The myWorld companies were not new companies but routinely cycled existing Lyoness/Lyconet companies with new company and owner names as was customary business practice at Lyoness. Especially as on further examination, the legal notices on the respective websites state the following: “Performance of service for all products shall be provided through mWS myWorld Solutions AG ……….”

Lyoness/Lyconet/myWorld have been claiming at the courts for years that the contracts, general terms and conditions and agreements concerned are old and have long since been updated, but the same mercilessly litigious thread has always run through “new” contracts throughout the Lyoness/Lyconet company history. And the myWorld group has nothing to do with this but is still controlled by the same group of people in the directorship headed by Hubert Freidl. Who do you think is willing to buy this?

Your letter on acquittals refers to a ruling from the year 2015, which itself was panned by the local press as highly questionable. 

On the other hand, you forget to mention the final judicial decision in Norway from 31 May 2018 condemning Lyoness/Lyconet as a pyramid scheme and banning it. The ruling also prohibited newly established successor companies from continuing this activity. Lyoness/Lyconet ignored the ban, and the Norwegian Competition Authority (Lottstift) reported this to the police.

Also note: (1) https://lottstift.no/en/om-oss/aktuelt/lyoness-must-stop-illegal-pyramid-activtiy-in-norway/. , (2) http://www.bekm.us/norway-lyoness-shopping-network-continues-to-operate-despite-an-official-ban/

The Italian Competition Authority AGCM, like the Norwegian supervisory authority before it, decreed the business practices of Lyoness/Lyconet as wrongful (incorrect or illegal) on 19 December 2018 and imposed, inter alia, a fine of €3.6 million.

Also note: (1) https://www.agcm.it/media/comunicati-stampa/2019/1/Vendita-piramidale-e-promozione-ingannevole-sanzione-da-oltre-3-milioni-a-Lyoness , (2) http://www.bekm.us/lyoness-following-norway-italy-now-also-prohibits-lyconet-practices/

Poland’s Office of Competition, UOKiK, classified Lyoness as a pyramid scheme by official decree on 30 December 2019. Funds had to be reimbursed. 

Also note: (1) https://biznes.gazetaprawna.pl/artykuly/1453526,lyoness-piramida-finansowa-program-lojalnosciowy.html?fbclid=IwAR0L6zTEAukbAKw1Ykh0yWwmu71utvqL , (2) http://www.bekm.us/lyoness-has-now-been-officially-branded-as-a-pyramid-scheme-in-poland-polands-office-of-competition-and-consumer-protection-uokik-has-classified-lyoness-as-a-pyramid-scheme-by-official-dec/

The actions of your company at sports clubs are not partnerships, only sponsoring arrangements. Referring to them as partnerships is just window dressing intended to project a false impression of integrity towards existing and future members.

Your reference to “bogus claims” at BECM Inc. is false and simply a lie. The BECM Inc. has been contacted by allegedly deceived members themselves; fishing for customers is more your business style.

It would be easy to determine whether the satisfied and refunded customers listed on www.bekm.us/rating were not once actual members of Lyoness/Lyconet. A few minutes studying the results of a Web search on Lyoness/Lyconet with open eyes would reveal that the representations in your letter are blatantly absurd. Feel free to litigate if you think you have any ammunition against BECM Inc. – we will take it in our stride. BECM Inc. has made and will continue to make payments to Lyoness aggrieved parties.

Your members from the Asian-Pacific region should have the German Wikipedia entries translated for them. 

Poland’s Office of Competition and Consumer Protection, UOKiK, has classified Lyoness as a pyramid scheme by official decree of 30 December 2019. This means that funds will have to be reimbursed.

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The Polish business and law journal GAZETA PRAWNA published an article on the UOKiK decree on 12 February 2020.

https://biznes.gazetaprawna.pl/artykuly/1453526,lyoness-piramida-finansowa-program-lojalnosciowy.html

The loyalty programme as run in forty-seven countries has turned out to be a poor investment in Poland, according to the President of Poland’s Office for Competition and Consumer Protection (UOKiK) in his conclusion.

Proceedings (80 pages) against Lyoness that began in 2013 came to a conclusion on 30 December in 2019 with the UOKiK president’s decree, ending with a statement that the Lyoness Loyalty Programme was de facto based on recruiting new members into the Lyconet/Lyoness scheme, thus undermining the collective interests of Polish consumers. Briefly: Lyoness was found to be a pyramid scheme with earnings to be made solely by recruiting new members into the Lyconet scheme. Dorota Karczewska, legal consultant and lawyer at the WKB Wierciński Kwieciński law firm, recommended that the Lyoness case be referred to law enforcement agencies.

The decree includes an order to reimburse advances already paid by consumers for vouchers or gift cards from Lyoness Europe AG within four weeks after the decree comes into force unless these advances have already been exchanged for vouchers or gift cards.

The UOKiK decree states the following: “The business activities of the business operator are focused on promoting the structure of the Lyoness Cashback scheme in such a way as to recruit members into the Lyconet sales structure. Members may have been able to participate to an insignificant degree and earn limited commission by recruiting a certain number of additional Cashback members into the Lyoness scheme, but were only able to make substantial earnings once the recruited Cashback members joined the Lyconet scheme at an entrance fee of €2,400 (discount voucher advance payment) and other charges (advance payments) in order to achieve premium marketer status.

“The case against Lyoness was extremely complex. Identifying the actual working mechanism of the pyramid scheme proved difficult for the Office, which led to a very long and drawn-out investigation. Lyoness has also continually changed its corporate name and respective owners,” adds Dorota Karczewska, legal consultant and lawyer at WKB Wierciński Kwieciński. Former vice-president of the Office of Competition and Consumer Protection Baehr, then still an office admin, filed an application for declaration as early as in 2017 to rule that Lyoness was a pyramid scheme (“New priority of the Office of Competition and Consumer Protection: Combating pyramid schemes,” DGP of 11 May 2017). According to Baehr, this decree should only be one element of state action in the Lyoness pyramid scheme matter: “We need the law enforcement agencies to respond.”

Italy has ruled against the business practices of Lyoness, and Norway has prohibited them. Some national jurisdictions have found, inter alia, the terms and conditions to be so complex and opaque (presumably by design) as to conceal any potential legal infractions from the authorities on initial review.

Network Magazine Editor-in-Chief Maciej Maciejewski has mixed feelings. Maciejewski was one of the first in Poland to question the Lyoness business model.

“I’m pleased that the efforts of the Office and of investigative journalists have borne fruit after so many years. It’s a shame it took so long. This shows that UOKiK doesn’t have enough room for manoeuvre in analysing pyramid schemes. It took a while for financial professionals to follow up on suspicions that Lyoness/Lyconet is a pyramid scheme. Law enforcement agencies should conduct a search on the company premises, and confiscate and examine their computers. Meanwhile, the tools they had available only allowed UOKiK to play cat and mouse with Lyoness,” according to Maciejewski.

Lyoness/myWorld will of course trivialise and play down this decision and present it as insignificant nonsense towards its members while also opening itself to further official action as we have seen in Norway and portraying itself as a bona fide company using sponsoring campaigns in the sports industry to uphold and cash in on the illusions of its members.

Lyoness Europe AG loses appeal/Defence on grounds of international jurisdiction at court. Terms and Conditions declared null and void. Court makes no distinction between my World and/or Lyoness.

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The Lyoness pyramid scheme has a penchant for appealing to the jurisdiction of individual courts, invoking Swiss jurisdiction outside EU legislation.

As usual, the Lyoness pyramid scheme referred to international and local jurisdiction of the Austrian courts in a case concerning one Austrian Lyoness victim (more than €20,000 [über zweideutig!]) at Vienna Commercial Court (51 Cg 10/19f-13) against Lyoness Europe AG.

Vienna Commercial Court found the following, inter alia, in the rationale of its ruling on 3 February 2020 (51 Cg 10/19f-13):

The court has ruled dismissed the defence raised by Lyoness on grounds of lack of international jurisdiction.

The injured party petitioned on behalf of his company XXXXXXXXXX, of which he was the sole owner, for repayment of several investments made from the respondent resident in Switzerland (Lyoness). He referred to a convention on court jurisdiction in the question of Austrian court jurisdiction, which applied to this case. All members Lyoness were forced to sign to the new terms and conditions in order to be able to access their online member account; the members were unable to acknowledge the new terms and conditions beforehand.

The transition procedure involved Lyoness blocking the petitioner’s access to his online account and personal user area on the website of the respondent (Lyoness) until the petitioner accepted the new terms and conditions for Lyoness members as well as the additional general terms and conditions for Lyoness members on using extended membership benefits. The Lyoness website issued the following notification:

“[…] Terms and Conditions not confirmed

“You have not yet confirmed the Terms and Conditions “You are required to read and accept the Terms and Conditions in order to proceed to the internal area.”

The online user area of the petitioner was not (technically) accessible or unlocked until the petitioner ticked the box confirming acceptance of the terms and conditions.

International jurisdiction regarding the Lyoness headquarters in Switzerland is governed by the convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (LGVÜ 2007) concluded in Lugano on 30 October 2007. LGVÜ 2007 has been applicable to Switzerland since 1 January 2011.

In addition, Lyoness did not comply with the procedure specified in its intended transition to the new terms and conditions (change notice); in particular, Lyoness omitted any reference to the legal consequences of (not) objecting to the change, so the terms and conditions did not effectively come into force.

“The question as to whether my World Austria GmbH is in fact Lyoness Austria GmbH under a new name is moot, as is the matter of its headquarters in Graz,” the court added. The routine change in company name did not have the intended result for Lyoness.