The Guardia di Finanza (ital. financial police) of Turin, Corsico and Bologna has received the first claims against Lyoness lodged by customers who are claiming the repayment of money. The total sum of claims amounts to EUR two million. Lyoness is a “shopping community” that had been sanctioned by the Autorità Garante per la Concorrenza e il Mercato (AGCM – Ital. competition authority) because it had put up a forbidden snowball system through which the founders of the community had enriched themselves whereas new sometimes had invested considerable sums without retrieving them or even making profit.
In Italy, there are 241 victims to fraud who are represented by the law office 3A-Valore with the objective to initiate a class action suit at the court of Verona where Lyoness Italia has its legal seat. Together they are claiming a sum of EUR 1,815 million. In 2017 Lyoness Italia had a turnover of EUR 53 million.
In January 2019, the AGCM had concluded that “the support system, used to distribute a cashback system for purchases of goods (means: a refund of a certain percentage of the money spent at partner retailers), is unlawful because it includes a snowball system which represents a misleading business practise according to the Codice del Consumo (Ital. consumer protection legislation)”. The AGCM therefore imposed a fine of EUR 3,2 million on the company. Members had to pay an entrance fee of EUR 2,400 but what really made the system grow was the investment of other customers that also paid an entrance fee.
In Turin, the suit was filed by a 25-year-old man who had joined Lyoness in December 2017 and had paid EUR 50.- per month additionally to the initial fee. He also bought a share of EUR 1,500 and paid another EUR 500.- in order to participate in an event Lyoness had organised in Prague and where he got convinced to buy another share. A total investment “of EUR 7,000.- in a company that had attracted me in an opaque manner and on the basis of false facts, promises that were not kept and a working method that is incompatible with my ideas on morality.”, as he reported to the financial officials.
In a press release, Lyoness declared: “Our business model provides that every person who signs up for the free programme Cashback World, can retrieve the repayment of a part of the price paid at a partner retailer as well as bonus points that bring further advantages. Lyoness has made some amendments worldwide to guarantee maximum transparency and to prevent some individual marketers from making irrational investments, and therefore contravene orders from Lyoness itself, before they have not at least retrieved an appropriate part of the revenues generated by the system itself. Since Lyoness does not agree to the authority’s position at all, especially not in relation to the accused snowball system, it appealed against the judgement in order to enforce our rights and to prove that the complaints are groundless.”
Note: This is exactly the same state of affairs like in Norway approx. two years ago. Back then Lyoness also denied operating a snowball system although it had already been sentenced as such in Austria and Switzerland.