Vienna Supreme Court confirms VKI ruling from November 23rd, 2023 / 47 clauses of the Lyconet T&Cs unlawful! Good news for cloud owners!  

Once again, the GTCs of Hubert Freidl’s company have been declared null and void. The Lyoness T&Cs with 61 defective clauses were already ruled inadmissible in 2015. At the time, the company argued that these were old T&Cs and that the new T&Cs had been corrected and were unproblematic. However, this is not the case; now only 47 of the 61 clauses are illegal. A dubious improvement, but a good development for all cloud owners!  

The Association for Consumer Information (VKI) has brought a representative action against Lyconet Austria GmbH (Lyconet) on behalf of the Ministry of Social Affairs. Lyconet, a company active in network marketing, sold the “Cashback World Program”, among other things. This is a purchasing community that enables members to receive benefits by purchasing goods and services from partner companies. The subject of the lawsuit were 47 contractual clauses that were part of Lyconet agreements and so-called Lyconet compensation plans.  

These were criticized by the VKI due to numerous non-transparent regulations and the associated ambiguities, among other things. After the lower instances had already judged all 47 clauses to be unlawful, the Supreme Court (OGH) also recognized all clauses as unlawful. The judgement is final.  

The collective action brought by the VKI was directed against clauses from the Lyconet agreements (3-2019, 9-2019 and 1-2021) and clauses from the Lyconet compensation plans (3-2019, 9-2019 and 1-2021).  

A large number of the contested clauses were found to be non-transparent by the courts. For example, terms such as “Bonus Units”, “Customer Units”, “Subsequent Units”, “Transfer Units”, “Lifeline”, “Upline”, “Balance Program”, “Career Program”, “Balance Category” and “Balance Commission” were used, but their specific meaning remained unclear. The court of first instance already stated that these are not terms in common use and that they are incomprehensible in and of themselves without further context. They are also not sufficiently clearly explained in the entire Lyconet rulebook. The Court of Appeal added that even after intensive study of the entire set of rules, it remains completely unclear to the average consumer when and to what extent they acquire claims to which remuneration. 

The Supreme Court has now confirmed this view. Apart from the lack of transparency, some clauses were also found to be grossly disadvantageous to consumers. For example, the far-reaching options for cancelling the “marketer agreements” by Lyconet and excessive confidentiality obligations are abusive and therefore unlawful.  

According to the legal opinion of the VKI, the legally binding decision now available means that the Lyconet contracts in question are invalid and consumers can therefore reclaim the payments they have made in full.  

Hubert Freidl has always constructed his business model in such a way that all members are declared as entrepreneurs according to the general terms and conditions. The intention behind this is to deprive consumers of consumer protection and thus prevent them from reclaiming their payments, thereby unlawfully enriching themselves.  

In its judgement of February 22nd, 2023, GZ 11 Cg 55/22h-11, the Vienna Court of Appeal upheld the claim in full.  

Despite the clear legal situation, Lyconet Austria GmbH lodged an appeal, which was rejected by the Vienna Higher Regional Court on July 17th,2023, GZ 1 R 50/23i-18.  

Lyconet Austria GmbH nevertheless appealed to the Supreme Court, which rejected the appeal in its decision of November 21st, 2023, AZ 2 Ob 182/23p. According to the VKI, Lyconet Austria GmbH did not even pay the costs. 

Summary:  

Lyconet concludes contracts via a website it operates by means of registration and uses contract forms with a large number of standardized contract clauses.  

The overwhelming majority of people who enter into such a contractual relationship with Lyconet have never previously been involved in business activities, received income exclusively from employment and pursued private investment purposes. Lyconet does not reject contractual relationships with such people.  

Based on Section 28 KSchG in conjunction with Section 879 (3) ABGB, Sections 6 and 10 (3) KSchG, the VKI requests that Lyconet be prohibited from using or referring to clauses described in more detail or clauses with similar meaning in its business dealings with consumers in general terms and conditions or contract forms used by it. The VKI also insists on publishing the judgement in the daily newspaper.  

This proves that the vast majority of customers are consumers, but that the general terms and conditions imply that they are entrepreneurs in order to take advantage of them. 

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