What is a Pyramid Scheme?
A pyramid scheme is an illegal investment scam based on the setup of network marketing. The most famous kind of Pyramid Scheme is the Ponzi scheme.
Lyoness is MLM Company based out of Austria and registered in the year 2003. Lyoness was said to be active in 47 different countries, spread over 6 continents and its shopping community consisted of more than 8 million members as of 2016.
Poland’s consumer protection authority marked Lyoness as a Pyramid scheme. The Office of Competition and Consumer Protection (UOKiK) laid down their decision on Lyoness on 30th December 2019.
This has been released to the public recently; however, this has been evidenced a few days ago. The Consumer Protection Authority has marked Lyoness as MLM Company with the only source of revenue generation is recruiting members who can invest.
UOKiK identifies Lyoness’s pyramid scheme as a breach of Poland’s unfair marketing practice and consumer law. UOKik’s ruling has paved the way for the investor’s refunds. Lyoness has to inform its polish victims about their eligibility for the refunds and details on how to receive those refunds.
Lyoness uses gift cards and vouchers as a cover to mask the inflow of funds by new affiliates who are recruited. This is a well-exercised excuse used by the Lyoness affiliates to defend the scheme.
Though there is no denying the fact that if a Lyoness affiliate deposits money with the company, recruits enough new affiliates who do the same, then ultimately they will receive more than 100% Return On Investment.
Lyoness was also ordered to pay the UOKik’s legal cost of $50. In response to the UOKik’s declaration on Lyoness being a pyramid scheme, Lyoness told Gazeta Prawna that UOKiK’s decision was absolutely “unlawful”.
Lyoness told UOKiK that “Lyoness” has stopped operating since March 2019. However, this simply refers to Lyoness changing its name to Lyconet and continuing to offer the same fraudulent scheme.
Lyoness has a record of changing its company names when authorities get hold of them. Like the Norwegian Gaming Board, UOKiK wasn’t interested in Lyoness’ pseudo-compliance either.
Lyoness came under the investigation radar in Poland in 2013. UOKiK publicly reported Lyoness” can be a Ponzi scheme” in February 2014. In May 2016, the OCCP ruled Lyoness affiliate investor terms and conditions illegal.
By December 2017 OCCP controlled by UOKiK issued another warning against participation in Lyoness. As per my understanding by UOKiK’s decision in December 2019 means Lyoness in any capacity is now illegal in Poland.
Currently, Lyoness operates with the name of Cashback World. Following the regulatory ban in Italy early last year, the company appears to be targeting only Greece now.
How does Lyoness Work?
Lyoness is basically targeting three main groups of the audience:
- Customers who would like to save money through Lyoness while shopping.
- Merchants who want to benefit from International Loyalty Program.
- Business owners who want to make money through Network Marketing Opportunity.
For consumers, there are two ways for them to save money while shopping:
- Cashback-While shopping at a store which is a partner of Lyoness, you can enjoy 1-5% cashback reward by using cashback card.
- Shopping Cards-With every purchase in the partnered stores, one could collect reward points, which you may use to redeem cash bonuses and avail discounts that Lyoness offers.
Compensation Plan: Lyoness Review
You will not earn anything immediately with Lyoness as soon as you have recruited someone into Lyoness under you. Instead, you will receive 0.5% of the purchases made by your referrals and another 0.5% of the purchase made by your referrals referral.
This is known as their “Friendship Bonus”
Conclusion: Lyoness Review
Honestly, I am not fully confident about the UOKiK’s final verdict about Lyoness, but if you are a resident in Poland and you have invested in Lyoness, it is high time that you look for a refund from them.