Lyoness Judged To Be An Illegal Pyramid Scheme
In 2014, Lyoness was taken to court by the Australian Competition and Consumer Commission alleging that the Lyoness Loyalty Program constitutes a pyramid scheme. The Australian Competition and Consumer Commission failed in court. Now the Lottery Authority has shutdown Lyoness in Norway.
The Lottery Authority concludes that Lyoness’ work in Norway is an illegal pyramid-based sales system….
Here are the details of why Norway considers Lyoness a pyramid scheme:
On January 11, 2018 the Lottery Authority issued notification of a decision to stop Lyoness’ work in Norway.
Notification of decision sent to Lyoness
The notification of decision is against Lyoness Europe AG and Lyoness Norway AS, but will also include 150,000 Norwegian participants and 1,000 loyalty companies included in the Lyoness sales network in Norway.
Illegal pyramid-based sales system
Based on testimony, the Lottery Authority has rejected appeals in 2016 and 2017 by Lyoness, and the content of that, found grounds for assessing whether Lyoness is an illegal pyramid-based sales system after the Lottery Agreement Section 16, second paragraph.
In assessing, we have come to the conclusion that the revenues from Lyoness’ business in Norway mainly depend on the acquisition of participants, and not from the sale or consumption of goods, services or other benefits.
Lottery Authority’s conclusion
In the notice of decision, the Lottery Authority concludes that Lyoness’ work in Norway is an illegal pyramid-based sales system pursuant to section 16, second paragraph, of the Lottery Agreement.
We have paid particular attention to the fact that Norwegian participants in Lyoness do not receive or consume goods, services or other benefits from the sales system that correspond to the value of what is paid when they pay for them. Participants’ payments to Lyoness are as a consequence of this to be regarded as consideration to participate in a pyramid-based sales system. The income of the company and the individual participant is primarily related to the acquisition of new participants and those payments to Lyoness, and not from the sale or consumption of goods, services or other benefits.
In a letter dated January 11, 2018 the Lottery Authority has warned that we will make a decision that Lyoness must stop all work in Norway. Notification of resolution means that all repatriation of participants and loyalty companies to CashBack World and Lyconet, and all sales and use of benefit cards, discount coupons, customer shares, gift cards, promotional materials, seminars and other products in the workplace must be terminated.
The Lottery Authority’s notification of decision basically bases itself on the information we have received from Lyoness in the case.
Lyoness has a deadline of four weeks to object to the decision that is the alert, or the reason for the alert. The Lottery Authority’s further processing of cases is dependent on Lyoness’ feedback.
– Source lottstift.no
It looks like Norway is the country that will hold Lyoness accountable for running a pyramid scheme. We will find out in the near future if Lyoness is able to turn this judgement around.
The median income of all Lyoness members is $0.04 and of all IBRs is $28.00. With many people spending $3000 to become a premium member, there are a lot of people losing money in this scheme. This high level of loses is common in pyramid schemes. – Source Lyoness Income Disclosure