Lyoness: the paradox of an exclusive pyramid scheme

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Both the Lyoness Complaint Centre and Plattform Lyoness have received the story of an Italian man that was lured into the Lyoness web of lies. As reported by this blog earlier, Lyoness mainly targets small and medium-sized enterprises facing hardship under the current global economic crisis.

These enterprises are obviously being lied to in order to make them sign up for 'free' and then transfer all their assets into Lyoness. This blog has earlier discussed some of the bogus, untrue arguments used by the Lyoness instigators and adherents to achieve this. Yet, the Italian Lyoness victims who has contacted Plattform Lyoness and the Lyoness Complaint Centre mentioned another argument as the main reason for him to sign up with Lyoness and become a premium member.

"I tell you [that we were enthusiastic about bringing new customers to our shop] because I swear I did not become a Business Partner for their foolish career promises made by enroling directs: I did it to bring new customers in my shop! This is it.

Question 1: [why] did I believe that 1% discount should be so attractive?
Question 2: [what] pushed us to spend almost 5.000 euros?

Answer: the blatant lie of the exclusivity! They told us we were be the only Lyoness company in [our town] until the "market" should be saturated and we obviously could not satisfy such a huge demand anymore. A month later (March 2010) another IT company similar to ours, in our town became Lyoness partner: very exclusive, isn't it?"

Every cultic pyramid scheme thrives around an idea of exclusivity. This - simply - starts with the nature of the organised recruitment meetings, which are invitation-only. If you want to become a member, you need to be 'recommended' by someone who is already a member. During the meetings, emphasis is put on how special you must be that someone (who is also very special) considered you good and important enough to be introduced to this secret of great wealth, success and happiness.

Another aspect of this is that the systems explained at these meetings have to sound complicated. Obviously, this is done to make sure that casual observers, doubting prospects, journalists and government regulators/prosecutors cannot immediately see that they are fraudulous. Although the basics of the systems are in fact very simple, the lengthy and vague explanations provided by Lyoness may make them more complicated than they necessarily have to be.

Next to fooling everyone who is looking at these explanations, there is another very important reason to do so. Lyoness victims have indicated before that they needed to attend several presentations before they had fully comprehended the system. This makes them feel like they are the 'chosen ones', the ones intelligent enough to grasp this complicated, yet magical system that is guaranteed to reward the ones participating in it.

It also has the desirable effect that it instills the thought into the brains of the participants of the system that anyone who is negative about the system must just not have understood it, either because this person is stupid (and does not have what it takes to become one of the 'chosen ones') or is merely insufficiently informed. This effect can be nicely seen in the Dragons' Den Canada episode featuring the deluded Lyoness adherent, truck driver Andy. 

Andy keeps trying to explain how awesome the opportunity is that he is offering to the 'Dragons', yet they immediately disregard it as an obvious pyramid scheme. Not for a single second does Andy doubt the fairy tale that has been sold to him and that he is trying to sell to the world. Instead, he keeps emphasising that he will explain it simply now - he is convinced that his sceptical audience has just not understood what he is saying, because he talked in too complicated terms, which are incomprehensible for people who do not belong to the group of 'chosen ones'.

The form of 'exclusivity' that the Italian victim is referencing, i.e. the claim that Lyoness will guarantee the exclusivity of participating companies, is part of a whole bunch of lies that Lyoness instigators and adherents are not afraid to use to make everyone join Lyoness and have the participants transfer their money into the scheme. This is ironic, because wasn't Lyoness an exclusive club, in which participation was an honour?

Inherently, pyramid schemes are never exclusive, even though they always like to pretend they are. Pyramid schemes cannot be exclusive, because their stability, growth and persistence depend on the entrance of new funds, either in the form of investments of new participants, or new investments made by existing participants. Andy, for example, invested 10,000 Canadian dollars into the scheme, in three steps.

Therefore, the instigators and adherents of Lyoness will do anything and tell you anything to make you join Lyoness and put as much as possible money in. Paradoxically, also that your company will be an exclusive loyalty merchant for Lyoness in your region and your line of business, protecting you from market saturation, competition and guaranteeing you an incredible increase in customers and sales - or that the fact that you have been invited to come to a recruitment meeting or to join the scheme makes you 'special'.

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