The Lyoness Myths #3: 'Most participants just want discounts'

The Lyoness myths section was developed to assess the validity of the arguments used by Lyoness instigators and adherents to 'prove' that Lyoness provides a viable business opportunity. It should provide people considering to become a Lyoness member with a more balanced view of the 'overwhelming' sales pitch of the Lyoness racketeers, as well as show people defrauded by Lyoness how exactly they were deceived and lured into Freidl's web of lies.

In September 2012, Lyoness spokesman Mathias Vorbach wrote an article for the Austrian newspaper WirtschaftsBlatt in which he provided a company response to the increasing allegations that Lyoness is not operating a shopping community - it is in fact exploiting a pyramid scheme. Vorbach claimed that the vast majority (well over 90%) is not participating in 'sales' or referral, but merely joined to obtain a free discount card.

This company line has often been used by the adherents of Lyoness too, when trying to persuade prospects to become a (premium) member of Lyoness. In order to make the prospect feel special, and give him/her the idea that Lyoness is a viable business opportunity, it is stressed that one should not be afraid of market saturation (i.e. being unable to enrol new members), as nearly all members that have joined Lyoness so far, did so to enjoy the amazing discounts Lyoness offers. In the same line, the doubting prospect is made to believe that since so many people joined Lyoness 'just so they could get all these tremendous discounts', there is an potentially unlimited supply of new recruits. As a way of building the ego of the prospect, they are persuaded to believe that their set of unique capacities is exactly what is needed to build a successful business within Lyoness. This implies (and implants within the brain of the prospect) that others are less, and have not been asked to become a business partner because 'they lack what it takes to become successful'.

In fact, like with any pyramid scheme, anyone is encouraged and pressured to join, and to invest as much as possible. It is ridiculous to believe that Lyoness would 'select' their prospects based on suitability, because it inherently needs to attract as many as possible investors and as much as possible capital in order to keep the scheme going. On a lower level, this applies to the recruiters/adherents as well. Money is made if you recruit, so recruit anyone you can ('das heisst positionen, positionen, positionen, positionen').

According to Vorbach, in September 2012, 90% of the members of Lyoness only joined Lyoness to enjoy the benefits of owning a cashback card. In 2012, Lyoness had 2.3 million members, so this would mean at least 2.070.000 participants would at least use the card once. However, in May 2013 it became known that only about 10% of the current Lyoness members have used the cashback card. This amounts to 270.000. This would mean that over slightly more than half a year, roughly 1.8 million members would have stopped using the card. Not a very good product then, is it?

It is considerably more likely that Mr. Vorbach was simply lying about the 90%. Indeed, if 90% only subscribed to become a 'free member', 10% of the participants (230.000) would have brought in 99.67% of the 2012 turnover, roughly 997 million in advance payments or saved up discounts. As the amount of saved up discounts is negligible, this would mean that the average business partner would have put in 4300 euros in one year. Yet, the discounts they would supposed start earning over would be virtually no existent, as 90% of the members would have to share about 12 million in discounts, or 5 euro annually per member. Probably not exactly the point Vorbach was trying to make.

In reality, at least 90% of the participants never even used the cashback and only joined to be able to recruit, and get a commission over the investments made by the people they bring in. This is a conservative estimate, as using the cashback card naturally does not preclude simultaneous recruiting activities (in fact, one would expect everyone to use the card). Therefore, it can be expected that effectively every member of Lyoness is a 'premium member', trying to recruit new victims for the scam. The 10% that do use the card once in a while spent averagely about 1100 euros at Lyoness loyalty partners last year. This would give them an annual return of about 30-45 euros. This makes it more understandable that virtually no-one bothers to use it.

1 comment:

  1. Yet again, this reality-inverting chapter of the 'Lyoness' fairy story, is essentially the same as those entitled, 'Herbalife', 'Amway', 'Nu Skin', 'Xango', 'Fortune Hi-Tech Marketing', 'USANA', 'Forever Living Products', etc.

    All these copy-cat, Utopian, cultic rackets have induced never-ending chains of core-victims into handing over thousands of dollars annually, in exchange for effectively-unsaleable materials, on the pretext that by doing so and by recruiting other to do the same (who then recruit others, etc., ad infinitum), eventually any obedient participant can achieve 'total financial freedom.'

    When challenged, the instigators of closed- market swindles, or pyramid scams, dissimulated as 'Direct Selling' or 'Multi-Level Marketing Income Opportunities', have all steadfastly pretended that the overwhelming majority of participants who appear to have lost money in these schemes, have not actually handed over their cash in the expectation of a future reward: they did so merely to 'buy products at discount prices.'

    In other words, the bosses of 'MLM' rackets have defended their criminal activities by claiming that all the millions of losing participants who have been churned through their frauds in the past, and who they have always insisted were 'Independent Business Owners' or 'Direct Sellers,' weren't actually 'Direct Sellers' or 'Independent Business Owners' at all - they were 'customers.'

    David Brear (copyright 2013)