People who have watched the Dragon's Den episode on Lyoness pitcher Andy, may have noticed that Andy kept trying to turn the sceptical opinion of the dragons around by emphasising that he would now explain the system in a 'simple' manner. This is probably a consequence of the brainwashing efforts made by the instigators and promoters of Lyoness to convince anyone who gets enrolled that it is impossible that anyone who understands the system is not extremely enthusiastic about it - because it is 'absolutely revolutionary and perfect'. And, reversely, that anyone who is sceptical or even negative about it, must therefore just not understand it.
One may wonder how difficult it is to grasp the Lyoness 'business model'. In any case, Lyoness has made a real effort to hide what is going on within their corporate structures. Its (recruitment) gatherings are invitation only, search terms are being bought to prevent doubting prospects or suspicious participants from visiting blogs like this one, directors, company names and business terms change regularly and rewards up to CHF 45,000 are offered to its participants if they can provide them with information about its critics. Additionally, Lyoness does not offer just one system with 'unlimited earnings potential', but reportedly at least 10 (beware, link to Lyoness propaganda).
The most prominent and controversial of these is the Lyoness position system (apparently renamed again). Contrary to what Lyoness tries to sell to the outside world, the (allegedly free) cash back card is a worthless piece of plastic and the 'shopping community' Lyoness claims to be, is virtually non-existent. The position system is where nearly all the money is made.
As most of the readers already know, the only way to make money in Lyoness is by recruiting new, investing members. The following is an excerpt from the Lyoness General Terms and Conditions:
"Above / Below BC I BC II BC III BC IV BC V
3/3 € 8,- € 24,- € 80,- € 240,- € 800,-
5/5 € 12,- € 36,- € 120,- € 360,- € 1.200,-
10/10 € 16,- € 48,- € 160,- € 480,- € 1.600,-
15/15 € 24,- € 72,- € 240,- € 720,- € 2.400,-
20/20 € 32,- € 96,- € 320,- € 960,- € 3.200,-
25/25 € 40,- € 120,- € 400,- € 1.200,- € 4.000,-
You require 4 direct Customers with at least one position in the system (regardless
of which business category the position is in, and of whether the position was
created by remaining discounts from purchases or by pre payments for future
purchases) for the weekly reimbursements."
This concept is called the system commission and it is directly related to the position system. If a Lyoness member has recruited 4 people (who have bought or saved up at least one position), he or she starts earning this commission. The bonus is paid out weekly. The numbers in the first column indicate the amount of positions required to become eligible for the commission (over/under, so 20/20 is 40 positions). The business categories represent different levels of position chains, in which the positions are increasingly expensive.
Here is another excerpt from the Lyoness General Terms and Conditions:
"4. Purchase reimbursement and shopping credit
(...) You will receive shopping credit for positions created by pre payments for future purchases. When you have completely filled a position in your accounting system which arose from purchases (position account) or by pre payments (TMC), you then receive the following reimbursement, depending on the business category (BC):
In Business category I at 35/35 (above and below): € 450,-
In Business category II at 30/30 (above and below): € 850,-
In Business category III at 25/25 (above and below): € 1.600,-
In Business category IV at 25/25 (above and below): € 4.800,-
In Business category V at 25/25 (above and below): € 16.000,-"
So, positions can be saved up in remaining discounts (which is highly unrealistic, considering the average spendings of the Lyoness members) or purchased. If additional positions come into the downline (or upline), the positions move up and when they reach the end (after 35 additional up and 35 additional down, 30 additional up and down, etc., depending per category), the last position in the chain is multiplied.
Considering the average spendings (and consequential discounts) of the Lyoness members, the only realistic way to make money of the position system is by recruiting new (position purchasing) members or by making existing members purchase additional positions.
In order to become a 'premium member' and/or a 'loyalty merchant' of Lyoness, one needs to purchase 2000 euro worth of positions; usually 7 of 50 euro, 3 of 150 euro and 3 of 400 euro. 'Regular members' initially have to purchase at least 150 euro worth of positions. Later this can be waived to increase the amount of members. Then, you will qualify for 1-2% cash back discounts of averagely 1.11-2.22 euro, for 'free'.
Thus, the only realistic way to make money is by persuading recruits or existing investors to make new investments, or as Lyoness calls it 'position purchases' or 'downpaying on future discounts'. Lyoness is simply a pyramid scheme.