Lyoleaks #1: Lyoness' corporate instructions on deceiving people

Few readers of this blog will be surprised to read that it is the opinion of the Lyoness Complaint Centre that Lyoness recruits people into its schemes with false promises of great wealth, and trains them to do the same to their friends.

In fact, Lyoness is part of a much wider, and evolving, phenomenon which David Brear has studied over many years. Consequently, he has been able to identify Lyoness in accurate terms as 'a classic example of a corporate front for a self-perpetuating, blame-the-victim, cultic racket comprising a dissimulated closed-market swindle (or pyramid scam) - and related advance fee frauds (comprising peddling victims of the pyramid scam, a progressively-expensive, but fake, 'plan to achieve a future, secure, Utopian existence') - based on the crackpot pseudo-economic theory that:

Endless-chain recruitment + Endless payments by the recruits = Endless profits for the recruits'.

Following that logic, anyone who gets persuaded to join Lyoness is from the very start instructed to do two very important things:

a) Make 'down-payments' (i.e. investments) into the Lyoness system

b) Recruit as many as possible others to make similar investments

Like in many scams, this principle is sold by telling the adherents of the scam that they will only succeed if they duplicate exactly what others (who are allegedly successful and wealthy due to the scheme) have done. This duplication always involves investing (no matter in which way it is disguised) and recruiting people who will also invest.

Of course, Lyoness and its adherents do their utmost best to make sure this principle stays internal and does not become known to the general public. However, sometimes something leaks out. In this case, it is a video made by an Austrian kite-surfing guy calling himself Dr. Julian Hosp (although any evidence that he is in fact a scientific or medical doctor is lacking).

Hosp claims to be a 'level 5 leader' in Lyoness, who has definitely 'made it'. Now, as a favour to all of us, he teaches us (especially people from Hong Kong, Lyoness' new 'growth market') how to do exactly what he has been doing to get so darn wealthy. We will be publishing more of his videos here shortly, but we could not wait to show the world this one, as it captures the clear-cut  instructions that Lyoness members get about how to deceive people into investing in Lyoness.

  We have taken out the most interesting parts and prepared our modest analysis for our readers.

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Right from the very start, Mr. Hosp emphasises the income cycle of Lyoness. You join, you pay, you contact people to do the same and you will become rich. The first someone who has just joined should do is make a list of everyone he/she knows and add all possible contact details to the same sheet. 

Although such a list is a very private document by its very nature, Lyoness urges its newly recruited members to hand over the list to the 'recommender' and let the 'recommender' handle - at least - the first few presentations. These first few presentations, according to Mr. Hosp, should be with the so-called 'warm contacts', meaning the closest social contacts a person has, like your best friends and closest family. Lyoness feels that not everyone will be enthusiastic from the start, and has therefore developed a systematic, duplicable approach of how to treat new contacts and prospects. It all starts with establishing the contact. 

Honesty, as it turns out, is not a key-component of (the first phase of) this approach:

"Whenever you contact them, you only have one goal. And that goal is: getting a meeting. It does not matter how you get that meeting. Be creative and flexible; tell them you have a surprise for them, tell them you wanna go for a drink, tell them you wanna go for a coffee. The only important goal is: you wanna set up a meeting."

And the company name, which is so successful, endorsed by so many and opens doors everywhere around the globe, is also not very popular at this stage:

“Never mention Lyoness, never mention anything about saving money. The maximum you can say is an opportunity to make money. We are not looking for savers at the moment; we are looking for business people.”

So, what they are telling us is that people looking to save money have no place within the 'shopping community' Lyoness? Interesting - and it sounds familiar. Didn't Freidl say something to the same effect when he was unaware of being filmed?

Thus, as pointed out earlier, the 'cash back card' is indeed nothing more than a form of 'bait', used to gain access to you, your contact details and the contact details of 'at least 25-30, but preferably 100-200' people you know. Maybe that explains why so few people actually shop through 'shopping community' Lyoness? 

Approaching 'warm contacts' (i.e. your closest social connections) is to be prioritised in the early stages of a Lyoness membership, always with your 'recommender' present, though:

"There are two different approaches; the direct approach and the indirect approach. The direct approach means that you can only do it with very close people – people you would meet anyway; people that cannot evade you. Now with everyone else you use the indirect approach. You need to tell the other person, why you are calling them. You should never mention Lyoness, saving money, or that it is a network marketing business. Always mention that you do this with a friend, a business partner, so there is some peer pressure."

So, in short, preferably try to recruit people that 'cannot evade you' and use 'peer pressure' to enroll the rest. We at the Complaint Centre would hereby like to nominate Lyoness for the award of most ethical company of 2013! 

Mr. Hosp also deems it important that we view (and recommendably use) his template for approaching new contacts:

No matter how excellent his work truly is, there is always a chance that the approached prospects will annoy you with their tedious, irrelevant questions, such as:

- What is the meeting about?

- What's the name of the company?

- Can you send me some info upfront?

Luckily, Lyoness offers you a way out:

"Annoying question number 1 is: 'what is this meeting about?'. I always tell them 'look, the company is still very small, we don't have a website yet'. That is of course not true, but that does not matter."

And:

"We are very small still, we are just growing, we are in the start-up phase. I cannot give you much more details, but I will introduce you to my business partner, because, well, I do not want to do that alone. I hope you respect that - we always do that together."

Written info is not very popular either:

"If the person asks” can you send me some info”, you say “no, we do not have any written info yet, it’s just the concept of it and I want to explain it to you."

Getting a meeting is very important and any obstacles possibly stand in the way of arranging one should be removed:

"The important thing is, never forget, it is not about telling the exact 100% truth. It is just about meeting the other person. And if you tell them you just want to go for a drink, you just want to introduce them to a new friend of yours, you can just introduce them to the business."

Doesn't that just warm your heart? 

Basically, it is to be recommended to avoid unexpected, unprepared discussions of Lyoness. The business concept is best explained by someone with a little more experience (i.e. 'an upline') and should always be scheduled. However, Mr. Hosp does not deny the possibility that you run into someone who could turn out to be a prospect (that's because: everyone is a prospect!). 

Naturally, a method was developed to deal with such situations as well. Let's call it an 'elevator pitch'. How it works is that you run into someone who asks you what you do for a living. As you have been taught, you should under no circumstance mention 'Lyoness' or 'Network Marketing'. Instead, lie briefly and then put the ball in their court:

We at the Complaint Centre are particularly fond of the 'XXX' sections in the template. Which compliments will be given to you, will be decided on the spot. Improvised sucking-up, always pleasant...

"Be natural! You can also say the name, if the other person needs it, cause if you hesitate too much, it will be strange".

Finally, we get to hear a name - maybe we were wrong about the ethics of Lyoness...

"Maybe just change the pronunciation into 'Lion' or similar ;-)"

OK, I guess we weren't. 

It is very important that the recruiter is totally prepared for the eventual meeting, and the prospect is not (understandable, for which fully-informed, rational person would consent to this?). Using Google, written info, actual names, websites - it is all to be avoided. 

Does not it show that Lyoness has a certified management system?

"And this is the key, because I want to push the ball back, so the other person has to say what he is doing, and I’m telling you 95 % of the times he is not happy with his or her job, so I say “wow cool, sounds great, listen, we are always looking for competent people and you are very charming, so upfront, etc. [or: XXX], so maybe it would be interesting for you to see how our company works and make some money on the side"

And then of course there is the invitation for coffee, a drink or to meet a new friend. Remember, the helpless old woman you lie to today, may just turn out to be your country's 'leader' of the future!

It is also important not to scare off new prospects with the complexity of the Lyoness systems. In fact, never mention that it is difficult to explain, or anything to that extent:

"I never try to say 'this what I do is very hard to explain', because it’s not. I am setting up a business, so I am very natural and you should be too. Never mention the name - don’t try to do it,  never say that you have a website, never say you can send them some info upfront, you always want to meet the person. Remember the goal!"

Thus, the end justifies the means. Indeed, we can see how the great discounts and amazing average earnings justify selling your friends and family (and their contact details) and blatantly lying to them, as well as to any stranger you might run into. 

Knowledge is power, everyone knows that. Therefore, gather as much intelligence as you can on the people you are trying to recruit (which may come in handy when filling in the blank spots in the templates of deception).

"[It is] very important, [to] collect some info about your friend, your prospect. If you know that person well, that is very simple. But if it’s a new person, someone you haven’t met for so long, it helps to understand what the person is into. This will help you to pitch your idea better, provide a solution for the other person’s problems. Never forget your goals. The goal of the contact is – you want to meet that other person, that’s it."

And does not that fit perfectly into the idea of a business that can only grow when you 'help each other' and that employs the slogan 'together we are strong'? 

So much for the preparation, now we're moving on up to what it is all about - our one and only goal: the meeting:

“You have three goals in a meeting. To interest and excite the other person, and to register that person as a new member. And then: schedule a follow-up meeting!"

Huh? The prospect already became a member of the shopping community, yet we need to meet with him/her again?

"So you will talk to people, inform them, excite them, register them, and then schedule follow up meetings – you will have your premium members."

Ah, we see. It is all about the paying members.

"This success cycle of making personal contact, setting up meetings, scheduling follow-up meetings, going to the business infos , going to the Lyoness days. This cycle is what your success in Lyoness depends on. The faster you can go through this, and the faster you can teach others to go through this, the faster you will walk up the career ladder."

Let's make sure we got this straight. We join, we throw our card away and pay for vouchers instead. We then approach anyone we have ever met or see on the street for a secretive meeting, with an illustrious, mysterious business partner - for a company of which we cannot tell the name (or at least not pronounce it so accurate as that they will be able to Google it), we cannot give out any written info, nor provide them with the company website. If the meeting goes well, we immediately schedule another one where we convince our new prospect (which it still is, because nothing has been paid yet) to down pay on vouchers which will miraculously multiply in value if he/she will just do the same. 

So we are recruited and we pay, then we recruit people and make them pay, we teach those people to recruit new people and make them pay too, etc., etc., etc. To quote Robert Herjavec: 'Isn't that a pyramid scheme?'. Just like Andy, Mr. Hosp has a problem with 'that nasty P-word'. He prefers the terms 'career ladder' and 'system cycle'. Have it your way, Mr. Hosp.

"There are certain things you cannot do as a Lyoness member"

We are truly amazed, for we just heard an open appeal to lie and deceive as much as possible…

"You are not allowed to do public announcements on Lyoness. You are not allowed to go in front of the Pizza Hut or a Pacific Coffee and talk to employees or talk to other members about Lyoness. You are not allowed to do that. Your goal is to talk to your friends, family and, of course, people that you meet, but not at any loyalty merchant, and introduce them together with your up line in a proper way to what Lyoness is about, how to save money, and more important, how to make money."

First we should note that we appreciate the honesty here: finally it's admitted that making money is way more important than saving money. Probably a good slogan for the next marketing campaign. 

More surprising, however, is the prohibition of discussing Lyoness anywhere near a 'Loyalty Merchant' (those are the companies that 'publicly endorse Lyoness after a thorough check of all its systems by their comprehensive and immense legal departments'). This seems a little strange, but we have a theory. Could it have anything to do with the fact that no-one affiliated to those Loyalty Merchants has ever even heard of Lyoness? Perhaps they would not like you to find out about that, as it could endanger the magic cycle of success...

"It’s your responsibility to build a successful team. You don’t just look for people, you give them an opportunity and you will find key members. You will make your first money as soon as you have your four premium members. And then it’s our goal to get you to career level three in the first month."

So no money, if no recruiting? Quelle surprise... For your information, these premium members are only valid if they have at least one 'accounting unit' (or 'position', or 'point', whatever term is the most difficult to find information about on Google). In other words, unless your directly brought-in people have shopped for an incredible amount of money in a very short time (which would be unique), they are going to need to make a down-payment in order to be lucrative to you. And if you haven't down-paid yourself, they are worth nothing to you either (except for maybe 0.5% of their average annual expenditures at the affiliated merchants). 

To reach 'career level 3' - which should be doable in one month, you're going to need to recruit 'approximately 13 premium members' as you need '500 points' (units) in your 'lifeline'. This means you need to attract 13 x 2,000 = 26,000 euros in down-payments.

Now it all makes some more sense, now doesn't it? 

The cycle of success consists of paying, recruiting, paying, recruiting, etc., etc., etc. Indeed, that nasty P-word is just so inapplicable...