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12/07/2013

FAQ #2: Can you make money with Lyoness?



Question: can you make money with Lyoness?


Short answer: Yes, but it is extremely unlikely that you will..


Long answer:

Often, the promoters of Lyoness (being its instigators and severely deluded adherents) raise as an argument to convince unwitting casual observers of Lyoness' 'honest intentions' that they have made money with Lyoness. Although it is contestable that these promoters have in fact made money themselves (as they are typically taught to 'fake it until they make it'), we cannot possibly deny that there are a few people out there that have made some money off of their participation in Lyoness.

However, the vast, vast majority of Lyoness members makes nothing or extremely little. As reported on this Blog earlier, 46% of the Lyoness members in the USA have made zero dollars ($0) in commission so far. On average, the American members have made $23 in gross monthly commissions, and the distribution of the numbers appears to be severely tilted (as indicated by the median value of $0.38). Also, the average annual costs are higher than $1,000 for Lyoness' Independent Business Representatives (IBRs), meaning that a large share of the Lyoness members lose money, instead of making any.

In other words, there are a few 'top-earners' that make a significant income out of Lyoness. It is unclear whether these people have actually started as a Lyoness member, or were hired by Lyoness to expand the company into other countries. The latter is argued by Bernhard Wagner, former friend of Hubert Freidl and former managing director of Lyoness Bulgaria and G√ľnter Kreuzer, former managing director of Lyoness Italy and now owner and co-founder of Plattform Lyoness. Once every now and then, a list of the top earners of 'MLM' companies (and the likes) are published all over the internet, partly as a motivational tool to make people believe they can achieve the same if they follow the 'proven plan' for success. Recently, it was reported that Gerry Seebacher is the highest earning Lyoness member with an annual gross commission of 1.9 million dollars; followed by Werner Kaiser with 1.8 million dollars. This seems impressive, yet readers of this Blog should be aware that the fact that such high earning 'members' are present, means that an ever smaller percentage of the members make money (it can only be paid in commission once).

David Brear has called Lyoness, amongst other things, a 'closed market swindle'. This means that effectively no external revenue enters the scheme. In other words, the Lyoness turnover consists almost entirely of the money brought in by the members - in the form of their investments in accounting units, advertising campaigns and so on. This Blog has reported earlier that, based on internal Lyoness documents, it can be concluded that about 99.7% of the turnover comes from these investments. Just as shockingly, only about 10% of the Lyoness members actually seems to shop and receive discounts at the Lyoness 'loyalty merchants'. Thus, the claim that the Lyoness 'business model' is in any way sustainable, because it is based on 'never ending consumption' is a blatant lie.

Other than that your Lyoness income is therefore (nearly) fully dependent on how many people you bring into the scheme and how much you let them invest into Lyoness (or as Hubert Freidl said in Bulgaria: 'it's all about the positions, positions, positions, positions'), this means that your efforts to achieve the financial freedom carrot that Lyoness dangles in front of you are unethical at best (because you are enrolling new victims into the Lyoness scam) and in most countries illegal.

Another argument often coined to avert all these allegations is that 'in a pyramid scheme, it matters when you join; in Lyoness/MLM you can make more than the people who brought you in'. Again, this is a nonsensical answer. Pyramid schemes are defined by the mere fact that investing and letting others invest is the core business of the scheme. The technicalities can be deceiving, but are irrelevant to that conclusion. In most pyramid schemes, it is very well possible to make more money than your upline, as long as you recruit more new investors and get more money out of them. Contrary to in Ponzi schemes, the successful efforts of its members to attract new (illegally-earned) capital is always granted with 'commissions' and 'promotions' to higher levels in the hierarchical structure in any pyramid scheme, as attracting new capital is the only thing that keeps the pyramid from falling (for the time being). The same applies to Lyoness.

Then why do people say that only the people that join a pyramid scheme early have a chance to make some money? Well, that has almost never anything to do with the 'compensation plan'. Rather, it is a logical consequence of 'market saturation'. In other words, there is a limited number of people in a country that is willing to invest their money into a pyramid scheme (no matter how perfectly disguised). If someone joins early, there is simply more chance that there are more people out there who have not heard of the scheme yet, and therefore more chances to recruit unwitting people into these schemes. Additionally, due to its smaller size, it is less likely that negative publicity is available - which also increases the chances that people are willing to join.

Altogether, the truthfulness of both mentioned 'arguments' is not that important, as these arguments are completely irrelevant. As argued, pyramid schemes are not defined by technicalities and the fact that money can (theoretically) be made off of any 'company' (even though the chances are minuscule, and only possible if enough people - that you bring in - lose money) is definitely no proof of its legitimacy. By that logic, nearly all forms of crime would be legal and legitimate, as there are a lot of crooks financially benefiting from them.

By the way, it is even more unlikely that people who join Lyoness now will make any money off of their participation, as the Lyoness pyramid is severely crumbling and can collapse any day now.
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The Lyoness FAQ (Frequently Asked Questions) section was designed to provide the general public with answers to the common questions about Lyoness they may struggle with. The section will also provide yet another way to structure the content of this Blog - and direct the searches of people interested in our content to exactly the information they seek.

Which questions are discussed in this section is based on three factors. We have combined the questions that our readers have asked us through the comment system of this Blog (and the answers we have given to these questions) with the most used search terms (often questions too) to reach our Blog. Thirdly, we would like to give our readers the opportunity to ask questions through the comment system of our Blog. Depending on the nature of the question, and the frequency in which it is asked, we will decide to answer it individually or make a 'FAQ' post out of it.

If you know anyone who is struggling with finding the right information about Lyoness, feel free to share our Blog with this person.
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3 comments:

  1. Probably the best way to explain what indicates the operation of a closed-market swindle, is to imagine a smooth-talking bunch of charlatans (e.g. Hubert Freidl and his schills) persuading 10 000 excited persons each to place $3000 on a table - by assuring them them that a magic, but very complicated, system has been discovered by which each contributor can get back more money than he/she started with. The only proof which the charlatans produce to confirm this attractive fairy story, is their own apparent prosperity.

    Obviously, no matter what incomprehensible hocus-pocus is wheeled out, the resulting $30 millions cannot be divided up so that each and every contributor gets a profit, but this revenue can be divided up so that the minority of smooth-talking charlatans who control its division will win massively whilst the powerless majority will lose.

    The fiendish trick which has been pulled by all 'income opportunity' racketeers, has been to silence most of their victims by further convincing them only people who believe 100% that will succeed, do succeed, and that, consequently, persons who fail to make any money, only have themselves to blame.

    David Brear (copyright 2013)

    ReplyDelete
  2. Excellent analogy David, thank you.

    ReplyDelete