Appeal: Send us your Lyoness story!

In line with the current developments over at our Austrian counterpart, Plattform Lyoness, revolving around the preposterous claim by Hubert Freidl that only 30-35 people are not fully satisfied with their Lyoness experience, we are happy to introduce a new section on our Blog: 'The Witness Statements'.

This segment will primarily deal with the (translated) testimonies sent in by the readers of Plattform Lyoness. However, we would like to invite all our readers to submit their Lyoness stories as well. The stories can be send in through the comment section below. If the comment is privately intended, please clearly indicate this. Contact details will never be disclosed or published.

The Lyoness Myths #8: Only 30-35 people are unhappy with Lyoness

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.

When asked about the persistent and rapidly increasing controversy surrounding his 'company', Hubert Freidl stated confidently that out of all those millions of happy Lyoness members, maybe 30 to 35 had some minor complaints about the impeccable services provided to them by Lyoness.

Anyone who has been reading about the latest developments in the Lyoness case at any of the many well-informed sources reporting on these developments will understand immediately that this statement constitutes a blatant lie, which serves to keep the millions of (often unwitting) victims calm. Looking at the Income Disclosure Statement of Lyoness Americas, it seems more plausible that 30-35 people (out of the 3,000,000 members) are not unhappy with Lyoness.

In Austria, Plattform Lyoness has reported recently that by now, 500 people have contacted them and stated that they feel scammed by Lyoness and want their money back. This number grows steadily. Additionally, the Lyoness Complaint Centre, that's us, has reported earlier that in Australia, a considerable number of victims has applied for refunds and examined the legal possibilities to force Lyoness to pay back their investments. Several of these people have already taken action in this respect.

In the mean time, Freidl and his companions keep up the happy face, continue smiling and lying to everyone who is willing to listen and buy themselves enough time to get away with their criminal acts - and start working on new ones. Anyone who buys that 'only 30-35 people are not completely happy with Lyoness', must really think very hard why on earth they would believe that. Perhaps, the Lyoness racketeers have had more influence on their thoughts than they'd care to admit.

In line with the appeal launched by Plattform Lyoness, the Lyoness Complaint Centre would like to, once again, emphasise the importance of filing your complaints with the appropriate (local) authorities and contacting an independent intermediary for advice. Also, tell your story and spread the truth!

The Lyoness Complaint Centre can be contacted using the comment section below. Please, indicate whether the content is intended to be published or not. Contact details will never be disclosed or published.

The Austrian Mafia 8: Lyoness sues attorney Eric Breiteneder

After the (partial) 'success' of Lyoness' civil suits against the founders of Plattform Lyoness, through which it forced Plattform Lyoness to change the name of its domain and remove legal documents from its website, Lyoness seeks to employ the same strategy to fight off other regular critics with the same means.

The Austrian newspaper Kurier reported that Lyoness has started legal proceedings against Eric Breiteneder, attorney at law. As most readers of this Blog know, Breiteneder is the main legal opponent of Lyoness in Austria, is representing about 220 Lyoness victims in their struggle for financial retribution, and has won most court cases for his clients - and has thus succeeded in getting their money back.

In a complaint to the Austrian attorney association and a civil lawsuit filed in Vienna, Lyoness claims that Breiteneder has organised information meetings to instruct Lyoness victims to lie in front of court, by saying that they did not clearly understand the 'position system' when investing in Lyoness and that they were falsely informed that they could redeem their investment at any point. As everyone knows, these claims are factual.

Another part of the same complaint focuses on a meeting Breiteneder had with a client about three months ago. 'Coincidentally', an attentive listener overheard Breiteneder 'instruct his client to lie in court'. The 'attentive listener' is now testifying on Lyoness' behalf. Although a testimony about an event that transpired more than three months ago may not be considered very reliable by the Austrian judges, Lyoness claims to have tape recordings of the incidents. We find it very surprising that a 'coincidental attentive listener' carries around a tape recorder, just in case.

Of course, Lyoness has no case here. It is completely normal that an attorney instructs clients on what to say in court. Moreover, the instructions given by Breiteneder have a solid foundation in quantifiable evidence. That is more than we can say about Lyoness' absurd claims.

Readers should note that the Austrian Consumer Union (VKI) contests 61 clauses of the Lyoness terms and conditions in court for their vagueness, opaqueness and incomprehensibility. Furthermore, the position system is an obvious pyramid scheme.

Breiteneder himself does not take the matter up lightly, even though he considers the complaint and court case to be mere attempts to silence and get rid of a nasty opponent. Breiteneder is at the moment active in more than twenty court cases against Lyoness. This seems a lot like 'revenge'.


"This is strong stuff. It brings a new dimension to the debate if a party starts spying on lawyers in private conversation with clients.[...] If I can not recommend a client, as provides his facts to the court, then the concept of legal advice falls apart."

Lyoness has issued a press release in which Mathias Vorbach, Lyoness' spokesman, explains the 'company's' new strategy:


"Suspecting him of continuously influencing court testimonies, Lyoness Europe AG took legal action against attorney Eric Breiteneder in Vienna this week. Moreover, the facts have been submitted to the attorney association in request of disciplinary action against him. Lyoness has entrusted the Viennese law firm Gheneff, Rami and Sommer to protect its interests. 

Lyoness accuses Breiteneder of recruiting plaintiffs among the Lyoness participants that attend the information meetings he organises and persuading these plaintiffs to lie in court in order to provide Breiteneder with the verdict he is after. As evidence to support these complaints, the court has been provided with tape recordings of an example of Breiteneder's attempts to influence a plaintiff in April. In this case, Breiteneder cannot hide behind calling our recording 'spying on a confidential client conversation', as the media are now referring to this evidence - these were publicly advertised and accessible events. 

"After two independent injunctions have strengthened the legal position of Lyoness, we now take action against the strategy to produce complaints using - in our opinion - illegal activities", says spokesman Mathias Vorbach. "For a long time, we have suspected that all this false information was deliberately disseminated. Now, it's time to put an end to that and inform the public about it."    


So, what should one make of these developments? Are these proceedings and complaints a simple act of panic? Of course, it would not be the first time that Lyoness seems to act out of panic. Earlier, Lyoness flew Werner Kaiser (officially second in command at the headquarters in Switzerland/Austria) to London to calm down worried investors. In Australia, a similar meeting was held. Most recently, Freidl summoned his most faithful believers and extensively 'trained' them for 10 days in Austria.

Another, more probable option is that the Lyoness racketeers are busy setting up their new scam(s) and in the mean time, while transferring the assets to shell corporations owned by various jackstraws, want to prevent being financially drained by losing court cases and repaying its investors. It is also possible Lyoness wants to keep their investors around until the whole charade finally goes down the drain, and they will be offered to redeem their losses through a new, similar racket. In order to pull that off, Lyoness needs to keep up a strong attitude to preserve some of its rapidly tainting reputation.

On a similar note, we are very curious to find out what happened to Dr Peter Hauser, attorney of Bernhard Wagner (former managing director of Lyoness Bulgaria), who provided very intelligent and informed views on the Lyoness racket in the ORF Report episode on Lyoness. The website of his (former?) law firm HHS Law seems down and nearly nothing can be found about Dr Hauser on the internet anymore. If anyone knows anything about this, please contact us through the comment section of this Blog or through Twitter; @antilyoness.

Lyoness' unlimited growth potential

Anyone (formerly) involved with Lyoness or familiar with its propaganda has probably heard the bogus argument used by Lyoness to guarantee its investors that investing in Lyoness will bring 'unlimited benefits' for life (i.e. 'a passive income'): Lyoness will always grow, because it is based on 'the power of never-ending consumption'.

This claim is of course easily contestable, as Lyoness is in no way based on consumption (only 10% of the members ever used one of Lyoness' discount options, 99.7% of the Lyoness turnover derives from down-payments, not shopping, and the average member saves up a few euros per year). Instead, the Lyoness 'business model' runs on an 'endless' chain of new investors and investments, in order to pay off earlier investors. Such a chain is inherently finite.

The same argument has been used by Lyoness to deceive its investors into believing that Lyoness will continue to grow and that we are 'just in the beginning'. Over time, a Utopian world will develop in which everyone shops through Lyoness and every single self-respecting company or shop owner will be connected to the Lyoness network. In countries where Lyoness is just starting out, the Lyoness promoters point at Austria and Eastern Europe to show how much the local network is expected to grow within the first few years (of course, forgetting to mention that the growth rate inherently and drastically declines afterwards). However, another country where Lyoness started out early, and where most of its corporate structures are registered - Switzerland - is often omitted from the discussion.

This is not without a reason. Earlier, this Blog has reported that Lyoness is effectively-bankrupt and that particularly in Switzerland, Lyoness seems to be decreasing in size, rather than growing. Also, from the very start in Switzerland, Swiss media have extensively reported on the Lyoness racket and denoted its 'business model' as a pyramid scheme. Consequentially, important 'partners' decided to publicly distance themselves from Lyoness and explain that they were unaware of their apparent ties to this scam.

Today, at the Ktipp forum, an interesting text was published by a commentator going by the alias 'PonziCharles'. In response to a Lyoness promoter claiming that Lyoness 'thrives in Switzerland', he discusses that although Lyoness is active for quite a while now in Switzerland, very few companies accept the Lyoness membership as a reason for giving out a discount.

In Zurich, Switzerland's largest city with 400,000 inhabitants and 38,000 registered companies, 40 merchants are part of the Lyoness network (roughly 0.1%). Geneva, the second largest city with 200,000 inhabitants - 9 registered merchants. Basel, number 3 in the list, 180,000 inhabitants, 8 merchants. Number 4, Lausanne, 140,000 inhabitants - 6 merchants.

Not very impressive, now is it?

FAQ #3: Is Lyoness a pyramid scheme or a Ponzi scheme?

Question: is Lyoness a pyramid scheme or a Ponzi scheme?

Short answer: Lyoness operates both pyramid and Ponzi schemes.

Long answer:

All around the internet, there seems to be a lot of confusion about the difference between a pyramid and a Ponzi scheme - and a straight answer is almost never provided. Recently, for instance, we read the contribution of a fellow-commentator who stated that although the Lyoness business model could be called a 'pyramid scheme', it wasn't too bad, for it was not a 'Ponzi scheme'.

Thus, obviously, such confusion can have negative repercussions for the general understanding of the Lyoness racket, as well as of the numerous comparable scams that are present in our contemporary society.

Although we feel that we have already largely addressed this issue in our earlier FAQ post 'Is Lyoness a scam?', we still get many visitors through the search term 'Lyoness pyramid ponzi'. To avoid all confusion, we would like to provide our take on the matter, hoping to clear up a few things.

First, it should be noted that pyramid schemes and Ponzi schemes are not very different from each other. In fact, English author David Brear years ago coined the term 'closed-market swindle' to accurately deconstruct every type of pyramid and Ponzi swindle available to us. Indeed, pyramid schemes and Ponzi schemes share as the most important common denominator a near absence of external revenue. In other words, the only money that can possibly come out of such a scheme, is the money that came in earlier. The (near) absence of external revenue makes it impossible for everyone to gain from the scheme. Only a fixed amount of 'investors' or 'participants' can actually make more than they have put into the scheme, as there is simply not more money available. David Brear, in response to our earlier FAQ post, shared a very insightful (copyrighted) analogy:

"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."

Then why distinguish between a pyramid and a Ponzi scheme? Basically, this is just a technical difference, meant to indicate how the scam was played out. The term 'pyramid' is used to indicate that the scheme revolves around 'geometric progression', i.e. that in order for someone to make some money, there will always be more investors or investments needed. When visually represented, this leads to a pyramid shape. However, the same concept applies to Ponzi schemes, in which additional investments are also needed to keep the scheme going.

The term 'Ponzi scheme' derived from the famous Italian-American racketeer Charles Ponzi. He founded the 'Securities and Exchange Company', through which he promised investors to double their investments within 90 days by buying cheap stamps in Europe and exchanging them for more valuable US stamps. Although his idea would work in theory - if it weren't for all the red tape he had to cut through - it would never render enough revenue to pay off all his investors. Therefore, Ponzi gave up on his 'golden idea', and instead started paying off his earlier investors with the money brought in by new investors - the 'Ponzi scheme' was born.

Inevitably, such a scheme collapses as soon as it runs out of (enough) new investments. Key to the concept of a Ponzi scheme is that (nearly) all investors in the scheme are kept in the dark about the true functioning of the scheme - i.e. no-one is told that their profits derive from the investments made by later-joining investors. Nevertheless, the high returns in the beginning of the period in which the scheme runs, make early investors honestly recommend the scheme to their acquaintances as a great way to make some extra money. Consequentially, the 'recruits', who trust their friend/relative who recommends this great opportunity to them, invest too, and thus the scam expands. This expansion is thus mostly based on word of mouth advertising.

Other racketeers sought to exploit this concept, and capitalised the concept of word of mouth advertising by telling their investors that it is key to their own financial benefit that they recruit new investors into the scheme. This type of scam is commonly referred to as a pyramid scheme, although there are some languages, like German, in which it is called a 'pyramid game'. The 'game' part of this term refers to the emphasis on the recruitment of new investors by the existing investors, which technically gives the victims an opportunity to determine whether they become one of the very few winners or one of the many many losers. This of course does not change the fact that market saturation considerably decreases the chances of later-joining investors to find enough new recruits to benefit from the scheme.

Note that the business model remains largely similar, and that much like Ponzi's tale of the lucrative stamp exchange, the racketeers leading the pyramid scheme will also work up an excuse (or disguise) to hide that the only revenue present in the scheme derives from the investments of participants. (In the case of Lyoness, this would be the effectively valueless shopping community). Yet, it is at all times clear to the participants that if they want to make a lot of money, they will need to recruit others into scheme.

As mentioned, Lyoness operates both pyramid and Ponzi schemes. The pyramid scheme is called the 'position' system, in which acquired positions increase in value when more acquired positions enter the system. Additionally, the amount of brought in investors (measured in the amount of positions they acquired) determines how high the monthly system commission paid to the initial investor is. The more investments brought in, the higher the commission.

The Ponzi schemes are disguised as advertising campaigns, from which high returns can be expected due to the expansion of the company in the countries where these campaigns are organised, which flow into the company and then back to the investors. This has not happened, and it has been reported that only a small part of the invested sum for these campaigns has actually been spent on the advertising campaigns. The rest of the money has been used to pay off earlier investors and to subsidise the extravagant lifestyle of the Lyoness instigators. The same goes for the 'option trading' schemes set up by Lyoness. Both the advertising campaigns and the option trading schemes were organised - obviously - without issuing a financial prospectus. This had led the Commercial Court of Vienna to conclude on several occasions that these investments should be refunded by Lyoness.

Both the pyramid scheme and the Ponzi schemes were of course masked by the redundant 'international and cross sectoral' shopping community that Lyoness claims to make its money with.

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Found this helpful? Please return the favour and help us spread our message!

Should you have any further questions, please don't hesitate to contact us through the comment section below.

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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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Update: Helpful links - others on Lyoness

Readers of this blog should be aware that this blog is by far not the only medium concerned with the pernicious nature of the Lyoness pyramid scam. Several other noteworthy sources report regularly on current developments in the Lyoness case.

Several very interesting articles have been written by English author and income opportunity fraud expert David Brear, on his blog www.mlmtheamericandreammadenightmare.blogspot.com. These articles can be found mainly in the latter months of 2012 (September and so forth).

A well-structured article has also been published on: http://randominternetthings.blogspot.com/2012/07/lyoness-are-they-scam.html.

In many countries, consumer forums have picked up on the devious nature of Lyoness' pyramid scheme. These are the ones the Lyoness Complaint Centre has found.

If our readers have any additional recommendations, please inform us through the comment section of this blog.

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*Note that this blog does offer the opportunity to translate the articles published here into nearly any language through the Google Translate function in the top left corner of your screen. These are automated translations and their quality heavily varies. We do not accept responsibility for translation errors occurring due to the use of this tool.*
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For German-speaking readers:

http://www.verbraucherrunde.net/lyoness-serioes-oder-nicht-t290-9555.html

http://www.plattform-lyoness-geschaedigte.at

http://www.ktipp.ch/artikel/d/lyoness-fragwuerdige-einkaufsgemeinschaft/

http://de.wikipedia.org/wiki/Lyoness

http://www.dailymotion.com/video/x108ijj_lyoness-orf-report-english-subs_news

http://questions-lyoness.weebly.com/deutsch.html

For English-speaking readers:

http://www.boards.ie/vbulletin/showthread.php?t=2056528522

http://forums.whirlpool.net.au/archive/2004861

http://www.englishforum.ch/business-entrepreneur/101705-lyoness-cash-back-card-system.html

http://lyonless.ch/

http://en.wikipedia.org/wiki/Lyoness

http://www.dailymotion.com/video/x108ijj_lyoness-orf-report-english-subs_news

http://questions-lyoness.weebly.com/english.html

http://vimeo.com/66318039

For Polish-speaking readers:

http://antylyoness.blox.pl/2013/04/Nie-sposob-zrozumiec-jak-dziala-Lyoness.html

http://www.goldenline.pl/forum/3098438/nie-polecam-mlm/s/205

For Danish-speaking readers:

http://www.amino.dk/forums/t/164220.aspx?PageIndex=2

http://www.pokernet.dk/forum/lyoness-pyramidespil.html

For Swedish-speaking readers:

https://www.flashback.org/t1574199p51

http://sv.wikipedia.org/wiki/Lyoness

For Greek-speaking readers:

http://www.insomnia.gr/topic/454424-lyoness-%CE%BA%CE%B1%CE%B9-%CF%84%CE%B9-%CF%80%CE%B1%CE%B9%CE%B6%CE%B5%CE%B9/

For French-speaking readers:

http://questions-lyoness.weebly.com/

http://forum.quechoisir.org/lyoness-t1721.html

For Serbian-speaking readers:

http://www.dailymotion.com/video/x108ijj_lyoness-orf-report-english-subs_news

For Norwegian-speaking readers:

http://freak.no/forum/showthread.php?t=243699

http://forum.hegnar.no/thread.asp?id=2106880

For Dutch-speaking readers:

https://forum.www.trosradar.nl/viewtopic.php?f=29&t=81741&sid=15f1dc23e4c1ddf1ee2f4e030d46a7e5&start=680

http://308518.forumromanum.com/member/forum/entry_ubb.user_308518.1128207384.1106692569.1106692569.2.lyoness_nederland_belgie-uitmuntend.html

For Italian-speaking readers:

http://www.dailymotion.com/video/x108ijj_lyoness-orf-report-english-subs_news

http://forum.alfemminile.com/forum/f663/__f4656_f663-Attenzione-a-lyoness-solita-bufala.html

For Hungarian-speaking readers:

http://lapforum.lap.hu/topic/20577-lyoness/

For Croatian-speaking readers:

http://www.forum.hr/showthread.php?t=698194&page=24

Traditional media sources:

Suspicions of Lyoness operating an illegal pyramid scheme have been reported in traditional media souces for quite some time already, particularly in Austria and Switzerland. However, the articles published there have become considerably more concrete as the amount of evidence has grown and the number of victims has increased. These are some of the media sources one could check to remain updated on the situation concerning Lyoness:

http://www.kleinezeitung.at
http://www.wirtschaftsblatt.at
http://www.format.at
http://www.beobachter.ch
http://www.kurier.at
http://www.wienerzeitung.at
http://www.handelszeitung.ch
http://www.derstandard.at
http://www.orf.at


Experts on Lyoness:

Eric Breiteneder is an attorney who has dedicated most of his time in recent years to the fight against Lyoness. Several victims have successfully gotten their money back through his services. Additionally, he publicly warns people against Lyoness and assists the Austrian authorities and media with their investigations into Lyoness. His personal website is: http://www.breiteneder.pro/lyoness

Karl Hengstberger and Peter Hauser (also an attorney) have investigated Lyoness as well.

A full list of Austrian and Swiss attorneys with knowledge of the Lyoness dossier can be found here.

Update: David Brear on Lyoness

English author David Brear’s [unchallenged], copyrighted study of [Lyoness] concludes that: 'Lyoness is an unoriginal, blame-the-victim, cultic racket comprising a dissimulated closed-market swindle and various, related, advance fee frauds’ (Wikipedia).

---

"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)"

---

Austrian Ministers refuse to identify what lurks behind the 'Lyoness' lie (July 2013)


'Scientology, Lyoness, Herbalife, Nutrilite, Amway,' the same lie, but with different authors and titles (June 2013)


The 'Lyoness' people's business lie, is an adaptation of another big lie (June 2013)


The 'Lyoness' racket is still hiding in plain view (June 2013)


'Lyoness' core-adherents believe they are part of a Master Race (June 2013)


Deluded Giulia is certain Warren Buffett believes in 'Lyoness' (May 2013)


Victims of the Lyoness lie - contact 'Quality Austria'! (May 2013)


The absurd 'Lyoness' propaganda is strangely familiar (December 2012)


'Lyoness' racketeers foolishly attempt to silence 'MLM The American Dream Made Nightmare' (November 2012)


No matter how much you believe in the 'Lyoness' Utopia, you can never achieve it (October 2012)


Hubert Freidl and Jimmy Savile, criminals hidden behind philanthropy (October 2012)


The 'Lyoness' lie is an 'Amway' copycat, complete with its own Lady Haw-Haw (October 2012)


'Lyoness' has exhibited the universal identifying characteristics of a cult (September 2012)


'Lyoness' is a lie and Hubert Freidl is its author (September 2012)