Lyoness, the LOYALTY card shopping company, has won a court case against a governmental consumer watchdog group in Australia, which accused the company of operating a pyramid scheme.
23 October 2015
Lyoness welcomes court dismissal of ACCC pyramid scheme case
Lyoness, the international customer shopping network, welcomes the decision today of the Federal Court of Australia dismissing the claims of the Australian Competition and Consumer Commission (ACCC) that the Lyoness Loyalty Program was a pyramid scheme and involved unlawful referral selling.
Lyoness has at all times denied the allegations and defended the Court proceedings.
“Lyoness welcomes the judgement. At every stage we have wholly rejected the allegations raised by the ACCC,” said James O’Sullivan, Lyoness Managing Director for Australia.
“As a company, Lyoness is committed to compliance with consumer laws in every country we operate in”.
“We look forward to continuing to provide a great shopping and loyalty experience for our members and merchants,” James concluded.
Lyoness thanks its members and merchants for their continuing support.
But wait there is more…
The official statement from the Australian Competition & Consumer Commission:
23 October 2015
The Federal Court has found that a loyalty program operated by Lyoness Australia Pty Ltd does not contravene the pyramid and referral selling provisions of the Australian Consumer Law (ACL), following action by the Australian Competition and Consumer Commission.
The Lyoness program includes the ability for members to earn various rebates and bonuses from shopping. It also includes ways for consumers to earn bonuses if they introduce new members who also shop or make down payments on future shopping.
Whilst cash back offers themselves are not prohibited by the ACL the ACCC alleged that the Lyoness scheme also offers commissions to members who recruit new members who make a down payment on future shopping.
The Federal Court found that: “there can be no doubting the fact that inducements were held out to prospective Members that they would ultimately receive “financial benefits” other than the discounts they received on purchases made from Loyalty Merchants”.
However, the Court found that any entitlement to receive a benefit was occasioned – not by the introduction of the new Members – but from the pursuit of shopping activity by those new Members and the shopping activities of further new Members who, in turn, may have been introduced by such new Members. The ACCC also failed to establish that persons could become Members only by making down payments.
The Court made similar findings about “referral selling” conduct.
Justice Flick noted: “The manner in which pyramid selling schemes operate…is ‘complex and elusive.’ The present Lyoness Loyalty Program is no exception”.
ACCC Chairman Rod Sims said: The judgment echoed some of the concerns the ACCC had with the scheme, in particular its complexity and the inducements that were held to prospective members”.
“The ACCC will continue to investigate schemes that encourage consumers to recruit new members. We will take action where appropriate to ensure consumers are not drawn into schemes where the financial benefits held out to induce potential members to join up rely substantially on the recruitment of further new members into the scheme,” Mr Sims said.
The ACCC is carefully considering the judgment.
Pyramid schemes involve new participants providing a financial or other benefit to other existing participants in the scheme. New participants are induced to join substantially by the prospect that they will be entitled to benefits relating to the recruitment of further new participants.
Pyramid schemes may also offer products or services, but making money out of recruitment is their main aim, and often the only way for a member to recover any money is to convince other people to join up. In contrast, people in legitimate multi-level marketing schemes earn money by selling genuine products to consumers, not from the recruiting process.
Media team – 1300 138 917
Many times we can look at governmental actions and if we have experienced some form of failure or break in a promise we believe was said to us, we can judge a person or company guilty before a judge rules on the facts and evidence.
I know in the past, I have judged harshly people and companies prior to getting all the facts.
We should all be careful to gather all the facts prior to casting judgement prematurely.