Lyoness America Responds To Accusations Of Violations To Ponzi, Pyramid, Business Opportunity and Security Regulations: Pt. 3

This is the third and last installment of the Lyoness America response to the allegations we first published July 22nd, 2013, and the second installment dated September 25th, 2013. In the first two Lyoness America went into detail to show where the writer of the allegations used deceptive tactics to deceive those who might have read his allegations. In today’s response they continue to share facts that seem to dispute all the Ponzi, Pyramid and Securities violation allegations.

6. Lyoness has a Volume Bonus that is paid based on rank achieved by have various quantities of profit centers sold. This should be a blatant pyramid law violation.

Lyoness Cashback - Money Back With Every Purchase - Lyoness US

No Profit Centers exist and therefore cannot be “sold.” No Units are “sold.” The writer either misunderstands or intentionally misrepresents these and many, many other aspects of the Lyoness Compensation Plan and is so careless with terms, amounts, accounting practices, regulatory law, and the well-established, long-understood differences between legitimate direct selling and illegitimate schemes, one wonders whether his/her motive was to investigate or to persecute. As we have previously and repeatedly stated, Units are generated only by shopping. At Lyoness, Members are not selling, but rather shopping. Members are not authorized to sell anything. Members do not even sell Memberships; rather they refer individuals to Lyoness to join as Members for free! If that referred individual joins, then he becomes a Member within the shopping community of the referring Member. But, the activity that generates compensation for Members is not selling, but rather consumers shopping at Loyalty Merchants (retailers that belong to the Lyoness network).

If Members shop, they earn rebates and other benefits. If no shopping occurs, then no compensation is earned. Units are generated in direct ratio to retail shopping. Units are not an abstract accounting practice (like a “profit center” may be) but represent a dollar amount of retail sales. Profit Centers may be likened to a column in an Excel spread sheet, whereas Units represent the dollars accounted for by those columns. So, to refer to “Units” as “Profit Centers” is not only confusing (and it certainly has confused the author) but it is also grossly inaccurate and misleading. Units are generated by retail shopping—online, onsite at SMEs, through Gift Card Orders, etc.

7. Commissions are paid in the binary matrixes based on the balanced sales volumes in the matrix. The company told me these sales were based on retail gift cards and on-line sales. After a couple months of review it became apparent that this is not so in the United States region. A review of Lyoness accounting records will review that the binary commissions are primarily generated by the sale of the profit centers. The required gift card purchases also generate some of these commissions, but less so. A third source of commissions come from the fact that Lyoness pays a portion of commissions earned into a purchase account, which forces distributors to use those funds for purchasing more profit centers, gift card or online shopping. A review of Lyoness America records will demonstrate the vast majority of all purchases are done by distributors to generate commissions. There are very little retail sales outside of the Sales Force. This should be a blatant pyramid law violation.

This is entirely untrue. This person is using words and terminology that do not exist in the Lyoness literature or other communications. We do not use or refer to such terms as “matrix” or “binary commissions” or “profit centers.” Again and again our accuser fabricates information he is unable to put into evidence, pretending to know the outcome of “A review of Lyoness accounting records” he has not made so as not to accept the real responsibility of supporting unsupportable charges. Whereas any accounting program may be accused of being “complex,” the fundamentals on which the Lyoness economy is based is quite simple: If a Member shops for items he regularly needs through the Lyoness network of third-party retailers, and that Member refers other Members to join Lyoness who, in turn, shop for their everyday needs within the Lyoness network of third-party retailers, then both Members will earn compensation that derives from their retail shopping activities, namely shopping rebates. Lyoness is basically about the power of shopping in an organized community and solidarity through shopping. Member shopping includes, among other things, paying for manicures, haircuts, and meals at a sushi restaurant at participating Lyoness retailers.

8. Distributors must sponsor a minimum of four (4) distributors to earn their uni-level, matching, Volume Bonuses and the cycle commissions in the binary structures. The rest of their sales force may be built by those they sponsor. This is common and traditional in direct sales. However, distributors are encouraged to purchase $3,000 of profit centers in their home region of USA in order to entitle them to purchase profit centers in the Brazil and Asian markets.

a. As Premium distributors in USA, distributors can purchase up to another $3,000 of profit centers in Brazil, but is also required to purchase another $600 of cards. They are told that the company, Brazilians and the rest of the world will fill the Brazilian binary matrix for them and create a passive income return for their investment. This should be a blatant pyramid law and FTC and state business opportunity violation, as well as a passive income violates the SEC regulations.

b. In USA Premium distributors can purchase up to another $10,800 of profit center in the Asian market, but is also required to purchased another (25%) of cards. That is up to $2,700 for gift cards required. They are told that the company, Asians and the rest of the world will fill the Asian binary matrix for them and create a passive income return for their investment. This should be a blatant pyramid law and FTC and state business opportunity violation, as well as a passive income violates SEC regulations.

c. In addition, USA premium distributors are allowed to make up to $10,800 of profit center purchases (which company claims to be down payments of future shopping that the distributors never do) three (3) times for a total of $32,400 with a total of $8,100 of required gift card purchases. The distributors have been told they will earn a passive income of almost $1,200,000 from doing this from the original profit centers they receive plus more from free future bonus profit cycles. They have been told it will take two to seven years and the faster they invest the faster the return will occur. This will require a large number of participate to accomplish and thus raise the question of a Ponzi scheme in addition to the pyramid, business opportunity and SEC violation.

Lyoness does offer its US Members the opportunity to expand into other international markets in which Lyoness operates. However, as we have evidenced repeatedly in our previous responses to the writer’s inaccurate and mistaken accusations and conclusions the details in (a), (b), and (c) are grossly inaccurate and provide an incomplete and profoundly misleading description of the National and Continental program.

One of the ways Loyalty Benefits may be exercised is to transfer them to programs in other countries. This is akin to “international expansion” permitted by other direct selling companies. Money is earned through retail sales generated through referrals, sponsoring, and supervision of Member networks making retail purchases through the Lyoness Loyalty Merchant Network. Lyoness securities counsel advises that neither our National nor Continental accounting programs violate securities laws because, among other reasons, “to be successful Members must be pro-active and rely substantially on their own efforts by enrolling new members who shop and generate shopping volumes through the Lyoness Loyalty Merchant network, but also by shopping and generating shopping volumes themselves within the Lyoness Loyalty Merchant network.” In fact, if a Member does not first achieve Career Level 1 through the accumulation of sales volume, then he/she is not even eligible to participate in a national or continental accounting program.

9. There are a total of 5 binary matrixes in each market called AC1 through AC5. In each consecutive matrix you earn higher and higher commissions based on a cycle volume requirement. There is a cap on the number of cycles each profit center can earn in each matrix. Once all the cycle commissions are paid;

a. A large buy out bonus is made.

b. You receive a free bonus profit center in the next higher matrix (AC).

c. You receive four (4) more free bonus profit centers (AU’s) in the current matrix (AC) that was paid out. This means that all of your AC1 profit centers will generate 24 more free profit centers. Premium members start with 13 profit centers. That means those will generate hundreds of new profit centers and when those are completed, they will generate thousands of more free profit centers. In addition, distributors are able to purchase two more profit centers for each free bonus center plus can earn even more free profit centers with the 2% cash back program. With tens of thousands of distributors active already, there are probably 100,000’s if not millions of profit centers that will generate in theory billions of more. Of course the growth in the number of distributors joining and purchasing profit centers accelerate this further. This exponential growth In the number of profit centers creates a definite Ponzi scheme scenario.

First the author alleges the Lyoness compensation plan is a “binary.” Then the author describes it as a “uni-level.” Now the author claims it is a “matrix.” Regardless of how the author chooses to mischaracterize the Lyoness plan, our compensation model does not include “buy-outs.” All commissions, bonuses, cash-back, loyalty awards, and units are awarded as a result of retail purchase volume generated by shopping. Therefore, what the author calls a “free bonus center” is in fact a Unit awarded as a result of cumulative retail shopping. This is also true of ALL the Units (what he calls “profit centers”) to which the author refers.

The way the author describes the growth potential of the Lyoness program does not reflect anything we are aware of actually being presented and has no basis in truth or fact.

In reality, there are five (5) different Accounting Categories, which the writer consistently and erroneously calls “profit centers” or “binary matrixes.” At some point an objective reviewer wonders: how is it possible to get so many things wrong and still to be taken seriously.

It is true that the higher Accounting Categories provide higher levels of compensation, because higher sales volumes are required to produce higher Accounting Categories!

Once an Accounting Unit is created, it is booked into the Lyoness Accounting Program. The Accounting Program tabulates and tracks a Member’s Accounting Units, which, in turn, is a way to tabulate and track shopping activity and the Lyoness benefits that the shopping generates. The Lyoness Program calculates Loyalty Cash, Loyalty Credits, Loyalty Commissions, Loyalty Commission Bonuses, Bonus Units, Category Rebooking, Volume Commission and Volume Bonuses, all of which are forms of benefit or compensation available through the Lyoness Compensation Plan. Each Accounting Unit in the Accounting Program may have no more than two (2) other Accounting Units linked to it directly, which is perhaps why the author characterizes it as “binary.” An Accounting Program is organized into five (5) categories. Once a Member completes a category, Accounting Units automatically move up the program to the next Accounting Category. Advancement is based on referring Members and the resulting shopping at Lyoness retailers.

The author charges that a “large buy out bonus is made,” and then claims that someone can “receive a free bonus profit center in the next higher matrix (AC).” This concludes with: “[Y]ou receive four (4) more free bonus profit centers (AU’s) in the current matrix (AC) that was paid out.” This is an inaccurate description on how our program operates. The “Lyoness Benefits” Members can earn are listed and described below:

Summary of Key Lyoness Benefits:

1. Cashback: Members receive a 1% or 2% cash rebate called Cashback credited to their Lyoness cash account on all personal purchases made within the Lyoness Loyalty Merchant network. Upon earning $10 in rebates, the money is then transferred by ACH to the Member’s personal bank account.

2. Friendship Bonus (Cash): Cash money paid to Members earned from the shopping activity of direct or indirect Members that the Member introduced and enrolled in Lyoness. For example, a Member earns a friendship bonus of .5% if any direct or indirect (second level) Member places an order for fully paid Gift Cards or makes any purchase using any other Lyoness shopping method. Members can receive a “Friendship Bonus” of 0.5% when any of the individuals they refer to Lyoness shop within the Lyoness Loyalty Merchant network, or the people they refer to Lyoness shop within the Lyoness Loyalty Merchant network.

3. Loyalty Cash: When a Member’s Loyalty Account accumulates $75 from shopping rebates the member earns an Accounting Unit. The Accounting Unit is booked in the Lyoness Accounting Program. After a Member meets certain milestones and has 70

Accounting Units in the first Accounting Category (35 above and 35 below) following an Accounting Unit created from shopping, then the Lyoness program pays the Member Loyalty Cash. There are five (5) Accounting Categories as described below. Only Accounting Units from shopping can generate Loyalty Cash, and Accounting Units that are generated from down payments once matured cannot generate Loyalty Cash for a Member. The term “mature” or “maturity” means, in the Lyoness terminology, that an Accounting Unit has additional Accounting Units following it down stream, specifically 35 above and 35 below in the first category of the Accounting Program. Loyalty Cash is hard money first deposited into a Member’s Lyoness cash account and then paid or transferred via ACH to a Member’s bank account.

4. Loyalt y Cre d it (“Sh opping Cre d it”): Earned once a unit generated from a partially paid Gift Card order has a certain number of units following it downstream which are generated by the Member and Member’s lifelines (including partially paid Gift Card orders). Specifically, once a total of 70 Accounting Units are created in the first category of the Accounting Program and follow from an initial Accounting Unit generated from a partially paid Gift Card order, then the Member earns Loyalty Credit in the sum of $675.00. This Loyalty Credit is issued to the Member and can be spent by shopping at gift card merchants within the Lyoness network of retailers. It is never a cash payment and can only be enjoyed or used as a shopping credit. Each of the five Lyoness Accounting categories has its own corresponding Loyalty Credit amount that a Member can earn through shopping and enrolling new Members.

Only Independent Business Representatives (“IBR”) are eligible to receive the next six (6) benefits (5 through 10) of the compensation plan:

5. Loyalty Commission (Cash): Earned by an IBR who enrolled four Members in Lyoness who in turn each created an Accounting Unit, which tracks those Members’ shopping volume and rebates accumulated. Once $75 worth of Lyoness Benefits are earned, an Accounting Unit is created. An Accounting Unit is a device that tracks and plots shopping activity. Members qualify to earn Loyalty Commissions once a Member has become an IBR by having enrolled four (4) direct Members in their lifeline and each such Member has accumulated at least one Accounting Unit. Loyalty Commission is paid out to an IBR on a gradual basis based on five (5) Accounting Categories. The amount of Loyalty Commission to be paid to the IBR is determined by the accumulation of Accounting Units (shopping volume). In sum, as Members in a lifeline spend money within the Lyoness network through shopping, the IBR earns a commission. Loyalty Commissions are actual hard currency cash payments that are first deposited into an IBR’s cash account and then paid via ACH into an IBR’s bank account after a certain period of time. An IBR must enroll a minimum of four (4) Members who in turn each created an Accounting Unit by shopping in order to participate in the Loyalty Commission Cash component of the Compensation Plan.

6. Loyalty Commission Bonus (Cash): An IBR earns an 18.75% bonus on a direct IBR’s loyalty commission and earns a 6.25% bonus from an indirect IBR’s loyalty commissions. A requirement to earning this benefit is that a Member must be an IBR who has at least four (4) direct Members (a “lifeline”) who in turn each have one (1) Accounting Unit. An IBR can only earn a Loyalty Commission Bonus if their lifeline Members earns Loyalty Commissions. Loyalty Commission Bonus payments are actual hard currency cash payments that are first deposited into an IBR’s Lyoness cash account and then paid via ACH to an IBR’s bank account after a certain period of time.

7. Bonus Units (Non-Cash): As Accounting Units follow above and below any of the Accounting Units created by an IBR or any of the direct, indirect or “in-in direct” Members in their entire lifeline, Bonus Units are created within the program at certain steps and are booked into a Member’s Accounting Program. Bonus Units do not pay Loyalty Cash or Loyalty Credit. Instead, Bonus Units pay Loyalty Commissions and Loyalty Commission Bonuses on Loyalty Commissions. In addition, Bonus Units are rebooked into the next Accounting Category and, in turn, create more Bonus Units. Bonus units are free or courtesy Accounting Units that Lyoness gives an IBR who has generated a certain number of Accounting Units in his Accounting Program. Bonus Units also help an IBR add up to 70 Accounting Units, but Bonus Units themselves will never pay Loyalty Cash or Loyalty Credit.

8. Category Rebooking (Non-Cash): Upon completion of an Accounting Unit in an accounting category (payment of either Loyalty Cash or Loyalty Credit), an Accounting Unit will be rebooked as an Accounting Unit within the next higher Accounting Category and will become eligible for Loyalty Commission, Loyalty Commission Bonus, Bonus Units, and further Category Rebooking. This is what allows a Member to advance within the five Lyoness Accounting Categories.

9. Volume Commission (Cash): Cash money that Lyoness pays out to an IBR under certain milestones that are met. Volume Commissions are earned by an IBR and is a volume-based program having eight (8) different Career Levels. Each Career Level requires a minimum amount of new shopping volume per month. Once the requirement is fulfilled by the IBR, the IBR is paid a Volume Commission. Failure to reach a Career Level once within six (6) months will result in being dropped down to the lower level that has been reached. A Member can “perfect” a Career Level by locking in a Career Level whereby if he does not meet production requirements he will not drop down to lower levels. Volume Commissions are actual hard currency cash payments that are also first deposited into an IBR’s Lyoness cash account and then paid on a monthly basis via ACH to an IBR Member’s bank account.

10. Volume Bonus (Cash): Hard cash paid at the confirmation of each Career Level once the IBR accumulates the required Career Points required for each Career Level, but only applies to Career Levels 2 and above. Lyoness will pay a Volume Bonus every month that an IBR confirms a Career Level with the required career points.

Lyoness also has non-income producing benefits, which are referred to as Lyoness “Loyalty Benefits.” Loyalty Benefits cannot be considered income because they cannot be used as cash or as shopping credits. Lyoness does not pay out Loyalty Benefits to Members; rather, the Loyalty Benefits can only be used to generate Accounting Units in an Accounting Program. Lyoness Members can acquire Accounting Units by using Loyalty Benefits that they have earned by shopping in the Lyoness shopping community. A Lyoness Member always earns Loyalty Benefits each time he shops at a Lyoness retailer. For example, in addition to earning a 1% to 2% cash rebate and the Friendship Bonus on two levels, shopping will also provide a Member with Loyalty Benefits, the percentage amount of which depends on the rebate amount contracted between Lyoness and the respective Lyoness retailer. In case of a 10% rebate, 2% is paid out as cash back; 1% is paid as Friendship Bonus and 7% (the Loyalty Benefit) will go towards creation of the next unit. The amount of a Loyalty Benefit changes depending on the total rebate, which can be as little as 1%, or as high as 25%.

Lastly, with regard to the accusation below:

The company has been making every attempt to suppress this information. They have threatened me with law suits and TRO’s. The company is based in Austria. Mario Hoffman, Oria, Mario’s wife and assistant, Dr. Silvio, the company top distributor who launch the USA operations are all believed to be from Austria and could be flight risks.

Lyoness encourages open and frank discussions about its program and overall business. Lyoness welcomes questions and scrutiny, which ultimately help to improve and strengthen the company. But, the anonymous author makes unsupportable accusations designed to mischaracterize our business, our Members. Lyoness has been in business for 10 years and currently operates in over 40 countries. Mario Hoffmann, our CEO, openly works in the Miami office, and is an important part of Lyoness’ leadership and its growth plans in the U.S. Who suspects him of being a “flight risk”? No one but, allegedly, the author, who makes this and many other false charges without evidence or reasonable argument. Over and over the author attempts to incite rather than inform, to vilify rather than describe, and finally enlists one of the last false arguments: Cultural intolerance. He would have us believe it is suspicious just to be Austrian! Naming the wife of an officer (or of any family member) is typical of this kind of hate speech and is contemptible.

Because the accuser has not identified himself, we do not have the opportunity to face him openly in the court of public opinion. Nevertheless, we are happy for public opinion to review our explanations and for fair-minded persons to decide for themselves.

 

Editor’s Note: After the first article was published, the parent company of this website Deep South Companies, Inc. was engaged to work with Lyoness USA on some compliance strategies. http://mlmhelpdesk.com/disclosures-surrender-the-booty/

Safe Harbor Statement

This article includes forward-looking statements on our current expectations and projections about future events. In some cases forward-looking statements can be identified by terminology such as “may,” “should,” “potential,” “continue,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” and similar expressions. These statements are based upon current beliefs, expectations and assumptions and are subject to a number of risks and uncertainties, many of which are difficult to predict. The information in this article is provided only as of the date of this article, and we undertake no obligation to update any forward-looking statements contained in this article based on new information, future events, or otherwise, except as required by law.

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51 thoughts on “Lyoness America Responds To Accusations Of Violations To Ponzi, Pyramid, Business Opportunity and Security Regulations: Pt. 3”

  1. I am a Lyoness member with a small group of shoppers one who just generated 1 Unit from shopping. 1 unit is generated once anyone makes purchases of $1,500.00 through any Lyoness Merchants, Online brick and mortar or through gift card purchases. We have to purchase gas, groceries, clothing, furniture and pay for services. Dental, car repair, remodeling our homes and many other services. Why not go through Lyoness Merchants and receive cash back with every purchase?

  2. I have had a look at the pdf document I found at the scam review site. It must be missing huge parts, i.e. I don’t find the legal logic I expected to find in it (legal logic will normally require some specific parts, and they’re missing in the document).

    1. He’s not analysing “jurisdiction” (e.g. which types of laws).

    2. He’s not analysing the FACTS, (e.g. Lyoness itself and its business model). That part is rather vague, focusing on the shopping part rather than the recruitment parts.

    3. He’s only using ONE legal source, and that source only tells that it is illegal to operate pyramid schemes. It doesn’t have any definitions. It will be impossible for him to draw any conclusions from that single source. That law is from 1997, so Austria should have some new anti pyramid scheme rules from 2009 (the deadline for implementing the EU UCP Directive into other laws).

    4. He’s not using a system to analyse the different legal sources for RELEVANCE (because he’s only using one single outdated source). He should clearly have identified the relevance of that source as a minimum. But that isn’t enough either, because that source didn’t have any definitions. However, that method allowed him to introduce his own definitions. That method simply doesn’t hold water, we can’t use ourselves as “valid legal sources”.

    5. He’s not using any “weight system” to rank the different legal sources (to sort them after their individual importance and relevance).

    He doesn’t need to use all these points, but some of them are really important. Legal opinions from professionals should first of all reflect correctness, e.g. they shouldn’t just pick a single law and assume it’s the correct one (as the only source needed). The facts are important too. If he can’t establish the facts correctly then the rest of the work will make very little sense.

    Legal opinions have very little VALUE if other people can’t check them for correctness. In EU, promotional pyramid rules are part of civil laws, typically Consumer Protection laws. Point #14 in the blacklist is a “Lex Specialis”, but with lower rank than the “parent rules” found inside the UCP Directive. If it has been implemented other places in the system of laws (e.g. “We already have that rule in Criminal law” type of logics), then all the definitions will be found in other places. The expert didn’t identify any other sources.

    My impression is that they have paid for his name and his willingness to write legal opinions that can meet almost all the needs a client has (e.g. for marketing purposes). I have actually done much more than that “expert” in trying to identify it correctly, but I have done it as a layman (I can’t guarantee any correctness, but neither can he).

    BTW, I found a Wikipedia article about Lyoness when I tried to search for information about Austrian laws. It has a lot of information about controversies and legal trouble in Europe, but it might be a little “unbalanced”.

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

    The Wikipedia article will put the idea of “ONE misguided MLM consultant” into context. There’s clearly some misguided people somewhere.

  3. I always find your subjective conclusions humorous.

    First you conclude I have not looked for it. I have reviewed several sites but have yet to find official document finding Hoffmann guilty of a crime.

    I did find a Russian billionaire who got in trouble in a real estate deal with the same name.

    I ask you for help and you make a stupid and unprofessional comment.

    If you care about this issue and want to help folks, then get off your high horse and help.

    It is not your copy and paste I am looking for, it is the actual link to the official document.

    In reviewing your info above, I do not see any reference of an actual shutdown or any civil or criminal proceeding.

    I see the wards “warning”, “according to”, and I see where “appropriate legal proceedings are already pending”, but nowhere do I see what those proceedings are or where to locate them.

    So again if you really care, then let’s work together and provide the official links to the regulatory agency or an article with the link.

  4. You can of course use all the information you want, I won’t claim any “ownership” to anything (e.g. no interest in being cited as a source or anything like that). But I haven’t actually been writing any “scientific report” here, it’s more like an overview for different aspects of the case.

    You clearly have my permission to use what you want, here or anywhere else. I don’t consider comments in a blog to be “intellectual property” for anyone (if it had been, people should have avoided posting it on the internet).

  5. My question about “Which legal recommendations?” was intended to give other readers some understanding of it. That’s what I have been doing most of the time = posting info so other people can understand the case.

    The statement about “Lyoness have followed legal recommendations, and also my personal recommendations” was rather vague. If it is important, you shouldn’t be vague about it. If you only want it to LOOK important, you clearly should be vague.

    I came up with 3 examples for “potential legal recommendations”, and I were specific about them. That’s a much better idea than making vague claims. Vague claims can be identified as vague claims, i.e. they don’t add anything important to the discussion.

    I don’t give any “legal recommendations”, so my personal recommendation to Lyoness will be like this:

    1. Identify the case correctly. It isn’t about one misguided MLM consultant posting false accusations. That strategy has already failed.

    2. Identify the case correctly. People have pointed out specific parts of the compensation plan, specific ideas about recruitment, specific types of laws, and so on and so forth. A vague defense strategy simply won’t work.

    3. Identify the case correctly. It isn’t solely about the legality of the program, it’s also about whether it makes some sense for merchants and consumers, or if they’re participating in something they shouldn’t have joined in the first place. I have pointed out the lack of professionality in the recruitment role, neither merchants nor consumers should recruit other people into recruitment driven income opportunities. They shouldn’t join any of them either, or support them in other ways (except for maybe when they have family and friends involved).

    4. Identify the case correctly. You’re sending out “mixed signals” when you first boldly are posting a 20 pages defense, but are failing to follow it up when it meets “a little resistance”. Most people will manage to score a few points if they have a defense strategy. I have even suggested “fair conditions” methods to make it become easier to score a few points. “Playing dead” will have a different effect = people will eventually lose interest. “He gave his best shot, but that was all”.

    5. Identify the case correctly. Internet isn’t a local phenomena in the US. A weak defense strategy in the US can potentially affect other markets. I have clearly involved more than the US. Someone higher up in the organization may have the right to be informed and the right to make decisions. When something is posted on the internet, other people will typically find it sooner or later.

    In short, my recommendation is “identify the case correctly”. I only gave examples, “correctly” may be about something I haven’t seen. I haven’t analysed each and every detail in the down payment or how it has worked in other countries.

  6. I fully agree that Arbitration mainly benefits the company. However, it is also the most inexpensive way for the distributor. I HATE arbitration, yet it is also in each of my agreements.

    We are on the same page on the issue of arbitration and lawsuits. I thought I was clear that in most cases arbitration is the best way for distributors because lawsuits are expensive.

    But, since each side has a representative, and a 3rd is chosen by both sides in most cases, it ia fair manner to get results.

    By the way while we are at it. Can you provide the official documentation where Mario was convicted, that will allow me to ask some additional info of him?

  7. Not Selectively at all. I am not answering a boatload of Morton’s comments, because as I wrote before he added some great info, that I wanted to use his stuff in an upcoming series of articles. 🙂 Hope that clears that up!

    I know you are waiting for answers to the above questions. And yes, that is one area I will be covering. Instead of it getting lost in a thread of comments, I would rather it be in the body of the article.

    Although Lyoness is a client and this is important, they are not the only client, and I will get back to this ASAP!

  8. Troy,
    You seem to be selectively answering some questions and not others. You claimed that Lyoness has listened to both you and their legal team regarding changes to make them compliant. Morten and I both asked if you would share what suggestions you made. STILL WAITING FOR AN ANSWER!

  9. Morten, I truly appreciate your analytical mind. However at times those of us who do analyze can read more into a situation than is there due to our worldview on a subject. If we are looking for a preconceived conclusion.

    1. Kevin Grimes has in reality directed the company to change the P&Ps and T&Cs to be in line with the best practices of not just direct selling but also consumer protection in general. I will look at the old vs new in an upcoming article.

    2. I would respectfully disagree that arbitration is not a business practice. But I do fully understand where you are coming from. If you review 99.9% of the P&Ps created for the direct selling industry you will find that Lyoness is not much different in the basic form.

    The only client I know that changed their so reps could sue them at anytime is LIFE.

    3. And I agree 100% that Lyoness or any other company would instruct their attorneys to protect them from lawsuits. Again regular business practices or maybe business principles would be a better phrase.

    4. And let me reference again, I am only focused at this tome on Lyoness USA. Anything written in forums about any other division of Loyoness is not part of my discussion.

    5. Maybe you should explain your last statement in more detail. Explain what you see as best practices for legit business vs the practices of a scam.

  10. Arbitration isn’t a “business practice”. It’s a method to resolve civil disputes outside the court system, typically disputes about contracts between companies. I haven’t analysed it in more details than that, but Eric Breiteneder obviously had a strategy to bypass that defense system.

    Kevin Grimes has probably delivered exactly what Lyoness has asked him about = “a legal defense system that will make it difficult for people to file claims against the company”, or “a system where we can feel 100% protected against refund claims”. Or something similar to that. Lawyers will typically try to deliver exactly what a client is asking for. If you ask for a watertight contract, you will get something that looks exactly like a watertight contract. If you ask for a lawsuit, you will get exactly that.

    Lyoness defense system, as described in a couple of forum posts, are primarily designed to make it difficult for people to file refund claims against the company. People in some geographical jurisdictions will have to sign contracts with the company in other geographical jurisdictions. That was one of the methods described. The management THINKS more similar to a scam than to a company in its legal defense system.

    The system will generate a lot of dissatisfied consumers and merchants after a while. The legal defense system is designed to make it difficult for them to file refund claims. The system itself is so complicated that people won’t be able to analyse whether or not it will work for them personally, e.g. how much money they actually will need to spend on shopping before a payout can be generated.

    People often get a shock when I show them some calculations for how much they actually will need to spend on shopping. I answered one post where a person claimed he didn’t intend to do any down payments, he would rather use the option of making a $30,000 purchase (buying a car), to become a Premium Member that way. He would need to buy 16 or 17 cars like that to receive his first $675 maturity payout (but the cash backs would make sense, generating a $600 cash back per car). The AU system simply doesn’t make much sense for a consumer, it makes sense ONLY if people recruit the required 4 people a couple of levels down = a total downline of minimum 20 people (investors, it will require more if you only recruit shoppers).

    The system itself is fraudulent, i.e. a chain recruitment system can’t work in reality. It will work for a few, but a few isn’t enough to claim that a system actually works. The down payment system is fraudulent too, down payments of that type isn’t a normal solution in trade. But people can accept the idea that it actually is a normal business solution, because SOME types of business deals can involve non refundable down payments. But down payments for gift cards clearly isn’t among those types where down payment can be an acceptble solution.

    Kevin Grimes delivered exactly what Lyoness asked him about. He’s probably the one who should defend his own work here. I’m partly attacking the defense strategy he has delivered to his client, partly by bringing in the Eric Breiteneder case in Austria. I offered people some “fair conditions” ideas they could use to better be able to post valid arguments. “If you claim a profession as a vital part of your arguments, REFLECT that profession. If you don’t claim it, you don’t need to reflect it either”. I haven’t claimed to have any specific profession, so I don’t need to reflect 100% correct legal ideas. “Fair conditions” is about allowing the same rules for everyone else, or any other rules they like to introduce themselves. But if they introduce their own rules, they will need to play by those rules (or clearly separate between different sets of rules).

  11. Let me interject, for a second. If you are referring to Lyoness USA, Kevin Grimes is the author of the T&Cs and P&Ps and arbitration is a noral business practice inside of direct sales.

    Although arbitration can’t be appealed, it can be stopped if one side doesn’t like the outcome. All they have to do is file a lawsuit. One of the Right’s of all US Citizens is the right to file a lawsuit.

    We have seen this happen with Amway and Melaluca in the past.

  12. I can post something more about the “How to bypass Lyoness’ defense system” idea I mentioned in one of my posts. I haven’t analysed anything in detail, so this isn’t a professional advice or anything like that.

    Lyoness’ “General Terms and Conditions” has a few points about how to resolve disputes, e.g. the use of arbitration. If I have interpreted it correctly, arbitration is a typical business method to resolve disputes about contracts, when both parties have an interest in keeping disputes out of the court system. The method is rather uncommon in consumer cases.

    Disputes resolution by arbitration can follow some very specific rules, e.g. a contract has to be interpreted exactly as it has been written rather than how it has functioned in reality. I looked at the Eric Breiteneder case in Austria, and he has obviously tried (and succeeded) to bypass contract rules like that. NOTE: I haven’t studied arbitration, I only looked briefly at a few sources (e.g. the Norwegian version of it).

    Arbitration is an off-court civil dispute resolution system, with a binding decision for both parties that can’t be appealed. The system has a very limited jurisdiction, it can resolve specific types of disputes between parties but it can’t resolve anything else. It should be relatively easy to bypass a system like that by bringing in factors that can’t be resolved in that type of dispute resolution system.

    Eric Breiteneder did it by bringing in general Consumer Protection Laws, after he first had got a preliminary decision from a court about the TYPE of laws that could/should be used. He did NOT try to bring in complicated pyramid scheme rules, only the general consumer rule “Lyoness hasn’t delivered what it promised during the marketing campaign”. Similar ideas can probably also be used in other countries, if anyone want to terminate their contracts and get their down payments back.

    Eric Breiteneder did NOT use any “hard hitting” pyramid scheme rules. They are typically difficult to prove. He probably used the material he HAD rather than material he was missing, e.g. marketing material rather than financial information. Consumer Protection cases will examine the material as a whole, and what the marketing has promised directly or indirectly will have similar weight as the contract (assuming one of the parties are unprofessional, and will not study each and every detail in a contract). Arbitration will primarily and only look at the contract (what the parties have agreed on, not what they have promised initially). The cases were settled outside court, 100% return of money to consumer types of members and 75% return of money to merchant types of members. The translation from German into English was rather poor, so I didn’t manage to get all the details there (e.g. 100% of WHAT, initial payment ONLY or initial payment plus personally accumulated units).

    Pyramid scheme can be difficult to prove because you don’t have access to all the financial information needed. It’s a better idea to use material you HAVE access to than material you don’t have fully access to. The Breiteneder methods make some sense from that viewpoint.

    The Breiteneder case has been analysed on BehindMLM, but not in great detail.

    The type of information I have posted here is designed to point a lawyer in the right direction, assuming a lawyer will have enough knowledge to interpret it correctly as an IDEA for how to resolve it rather than an exact METHOD.

    THE RECRUITMENT SYSTEM

    Systems like that can obviously not have been designed for consumers. I showed how the “recruit 4 directs” system would fail for the majority of consumers. It will fail to work properly for 75%-95% of the consumers, mathematically and logically. People can’t legally recommend other people to participate in anything like that, the system is inherently fraudulent (a deceptive trade practice, logically speaking).

    The system is not protected by any “fair trade rules” or other similar rules I can find. Most of Lyoness’ defense system seems to have been built up around “constructed law theories”, people’s IDEAS about how to bend the rules by making small adjustments to an illegal system. Ideas like that are not supported in anything in the law system, it’s only supported by the belief system to the ones who constructed the theories.

    If the system could have been defended legally, Lyoness’ lawyers would probably have chased me like a pack of wolfs through most of my comments here (I posted my first comments more than a month ago in part 1).

    THE DOWN PAYMENT SYSTEM

    That system doesn’t make much sense for a consumer. It first starts to make sense if you recruit 4 other investors, and they recruit 4 investors each (you+4+16 investors). That number is an estimate, based on a simulation of CASH payouts in the system if all the Loyalty Credits were reinvested in new units. The more investors you recruit, the more profitable the system will be. That’s not a consumer motive. It won’t become a consumer motive if you recruit “shoppers only” either. Recruitment is simply not a part of “normal consumer motives” (it CAN be in some specific cases, but this is not that type of case).

  13. the reality is, people will read into anything I write or say, what they want to read into it.

    As a matter of fact case in point is TennisMom, She thought I had made the alligations here on the site and was somehow was gong to apologize for calling Lyoness a scam, which I do not believe I have ever done.

    So, no, I would agree 100% with you that any conclusion can be rendered. What I will not agree with you on is that the conclusion is accurate.

    Great point you bring up!

  14. Troy,
    Really? You see no connection between your statement and my conclusion? Well, I think that statement CAN lead a reader to conclude that “Oh Troy thinks Lyoness is a good company with a solid business model. The only issue is that people are presenting it “wrong”.
    Maybe I’m wrong but that’s how it reads to me.

  15. Lyoness have had more than a full month to prepare a new defense strategy. The most important parts were posted already in the comments to “Lyoness Defense part 1”, in the middle of September. One full month should be more than enough time to inform the correct people about the situation, and get a decision on how to handle it.

    The new situation is that people have pointed out more serious problems than what the initial defense strategy covered. The initial defese strategy mostly focused on nitpicking on the details, trying to give the impression of “one misguided MLM consultant”. The new situation show a much wider scope of critics pointing out a (minor) range of more major issues in the core of the business model itself.

    The correct way to handle it, when the initial strategy has failed, is to inform people higher up in the system. Allow THEM to make decisions, they certainly have the right to do it. If a situation is serious enough to produce 20 pages of written defense material, it should normally be serious enough to inform people near the top about that method. And now the situation have become more serious. In a normal organization, that should normally require a decision straight from the top of the organization about how to handle it.

    The opposite method is to assume that internet is a local phenomena in the U.S., and that a situation only will affect that part of the business, and that decisions should be made at the lowest possible level, and that ignoring the situation might be the best strategy to use. “Critics will eventually lose interest if we don’t feed them with any new information” is a strategy that CAN work and WILL work (similar to playing dead). But the question is about whether a local leader has the right to decide something like that himself, or if he should involve someone higher up in the system? I have already pointed out what normal business people will see as a correct practice. Creative solutions (like ignoring a problem by playing dead) are not always welcome in an organization.

    THE INITIAL SITUATION was a “scientific style report”, breaking down the business model into points, a mix of facts and potential misinterpretations of facts, written in “specialized MLM language” (introducing concepts like “income centers”, “binary”, “matrices”, “unilevel”, and so on), with a brief indication for potential law violations.

    THE NEW SITUATION is quite different. I have pointed out some of the weaknesses in the initial defense strategy directly or indirectly. The defense script reads more like marketing statements than legal defense, e.g. because of the lack of legal conclusions. The nitpicking strategy didn’t work well either, it clearly directs attention away from major problems and onto unimportant details. That strategy allowed me to ignore most of it, I could simply point out a few weaknesses that are being repeated over and over again, making me able to focus on my own strategy rather than having to follow the point by point strategy.

    The new situation is VERY different. I’m not writing any “scientific report” where each and every aspects are covered in detail. I’m writing it as “they” see it, e.g. I’m repeating some of Lyoness defendants’ OWN arguments in some of the posts, using consumer arguments in other posts, using general legal arguments in some, and so on and so forth. It can be picked up by ANYONE, and it will still reflect some of their own ideas.

    You will even find some “direction” here, going from an overview of the case (plus links to additional sources), via questions about some details, via general analysis to more specific analysis, to more individual look at the situation. The last post looked at how to bypass Lyoness’ defense system, how it HAD been done by Eric Breiteneder and how it CAN be done to bypass the arbitration.

    Different types of people can potentially pick up different types of info here, e.g. consumers will find some areas they will need to focus on, merchants will find some other types, regulators will find a third type of info, and so on and so forth. The idea of regulators monitoring this website has been introduced earlier.

  16. Business Opportunity should NEVER be used in the same sentence as direct sales. Based on the current Business Opportunity Rules, any network marketing company still using those words walk a dangerous tight rope.

    This was one of the issues Herbalife has faced. Inside of their corporate documentation they were still using Biz Opp to explain their network marketing income opportunity.

    BizOpp’s usually take some form of investment on the part of the person getting involved.

    An Income Opportunity usually is free or has a onetime fee attached for some form of training materials or samples.

  17. Well, let’s slow down for a second.

    1. I never stated it did not have anything to do with their “ability” to run a company. Historically we can look at situations where the private and/or professional background played into their ability to run a specific company.

    2. I did make it clear, that Mario’s background with DESCO had nothing to do with anything I have published. This could change in the future when I publish my interview with him. I also stated that I am at this time not concerned with what company he may have been with that has been shutdown in another country as a ponzi or pyramid because each Countries laws are different.

    3. I have NOT and do not plan on recommending Lyoness USA to anyone. My objective and goals have nothing to do with recommending Lyoness USA.

    All I want to do is get to the bottom of the issues and see if any of them are truly outside of the US regulatory statutes. If they are then let’s get them handled. If they are not then let’s figure out why critics feel there are issues.

    4. Short answer No. Longer answer. Since Zeek was a US based business shut down by a US regulatory agency, then I would be very concerned if the architect launched a new compensation structure based on Zeek or any predecessor company.

    So again because of the differences in county laws, and based on the fact, that to date I have not published anything personally on the CEO of Lyoness USA, I do not see it relevant. But I truly understand where you are coming from, and is why your comment is live for others to review.

    I truly believe you, like Morton and others are raising some very valid concerns and issues to be reviewed.

  18. TrueSeeker,

    Without a doubt Flags Are Raised! Which is the very reason I posted the original alligations, met with the Lyoness USA leadership and agreed to publish their rebuttal.

    Now some direct selling consultants (I am one) will state that the more “complicated” (sophisticated)the compensation plan the more it pays to the field. But at the same time I will tell you, that it also causes higher attrition because the average person can’t understand it. Which is why the majority of companies try and create plans that are easy so easy to understand an 8th grader could explain it.

    This is also the reason I decided to take each piece of the comp plan and create an article on it. I am hoping that you and others can help me to better understand your concerns on each part.

    I have my own concerns on the partial down payment piece of the plan, and I hope that together pundits and critics can provide enough info that anyone looking at Lyoness, from reps to regulators can fully understand what they are looking at.

    And I agree 100% with your last statement. Heck look at how many top leaders in Zeek Rewards jumped into Lyoness at the closure!

    Just because I am engaged with a company, doesn’t mean I am not going to cover all sides or allow you and others to raise huge concerns.

    The only way to protect the reps in the field or potential reps from regulatory fallout is to address the issues and concerns.

    If the issues are real, and based on case law, they need to be fixed. And if the concerns can be addressed to the majority of everyone’s (especially regulators) satisfaction then we are all helping folks no matter what company.

  19. Hmmm… Nope! If you have read the Settlement, then you should know that the amount of the fine is determined on the amount of the agreement that was classified as “promoting” Zeek Rewards while not fully disclosing the fact that the “expenses” RVG were paying me also included my retainer.

    My fine was 100% based on my lack of full disclosure not on any impartialist.

  20. Well it is an interesting opinion, and on the surface I can fully see your point. So why not review the overall opinion and see where the holes might be 🙂

    1. If you have read and watched all I have published on Lyoness USA since they originally launched in North America, then you will see my overall concerns have always been on the way it is marketed and on the complexity of the compensation plan. That has not changed.

    2. I have never questioned the underlying business model of cashback or gift cards as a viable business.

    3. I have been engaged by Lyoness USA to work with their compliance team, not do handle PR. As a matter of fact, it is my understanding they have engaged one of the world’s largest PR firms to handle their public relations.

    4. We publish more pro-company and training info on this site than critical info on the site… Hence MLM Help Desk.

    5. If you are a frequent community member here on the site, then you should have realized we have slowly been eliminating all advertising on the site.

    6. If you check the current ranking here and YouTube I am not sure you will see any huge increase in traffic. I sure have not seen any increase in the advertising dollars from the ad networks which is why anyone would want to see and increase in traffic.

    So again although a well written opinion, at the end of the day that is all it is.

    By the way, can you share where my stance has changed when it comes to Lyoness? Outside of the fact I have met the folks behind Lyoness USA and have stated that they have been very open in answering questions.

  21. I did not term my admonishment an infraction, the SEC did! But I sure agreed with them 🙂

    So before you get into semantics, go get an education on the SEC and their rulings!

    Lyoness may get hit for sure. And sadly because you love to see things your way and make up statements along the way, you seem to have completely missed everything I have said from day one.

    So after you take the time to watch, listen and read what I have published, then maybe we can have an educated conversation.

  22. ROFLOL… First of all let’s get away from the red herring about pimping zeek rewards.

    Second, don’t try and put words in my mouth!

    Third, I did not violate federal laws! I was however charged by the SEC out of Washington with an infraction of the Securities Act of 1933 Title 8A, subtitle 17b.

    Which was for not fully disclosing within my statement “RVG is paying my expenses, that part of those expenses were my consulting retainer.”

    So, if I am correct hidden deep inside your red herring is the following question…

    “So, does this mean, from your perspective, that the only problem with Lyoness America is that overzealous affiliates misrepresent the company?”

    So let me ask you… How do you get the above question out of… “If is my firm belief that there are some who purposely present the business wrong in order to prey on others.”

  23. “If is my firm belief that there are some who purposely present the business wrong in order to prey on others.”
    Troy, this sounds eerily like the defense you used to pimp Zeek. So, does this mean, from your perspective, that the only problem with Lyoness America is that overzealous affiliates misrepresent the company?
    Didn’t you use that argument when defending Zeek where you violated Federal laws?

  24. Troy,

    Sadly, many of your supporters were hoping you would mend your ways after you were slapped for shilling Zeek rewards, Unfortunately, your Lyoness dealings are starting to smell a lot like the pile you left while peddling Zeek rewards. You term your admonishment by the SEC as an infraction. Semantics don’t disguise the fact that you BROKE THE LAW and led many people into the gutter while doing so…I see Lyoness getting hit hard by the SEC(and deservedly so) and you will once again take a hit for being a Ponzi pitch man…sad….guess we have to rely on Oz to provide real information from now on….
    I don’t think you’re intentions are always underhanded. I think you just aren’t that bright and thats’ not a crime. WIth that in mind, maybe you should hire someone for your site who can grasp the issues intellectually and you can pursue your real talent of being a shill for your cronies in the MLM industry…

  25. I can post something about the “pre loaded gift cards”, too.

    Theories about how Lyoness is buying gift cards from “gift card providers” each time people make an initial down payment popped up in discussions more than a year ago, something like this:
    * people make down payments
    * Lyoness is buying a fully or partially paid giftcard from a “gift card provider”
    * the gift card provider pays Lyoness a commission for the sale
    * the gift card is stored at Lyoness until fully paid.

    The only problem is that the theory is rather unbelievable. The normal solution for a gift card retailer is to receive empty plastic cards (for free or at low cost) from a gift card wholeseller / gift card provider, and pay for each card individually when a card is sold to end users. That’s the normal solution as businesses see it and as tax authorities see it (when defining “taxable events” = when to pay taxes for a sale). The gift card is taxable when it’s PAID FOR, not when the goods are delivered.

    The normal business solution is simply that gift cards are empty plastic cards until they are sold / paid for / delivered to an end user. It doesn’t make any sense neither for a gift card retailer nor for a consumer to make down payments on something like that. They CAN do it in Lyoness, but it doesn’t make much sense. “Justice is about realities, not about constructed law theories”. And the reality here is that the down payments don’t make any sense.

    The main motive for people to make those down payments and recruit other people is probably related to the prospected financial gains. People will make a profit if they recruit minimum 4 other people, and they recruit minimum 4 people each, all making similar down payments. Recruiting some shoppers will add to that profit, but recruiting other investors will make the profit come much faster.

    Another theory (one year ago) was that the down payment should act as some type of “commitment” from the consumer. That theory doesn’t make much sense either. Consumers should simply not make that type of “commitments” to a retailer (making non refundable down payments towards a gift card). The so called “parent rules” in Consumer Protection Laws typically have definitions for unfair trade practice about “actions or omittions that heavily can distort a consumer’s financial decisions”, and rules about “professional diligence” (i.e. “if it doesn’t make any sense from a professional viewpoint, it’s prohibited”). They also have definitions for “average consumer”, the legal definition of a consumer rather than how individual consumers potentially can see themselves.

    HOW TO BYPASS LYONESS’ LEGAL DEFENSE SYSTEM
    Note that I’m NOT a lawyer or anything like that. This section is posted to give people IDEAS about potential solutions. The other purpose of this section is to speed up the process a little, by clearly showing Lyoness that some arguments from their side are highly needed. People should preferrably use professional advice, e.g. from an independent lawyer or authority.

    In case people are wondering about how to get their down payments back, Lyoness’ legal defense system is primarily focused around the agreements (e.g. arbitrage of disputes). Eric Breiteneder in Austria bypassed that defense system on behalf of his clients, by making it become a case about general consumer protection rules rather than a dispute about the contract.

    His strategy was “My clients haven’t received what they were promised during the marketing campaign, and they want their money back”. He first had to bypass another part of the defense system = people are defined to be individual business owners in the contract ( = Lyoness claimed that Consumer Protection Laws couldn’t be used). He got a preliminary order from a court in Austria, analysing whether or not recruiting people into a chain recruitment system was a normal part of professional business activity. The court ruled that it wasn’t, it was a “consumer activity” both for ordinary members and for merchant members. I have used a similar logic in my “merchant post”. Ordinary members got a 100% refund and merchant members got a 75% refund, through different settlements (Eric Breiteneder had more than 200 clients when I read about it).
    Lyoness’ legal defense system can be bypassed by using your own duties as a consumer (or as a merchant) as an argument. I have posted valid arguments for why Lyoness potentially can be an illegal chain recruitment system in some of my posts, and also some “parent rules” about misleading actions and omittions. You can make THAT become the case = a case about your own duties as a consumer or as a merchant in how to handle that type of information (rather than a dispute about your contract).
    Your duties as a consumer will be about clarifying the situation, using all the sources needed (Lyoness itself, State AG, etc.). Lyoness MAY have valid legal arguments, but what they have posted here so far won’t qualify. It reads more like 20 pages of marketing statements than “valid legal arguments”.
    “My duties as a consumer is to check the questionable parts. Can you clarify the legality of the down payments and the recruitment system, so I don’t expose myself to unnecessary legal risks by participating in the program?” is a valid question to ask Lyoness. I can potentially fill in some specific details to ask about too.
    I have pointed out that posting valid legal arguments here will be an inexpensive solution. When they first have published 20 pages of defense, it doesn’t make any sense if they fail to follow it up for how it works. So far their defense have failed miserably, in that it attracted a whole set of other critical points that needs to be addressed properly.
    A written contract can’t regulate your duties as a consumer or merchant. Disputes like that can’t be resolved by arbitration, but they can be resolved by settlements about cancelling the whole deal (returning your money).
    Recruiting people to the cash back solution isn’t illegal in itself, but all other parts of the compensation plan may potentially be illegal. You can’t legally recruit people into the cash back solution either if you fail to inform them about the potential illegal parts and advice them to be careful about it.
    An agreement between you and Lyoness can’t regulate your duties as a consumer or as a merchant, e.g. it can’t “allow you” to act illegally. Lyoness agreement does exactly that, putting up Terms and Conditions that will reward you for recruiting other consumers into a chain recruitment system. The system doesn’t “force” you to act illegally, but it “allows” you to do so and it also reward you for doing that. And if you don’t use the system like it allows you to use it, you will be financially harmed (if you have made any down payments).
    If your primary motive for making a down payment was the financial rewards, Lyoness must offer legal methods to earn those rewards. It can’t offer potentially illegal methods as part of a “package”, e.g. reward the people who are willing to bend some rules more than they reward people who tries to follow the laws. Rewards offered can indirectly be interpreted to that they also are meant to be used. Lyoness is actually offering much more rewards if you participate in the “pay to play” chain recruitment system than if you don’t.
    Contracts that involves potential illegal activities should normally be illegal in themselves. It can be a reason for cancelling the whole contract, rather than making disputes about legal parts of the contract.

  26. I can add something more about WHY people see it as a pyramid scheme (or Ponzi scheme).

    Chain recruitment systems with 100% recruitment can’t work in reality. An average person will not be able to recruit more than 1 other person directly. Lyoness’ compensation plan has a requirement of 4 directly recruited to qualify for payouts in points 5-10.

    In a best case scenario where everyone is recruiting exactly 4 each (4 16 64 256 etc.).
    * 256 will have 0 people in downline
    * 64 people will have 4 people each in downline (256 total)
    * 16 people will have 4+16=20 people each in downline (320 total)
    * 4 people will have 4+16+64=84 people each in downline (336 total)
    * 1 person will have 340 people in downline

    1+4+16=21 will make a profit directly from the down payments and recruitment payouts, 320 will lose money (but 64 of them will potentially be able to get most of their money back through their own and others’ shopping), 256 won’t even qualify for most of the payouts in the compensation plan. The average number of directly recruited will be exactly ONE. The idea is guaranteed to fail mathematically and logically for most of the participants.

    For 90-95% of the participants, the down payments and the AC system won’t make much sense. 75% of the participants in my example are guaranteed to lose money. The problem here is that people can’t claim to get their money back. The down payments are non refundable.

    A participant is someone who pay something of value directly or indirectly (recruiting other participants is indirect payment), with the expectations of earning financial gains, based on that other participants are being introduced (recruited) into the system.

    Chain recruitment systems like that are typically illegal to organize, promote and participate in. Exceptions to that can be about:
    * too insignificant payment and rewards
    * fair trade rules (the system is primarily set up to distribute goods)
    * fair compensation for work rules.

    The “fair trade rules” are typically about MLM with external customers / other types of customers that don’t have the right to participate in the compensation plan.

    The “fair compensation for work” rules are about legally accepted types of work. Recruitment into a chain recruitment system doesn’t qualify as that type of “work”, i.e. you can’t use it as the only defense argument in court. It will potentially be TAXABLE as work, but tax authorities don’t define what’s legal or illegal, they will only define how to tax taxable events.

    I identified vaguely WHERE anti pyramid scheme rules can be found “inside the law, in a hierarchy of laws”. That method was needed to be able to identify the exceptions (fair trade, work, insignificance), and to identify the “parent rules” inside the law (the unfair trade practice rules, the misleading actions or omittions rules). That method will also allow people to identify legal sources with higher ranks in the system.

    LYONESS’ LEGAL DEFENSE SYSTEM

    * One part of it seems to be about a misinterpretation of laws, i.e. down payments are not specifically regulated by laws in most jurisdictions. That seems to be about the idea of “If it isn’t made illegal by any law, it must be legal”. That logic can work in criminal cases, bit not in civil ones.

    * Another part of it seems to be about misinterpretation of contract laws. Lyoness have contracts that will make it extremely difficult for anyone to sue them (in theory). But it isn’t that difficult in reality. People CAN bypass that defense system completely (Eric Breiteneder did it, and so can others).

    * A third part seems to be about misinterpretation of commercial laws (e.g. pyramid scheme rules). One of the arguments used to defend Lyoness is that no one will lose money, they will get all their money back through own and other people’s shopping (after some years). They have “invented” a new rule or something.

    * A fourth type of argument is business logic, e.g. that the down payments are needed to kick start the shopping program in new markets. The idea is something like “If it’s needed to make the business become profitable, it probably is legal”.

    * A fifth type of argument has probably derived from some MLM environment. People will need to buy a $600 gift card before they can make the $3,000 down payment. The idea about “pre loaded gift cards” is another of those ideas. In MLM and NWM, the idea that “flow of goods” will make all other parts of a business legal is one of the most common misunderstandings.

    * A sixth type of argument is the “If we call it something else, it will be legitimate”. ZeekRewards used similar ideas, “It’s not an investment, people are purchasing sample bids (real products)”.

  27. Troy,

    I found this on Oz’s site and thought it was rather critical of you when I initially read it…..but this gentleman was spot on…and it applies perfectly to your turnaround on Lyoness now that they are paying you…

    “******************************************************************

    Troy’s business model is what the real story is and should be. This is a joke of a fine in comparison to the potential of millions of dollars he influenced into this ponzi scheme.

    MLM Help Desk Business Model for Dummies:

    Step 1 – Identify a company that is currently getting a lot of current publicity and traction

    Step 2 – Do very little or no true due diligence on that company

    Step 3 – Point out numerous “red flags” on said company via a video editorial

    Step 4 – Wait for company to contact Troy or MLM Help Desk to give their side of the story and point out numerous misconceptions and inaccuracies of video editorial

    Step 5 – Convince said company to engage in a “Consulting Contract” with MLM Help Desk

    Step 6 – Let said company spoon feed information to MLM Help Desk so they can deliver PR to the public in a 3rd party watchdog style via numerous video editorials as long as monthly payments continue to clear the MLM Help Desk bank account

    IMHO, this is nothing more than “shakedown marketing” behind an American flag and a marine tattoo for added credibility and the SEC let him off way too easy
    *********************
    Spot on…but..one thing and this is sincere – Thank you for your service as a Marine for our country….

  28. Troy,
    The SEC surely did not see you as impartial: Bingo! Johnny, we have a winner. I think we could have drawn that conclusion from the fact that your “infraction” cost you $3000. Is that true?

  29. “Although, I have a long ways to go, to fully understand the compensation structure, I do believe the business of shopping is real, and I have talked to both members who shop and merchants who are part of the Lyoness SME program here in the states. That part I have no issues with at all.”
    *****************************************************************************
    Fair enough…but Troy doesn’t it raise a flag that you, purportedly an expert in Direct marketing, have been looking at Lyoness America’s compensation plan for 6 months and still don’t understand it. With that in mind, how can the casual investor expect to comprehend the intricacy. I would offer 1 more thought. Due to the complexity, i bet some ill-intentioned person could defraud an affiliate and they would never know.

  30. Troy,
    You said and I quote ”
    The leaders who are here in the USA (not sure about the world) are not known for being part of ponzi businesses. They are well respected networkers who have been with just a handful of companies over the last 20 to 30 years”.

    That surely sounds like a clean bill of health to me and I’m sure most would agree. Share what you know since you have given their leaders a clean bill of health, per your above quote? Thanks Troy for addressing the tough questions that would really benefit your followers!

  31. Regarding Morten’s comment in Number 1, my understanding is that an investment in Lyoness America’s accounting unit scam would be considered a business opportunity in most states including California. If so, there are laws pertaining to the amount a person can invest in a “business opportunity. Morten or KChang, do you know?

  32. Troy,
    You’re logic here is very dangerous. Are you serious??????
    SOmeone’s professional history has nothing to do with their ability to run a company? Why does every company that I know require a work history? Would you tell them not to consider someone’s criminal history? Don’t you owe it to your follower’s, before you recommend LYoness, to ask the hard questions, since you apparently have access to the people in question?
    Let’s use you as an example. When the architect of Zeek rewards primes up his next scam, will you be the first onboard or would you, like most reasonable people, consider his/her history and stay away? By the way, thank you for providing a forum here but keep it real by asking the tough questions when you can. That’s what this is about right? the facts….????

  33. Straightshooter,

    I will be covering much of your questions in up coming articles.

    Let me make one things clear. I am NOT a watchdog. Never called myself one, acted as one or want to be one.

    I am an advocate for legit direct sales, network marketing, MLM whatever one may call it. And I am an ambassador for making sure the independent professionals do things right and get a fair shake from the companies.

  34. (Troy)

    You bring up ZEEK, which is a good example of a company who DID NOT listen to their legal team and consultants.

    That has not been the case at Lyoness USA. From their legal recommendations to my personal recommendations, things have moved quickly.

    ***************************

    What type of recommendations is that about? Can you give us a couple of examples for both of them, the legal recommendations (from lawyers) and your own personal recommendations? Preferrably something from the topic discussed here.

    1. I can see some potential “legal recommendations” in the $600 mandatory gift card purchase before people can make a $3,000 down payment. Is that one of the legal recommendations?

    2. I can see a potential legal recommendation in people’s defense claims about “the gift cards are loaded when we buy them”. Is that one of the legal recommendations?

    3. Some merchants have been careful in not recommending the down payments when they recruit people (they try to recruit shoppers only, for the cashback solutions rather than for other parts of the compensation plan). Or so they claim. Is that one of the legal recommendations?

    I came up with 3 examples for “potential legal recommendations”. Please add a few more if you know about some?

  35. Well, obviously most people would disagree. Mario Hoffmamm is the head of Lyoness America (a move which would leave most intelligent people shaking their heads). How can the history of Lyoness American’s CEO(can’t even say that with a straight face) have nothing to do with Lyoness America.
    Apparently, you’ve never communicated what your personal Lyoness recommendations are here so we can see how astute an MLM “watchdog” you are. Please share….so we can know your skills as an consultant.
    TO clarify, are you saying that the criminal history of Lyoness America’s CEO is no reflection on Lyoness America? Please respond…your response will tell us everything we need to know about your motives…..

  36. I will ask the question again. I love when critics assume so much. 🙂

    I am not overly concerned about DESCO because it has nothing to do with Lyoness USA. What matter here is that the company is doing everything they should to protect the reps in the field.

    You bring up ZEEK, which is a good example of a company who DID NOT listen to their legal team and consultants.

    That has not been the case at Lyoness USA. From their legal recommendations to my personal recommendations, things have moved quickly.

    There are some of you critics who feel my info was impartial. The majority of the reps or those who didn’t join tell another story.

    And the SEC sure did not find my info impartial

  37. TruthSeeker, at NO TIME have I ever given ANY company a clean bill of health.

    I have no issue engaging with you or anyone on the state of any company. But DO NOT put words in my mouth. I can do a good job of that on my own. 🙂

    I am not sure why you bring Hoffmann into this specific conversation, when I was very clear my statement was based on “well known networkers in the USA over the last 20 or 30 years.”

    As for asking the question… I will ask. However, that is a red herring. Just because someone worked for a company that was shutdown doesn;t mean they are some form of ponzi player.

    Many people inside and outside of network marketing have worked for companies shutdown by regulators.

    Now if he is running the US office in an illegal manner that is worth talking about.

  38. The leaders who are here in the USA (not sure about the world) are not known for being part of ponzi businesses. They are well respected networkers who have been with just a handful of companies over the last 20 to 30 years. Troy,

    Troy,
    Since you have given Lyoness’ USA team a clean bill of health, can you please inquire about Mario Hoffmann’s involvement with DESCO which, not coincidentally was shut down by Austrian authorities? Now, that would be great stuff!

  39. Troy,
    Regarding Mario Hoffmann of Lyoness America. Do you plan to ask him about his involvement with DESCO which I added to this thread? People should know whether or not the head of Lyoness America has a shady past or not? Don’t you think? I ask because it’s obvious that Lyoness is putting nickels in your cup so don’t you want to know who you are working for? If you don’t research, you might end up with another ZEEK dilemna which made you look like a questionable resource for impartial information

  40. I introduced the idea of “fair conditions” in one of my posts, and the idea of “arguments can be valid in themselves, even if they can’t easily be identified in written rules and laws”. Both those ideas are reflecting a type of legal understanding that should be recognized as VALID among most people. They will allow people to bring in their OWN arguments without first having to identify them as “professional” or as “legal statements, reflecting specific laws”. They will also allow me to identify some of Lyoness’ defense arguments, e.g. some of the unfinished discussions from “Lyoness Defense part 1”.

    LYONESS UNOFFICIAL DEFENSE ARGUMENTS

    * “The down payment system is simply a method to kick start the shopping program in new markets”.

    * “Down payments can be compared to lay-aways”.

    * “The gift cards are preloaded, they contain value”.

    * “The AU units are paid by using additional benefits from the merchants”.

    * “The PROFIT in the system will be generated from shopping, not from down payments”.

    And so on and so forth. IDEAS can be identified as “valid legal arguments” even when they don’t reflect specific laws. They can reflect the INTENTIONS of the law system itself, e.g. “JUSTICE is about realities, not about constructed legal theories”. An idea like that can potentially have an identifiable higher rank in the legal system than low ranked specialized rules.

    If people have any defense arguments they feel are of any importance, “just bring’em in”. But try to limit arguments like that to important ones, something OTHER people can recognize as valid arguments, e.g. the lay-away argument isn’t very valid in itself. It was brought up in a Lyness defense blog, but the argument doesn’t reflect the reality. “One person can compare the down payments to lay-aways, and feel it makes perfectly sense” isn’t a valid argument in itself. Down payments CAN be compared to lay-aways, but a comparison like that will mostly point out the differences. The idea itself doesn’t make much sense if anyone use it as a defense argument for Lyoness.

    “THE GIFT CARDS ARE PRE LOADED”

    That was one of the unfinished discussions from “Lyoness Defense part 1”, from the comments there. I identified a couple of unfinished discussions that could be delayed and/or be brought forward to Part 2 or 3.

    “The gift cards are pre loaded” was brought up as a fact, but without identifying which gift cards. You have 3 types.
    * First party: Lyoness can have its own gift cards.
    * Second party: Merchant partners (members) can have their own gift cards.
    * Third party: Gift cards from unrelated merchants (non members).

    The statement didn’t identify WHY it was important either. Statements may be true in themselves, but they should preferrably have some RELEVANCE and IMPORTANCE. “The gift cards are preloaded” doesn’t make much sense if you don’t know WHY Lyoness is using that solution in ome cases.

    In business, gift cards and other “containers for unfulfilled transactions” are typically “empty containers” until an end user is paying for them. The gift card provider (the owner of the actual product or service) will first receive payment when an end user is paying for it and the gift card is delivered.

    * 7-Eleven sell different types of “service containers”, e.g. loading cards for prepaid cell phones. They are empty plastic containers until an end user is paying for a card. A transaction between an end user and 7-Eleven will also generate a transaction between 7-Eleven and the owner of the service.

    * A travel agency may sell tickets for vacations. The tickets are empty containers until an end user is paying for a vacation. The travel agency doesn’t need to pay for any vacations before the end user has paid it. People may believe in other ideas, but we¨’re not discussing people’s belief systems here.

    If Lyoness is using other methods than normal business methods, that will be more similar to “constructed ideas” than to valid legal defense arguments. JUSTICE is about realities (the normal ones), it’s not about people’s constructed realities. Adding a $600 gift card purchase before people can make a $3,000 down payment doesn’t make much sense in reality. Solutions like that revolve around some sort of “constructed pseudo compliance”. I can recognize it as an idea from MLM La-La-Land, but not as a highly valid defense argument.

  41. Morton I think this is a great starting point.

    With your permission I would like to take your comment create a new post or series of posts and look deeper into each of the ten individual parts

  42. I believe I have posted this earlier, but here’s the compensation plan point by point.

    1. Cashback
    2. Friendship Bonus (Cash)
    3. Loyalty Cash
    4. Loyalty Credit (“Shopping Credit”)
    – – – – – – – – – – Require 4 directly recruited – – – – – – – – – –
    5. Loyalty Commission (Cash)
    6. Loyalty Commission Bonus (Cash)
    7. Bonus Units (Non-Cash)
    8. Category Rebooking (Non-Cash)
    9. Volume Commission (Cash)
    10. Volume Bonus (Cash)

    I don’t think anyone have criticized point 1 (the cashback). Point 2 (friendship bonus) have been criticized for “potential pyramid scheme issues”, but most people have simply ignored it. Point 2 is not a primary issue.

    Point 3 and 4 are identical payouts, but CASH vs CREDITS. Critique has been about potential pyramid / Ponzi scheme issues (most people will have problem separating those two types from each other). To make it simpler, I will only focus on the pyramid scheme definition and ignore Ponzi scheme here. The main reasons for WHY people identify it as a Ponzi scheme are typically because of the down payment “investments”, plus the potential “reinvestments” of Credits.

    Point 5 – 10 have been criticized for the same as point 3 and 4. The main reasons for WHY people identify it as a potential pyramid scheme is because of the emphasis on recruitment of new “investors” (when Lyoness is introduced in new markets). People are clearly motivated by prospected financial gains (rather than normal consumer motives). The program doesn’t make much sense for normal consumers other than in the cashback part.

    PYRAMID SCHEME RULES can vaguely be identified like this:
    * Civil laws
    * Consumer Protection Laws (type of laws)
    * Unfair trade practices (type of illegal activity)
    * Misleading trade practices (“parent rules” for misleading actions and omittions)
    * Anti pyramid scheme rules (specialized but low ranked rules).

    I used a method like that so we can identify it more clearly, in a “system of rules” (inside the law), in a “system of laws” (so we can look at other laws if needed). That method will also allow for the use of unwritten rules and other legal sources than statutory rules (in case people have valid arguments, but they are unable to identify the correct law). The IDEA is that valid arguments can have some value in themselves, even if you can’t identify them clearly as part of a law system, e.g. the arguments can be tested against the general idea of “justice” or general “business ideas” rather than against specific laws. My method, where SOME types of arguments can be identified as “in a system of rules, in a system of laws” will also make it easier to identify other valid arguments.

    As an example for “other types of valid arguments”, Lyoness merchants have sometimes defended the down payment system as a method to kick start the shopping program in new markets. Arguments like that can have some value in themselves (they can be valid), but they can’t be easily tested against specific laws. Yet they may still reflect a correct legal understanding.

    I’m trying to limit the scope to a specific area of laws, but I’m not trying to limit valid arguments in a similar way. “Lyoness Defense part 1” had some unfinished discussions of that type, e.g. a discussion about gift cards. Are they products or services in themselves, “containers for unfulfilled transactions” or “inexpensive and empty plastic cards until fully paid”, or a combination of those definitions? Arguments like that can clearly have some value in themselves, and I’m not trying to limit that type of arguments.

  43. Hmmm… Well the name is Troy Dooly. But there is also a Troy Dooley who lives in Oklahoma.

    I am pretty sure I have been very clear on the areas where I have concerns and those I do not.

    But, let’s see if I can give some form of clarity on a couple of items you mention.

    1. I see no way to invest in Lyoness at all. I have raised concerns on the partial downpayment of gift cards, and how that might look to regulators.

    I have read the SEC attorney’s legal opinion and I am continuing to study all areas of the compensation plan.

    I do see that all money is generated first by the purchase of gift cards, so as I dig deeper I hope to get all the answers to the questions I am asking.

    And I was back in Miami today, and will be back in a few weeks to talk with the SEC attorney and others again.

    2. As I have made very clear, the person who ave me the original alligations is a well known consultant in network marketing. He may have also been a member, but since I am not a member, and I have not revealed the identity of the individual, I am not sure anyone knows for sure.

    And the answers were from corporate with the blessing of the legal team, not fully written by the legal team.

    3. I was invited to Miami as I have reported long before I published the company response. I was also invited and accepted the invitation to go to Calf., not for the opening but so I could meet the founder of Lyness and talk with him directly.

    I also went because some of my friends who just happen to be the Calf based legal team for Lyoness were there and I could chat with them also.

    4. I was not in Calf, to give positive press. I did speak at the event, and made it very clear, that from the company down to the newest rep, if people were presenting the Lyoness Income Opportunity in a manner that is out of compliance in the USA, then they will be held accountable.

    5. As I have also spoken about and written about, I have entered into an agreement with Lyoness USA to work closely with their compliance team to uncover specific areas where there are issues that Lyoness may face in the USA due to the way the business is being presented or has been presented.

    If is my firm belief that there are some who purposely present the business wrong in order to prey on others.

    Without a doubt the company, like all companies have their own weaknesses that need to be addressed. But that in and of itself doesn’t make the company a ponzi or pyramid.

    The leaders who are here in the USA (not sure about the world) are not known for being part of ponzi businesses. They are well respected networkers who have been with just a handful of companies over the last 20 to 30 years.

    I have been communicating with them since the first time they presented Lyoness to me close to 3 years ago.

    Although, I have a long ways to go, to fully understand the compensation structure, I do believe the business of shopping is real, and I have talked to both members who shop and merchants who are part of the Lyoness SME program here in the states. That part I have no issues with at all.

    Hope this helps.

    One last thing… My liking or disliking a company has nothing to due with anything.

    What is important is that anyone who joins any company is willing to dig deep enough to make an informed decision on if the risk of joining is worth the reward.

    Sadly most people will never do that. Instead they listen to someone who doesn;t know any more than they do.

    So if we can provide a place where both sides of a debate is found. Or if we can link to experts who fully understand which companies are ponzi/pyramids and people can find the facts, then so be it!

    TrtuhSeeker thank you for stopping by!

  44. A friend of mine who invested in the Lyoness scheme and is still trying to convince me of “how great a company it is” followed me an email this morning as he knows I occassionally visit Troy Dooleys blog. I guess he wanted to convince me that Lyoness is legit by using the “well if Troy Dooley likes them” it must be a great company. Kind of like “if Bernie Madoff has so many well known clients, he can’t be a thief”. Laughable.
    SO TROY, inquiring minds want to know – is what’s stated below truth. Specifically, is the person who originally wrote the analysis of Lyoness a “disgruntled member” or , as you stated a respected MLM industry consultant. Second question, where did Lyoness legal “crush his comments”. It’s not apparent in any of the discussions we have read here

    A while ago Troy was contacted by an “unidentified
    disgruntled member” who made a lot of discouraging remarks concerning
    Lyoness and it’s compliance. “Kudos” to our legal team who responded
    and not only picked apart his accusations but crushed his comments and
    strengthened our position as a legitimate company.

    Troy Dooley, after broadcasting on YouTube our legal teams
    response, was invited to our headquarters in Florida as well as the Grand
    Opening of our Lyoness office in Irvine California this past weekend.

    Good
    press is always a welcome conduit and we believe Troy’s input will help
    catapult Lyoness’ reputation and perception by bringing his insight to his
    followers

  45. Morten, I feel you and most of the others who question Lyoness do a fair job. Heck, I have mot own issues with areas of the company.

    I can say, that myself and many others who are reviewing and or working to help clear up some compliance areas also realize Loyoness is not like the majority of direct selling companies and we have gone info some other areas of industry to pull comparisons.

    I feel together with critical thinkers such as yourself we will get the majority of issues covered.

    And then if any regulator from any country looks at things on an official basis, we will all see how close we were in our conclusions.

  46. I can make it easier for Lyoness to defend their own business model, by identifying some needs and by making a suggestion for how to solve it, a suggestion for how to “level out the field” and “make the discussion become more fair”. They can simply use a lawyer to answer some questions, but he can act as an ordinary internet user (he will need to HAVE the right type of knowledge, but he doesn’t need to be limited to that type of knowledge).

    The way people (me and others) have described Lyoness’ problems is clearly about legal problems. Most people will SEE IT in the same way. Any defense strategy trying to direct attention away from that will most likely fail. It failed IMMEDIATELY in “Lyoness Defense Part 1”, and it won’t work here either.

    Defending the business model here can be an inexpensive and effective solution, but they will need someone qualified enough to defend it properly. I’m not talking about any “Presidential Team” member when I’m talking about “qualified enough”, they have already failed miserably. Lyoness will need a real lawyer to defend it, one with the correct knowledge to handle the defense properly. But he will also need fair conditions.

    FAIR CONDITIONS

    I have not made any claims about specific professional knowledge, and neither have any of the others of the ones posting comments here. No one will blame any of us for minor misinterpretations.of legal aspects, or for presenting personal viewpoints rather than professional ones. People simply don’t EXPECT more than that.

    People EXPECT more from professionals, and sometimes their expectations can be rather unreasonable. Professionals can be forced to focus on making their own work become “professionally correct” in each and every detail, not allowing them the flexibility other people have.

    “Fair Conditions” is about allowing people to act in the roles they feel comfortable with themselves. A professional can have valid knowledge outside his own “field of expertise”, and he should be allowed to use that type of knowledge too. But there’s a problem if people present themselves as something and act differently, e.g. if they start with “I’m a lawyer”, but where most of their arguments reflect their own personal view rather than a professional one.

    “Fair Conditions” = “Act in any role you like, but try to identify them clearly and try to separate them from each other”. Failing to meet that idea of fair conditions will probably be detected as misleading.

    I have identified my own role as “non professional” (not a lawyer or anything like that). I have also identified which parts of Lyoness business model I will be focusing on, and which types of legal aspects (pyramid or Ponzi scheme issues, misleading trade practice, gift cards and compensation, potentially some tax issues). I will mostly ask rather simple questions (but I haven’t analysed all the material in the articles yet).

  47. ScamMe99,

    I am somewhat confused. My work with Zeek Rewards as a consultant wasn’t illegal. As a matter of fact nothing about anything I did was illegal.

    My lack of full disclosure was an infraction of the regulation. That was a personal action based on my abiding by State Civil Law.

    However, I do provide a full disclosure on my activities based on the FTC rules.

    So, get it straight, my personal actions and not any agreement was where the infraction came from.

    And I am sure if I had asked my attorneys how to respond they would have given me different advice.

  48. Oh, by the way, why didn’t one of your MLM lawyer buddies help you understand your position with Zeek rewards was illegal. If Kevin Grimes and all the other people you call buddies are so astute, shouldn’t they know. After all, they know Lyoness is compliant, right?

  49. Troy,
    This is by far the most laughable in the series for Lyoness arguments. Sadly, your statement “we’re going to get Mario” to explain this is a joke. Have you ever heard this guy speak? It’s laughable. I;ve got a better question for you. Why don’t you ask him about the legality surrounding DESCO..

    Plattform Lyoness has just reported the breaking news that managing director of Lyoness Americas, Mario Hoffmann, was formerly involved in the convicted Austrian pyramid scheme ‘DESCO’. According to their information, Hoffmann and three accomplices were found guilty of operating the scam. ‘DESCO’ was hiding behind a redundant and apparently not-existing corporate front that organised ‘seminars’ of all sorts.
    Particularly many young Austrians were enticed to invest thousands of euros for the promise of incredible future rewards, if they would only bring in their family and friends. Much like Lyoness now, ‘DESCO’ had a controversial reputation at best, before being completely wiped out, with the Chambers of Labour of Wien and Niederösterreich, several established media and even members of parliament questioning the ‘company’s’ motives.
    There is reason to believe that the same scam formerly operated under the name ‘DESCO’ persisted long afterwards, perhaps with the same people (informally) running it.
    Particularly many young Austrians were enticed to invest thousands of euros for the promise of incredible future rewards, if they would only bring in their family and friends. Much like Lyoness now, ‘DESCO’ had a controversial reputation at best, before being completely wiped out, with the Chambers of Labour of Wien and Niederösterreich, several established media and even members of parliament questioning the ‘company’s’ motives.
    There is reason to believe that the same scam formerly operated under the name ‘DESCO’ persisted long afterwards, perhaps with the same people (informally) running it.
    We are talking about the CEO of Lyoness America…I have this guy speak on a number of occassions and it’s sad really…that anyone would take him seriously..
    Also. Troy be careful about pimping Lyoness because of your relationship with Kevin Grimes. To the casual observer, you seem to graviate toward lawyers. Perhaps, because they feed you legalese that sounds impressive. I know someone is taking Lyoness the whistleblower rout and they won’t give a damn about how impressive their legal team is if they undertake an investigation. So, ask Hoffman about this indictment with DESCO and post his response..we could all use a little humor after all

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