In what very effectively might be an early death-knell for Lyoness, Italian authorities have introduced a preliminary investigation into the corporate.
The Italian Antitrust and Client Safety Authority (AGCM) printed a bulletin on September twenty fourth.
Particulars of the regulators investigation into Lyoness characteristic within the PDF model of the bulletin on web page 23.
The AGCM state their investigation has been initiated attributable to a “massive variety of complaints” about Lyoness.
Particularly, the AGCM is investigating Lyoness for deceptive promoting, unfair industrial practices, contractual violation of shopper rights and using discriminating or unfair phrases and circumstances.
Not surprisingly, the finer particulars of the AGCM’s investigation seems like your typical Ponzi pyramid affair.
Lyoness, within the train of his personal exercise of promotion and a system of cashback, has put in place an unfair industrial follow that requires vital quantity (of cash) for entry to the Multi Degree Advertising and marketing.
(The MLM entry payment) and different vital quantities are offered as “advances” with respect to the money again future earnings.
The strategies for presenting the gross sales scheme created by Lyoness – and by associates selling it – seem like probably primarily based on incomplete representations (which are) not clear and (create a misunderstanding for) shoppers who pay cash to enter the System.
Particularly;
(i) the phrases and circumstances of the (Lyoness) Program offered to shoppers, which clarify the character of the dedication that the buyer assumes by signing up for (Lyoness) membership;
(ii) the precise likelihood of acquiring earnings by adhering to the scheme proposed by Lyoness;
(iii) to the normatively offered data. (Ozedit: Undecided what (iii) is meant to imply)
Lyoness associates make investments funds in procuring models after which set about recruiting others who do the identical.
As soon as sufficient new funding has been made, Lyoness take a proportion of it and use it to pay current associates a ROI.
The cashback facet of the enterprise is used to justify this baked in Ponzi scheme.
What’s by no means disclosed to shoppers, as AGCM will little doubt discover out, is that the size of time and uncooked {dollars} required to generate related earnings, versus straight funding in models, is just not comparable.
Lyoness makes use of cashback to lure unsuspecting shoppers into its Ponzi web.
As soon as they’ve acquired procuring models beneath them, they finally understand they’re not realistically going to see that cash until they make investments after which get others to speculate.
The exception is people who handle to persuade 1000’s, if not lots of of 1000’s of consumers to enroll beneath them – sometimes via massive teams.
Previously we’ve seen this shamelessly happen via authorities councils and sporting golf equipment.
AGCM’s investigation is critical for Lyoness, as for effectively over a 12 months now Italy has made up the majority of recent funding into the corporate.
On the time of publication Alexa cite Italy as offering 46% and 32% of visitors to the Lyoness and Lyconet web sites respectively.
Lyoness’ enterprise mannequin sometimes sees the corporate concentrate on migrating to a brand new market when both recruitment collapses or regulators shut it down.
Victims in current markets are promised riches if they assist recruitment efforts within the chosen new nation, which additionally serves to cease them cooperating with authorities and/or submitting complaints towards the corporate.
Unsuspecting shoppers are focused within the new nation for a set time period. If Lyoness fails to take off then a brand new nation is focused.
If, as within the case of Italy, Lyoness takes off, shoppers are milked dry till recruitment dries up or regulators step in.
Wash, rinse and repeat.
As of but a successor nation for Lyoness to pillage if Italian recruitment is shut down hasn’t emerged.
Poland, sitting at 13% of visitors to the Lyconet web site, might be a contender however it’s nonetheless too early to inform.
Replace twenty sixth September 2018 – A reader contacted me to let me know they couldn’t discover data on the Lyoness preliminary investigation in Italian.
I assumed this was odd, seeing as we’d linked to the AGCM supply announcement in our article.
Seems inside 24 hours of this text going stay AGCM eliminated any point out of the preliminary investigation from their web site.
Right here’s a replica of Google cache search outcomes, proving that the announcement was made:
No concept why point out of the investigation was eliminated. The bulletin doc did include a bunch of different data, so maybe there was one thing else in there they weren’t able to share with the general public but (or it may have been the Lyoness investigation itself).
Replace twenty eighth September 2018 – A while within the final 24 hours AGCM has restored entry to the September twenty fourth bulletin.
Replace fifteenth January 2019 – AGCM has concluded Lyoness is a pyramid scheme and fined the corporate €3.2 million euro.