Following a improve in native investor recruitment, Lyoness caught the attention of Italian authorities.
Italy’s Rivals Authority (AGCM) launched a preliminary investigation into Lyoness in September 2018.
The investigation concluded in late December, resulting in Lyoness being declared a pyramid scheme.
As per AGCM’s investigation,
the promotion system utilized by the company Lyoness Italia Srl to unfold amongst clients a elements for the acquisition of merchandise with cashback (ie with the return of a proportion of the money spent at affiliated retailers), is inaccurate on account of it integrates a system with pyramid traits.
For these unfamiliar with Lyoness’ enterprise model, the company makes use of a cashback ruse to masks pyramid recruitment. These recruited spend cash on fashions, which pay a set ROI as quickly as ample new investments have been made.
Or as a result of the AGCM put it;
(Lyoness’) promotion system, using the pretext of described advantage of purchases with cashback, really consists of the recruitment of quite a few clients who’re required, after having assumed the place of product sales supervisor, to pay an entry worth notably extreme to entry the first price diploma (equal to € 2,400.00) and start the “occupation” as Lyconet Premium Marketer.
Subsequently, they need to recruit completely different clients, along with make additional funds to substantiate and progress inside the “occupation”.
Of particular phrase is that the AGCM investigation revealed cashback buying inside Lyoness solely accounted for about 16% of Lyoness’ earnings in Italy.
The remaining 84% was sourced from direct funding in buying fashions.
That is due to the reality that, by design, the amount of amount required to set off a ROI is unfeasible by cashback.
The achievement of extreme ranges of Shopping for Components- the compensation scheme remuneration mechanism – is principally doable solely with the price of sums of money by the collaborating clients or by the matters recruited by the latter.
In accordance with knowledge provided to the AGCM by Lyoness,
many tens of 1000’s of shoppers have paid the aforementioned sums of money to enter, participate and keep inside the system, (nevertheless) solely a only some folks have really managed to realize essential positions.
AGCM moreover took concern with how Lyoness launched its enterprise model, labeling its promoting practices “deceptive”.
Together with be declared an illegal pyramid scheme, AGCM has moreover fined Lyoness €3.2 million EUR.
BehindMLM began warning clients of Lyoness’ Premium member Ponzi scheme once more in 2012.
Sadly Lyoness manages to proceed migrating to utterly completely different nations as quickly as caught or native investor recruitment collapses.
Lyoness has moreover tried to masks the scheme by renaming “accounting fashions” to “buying fashions”, and altering the company’s establish to Lyconet and additional not too way back, Cashback World.
On the time of publication Alexa estimates that Italy makes up a whopping 47% of web site guests to Lyoness’ web page. Italy will be the best provide of web site guests to the Lyconet web page (35%).
Which nation Lyoness will migrate to having misplaced its largest investor market stays to be seen.
Substitute 1st February 2021 – Following renewed promotion of Lyoness in Italy all by way of 2020, the AGCM has as quickly as as soon as extra confirmed Lyoness is an illegal pyramid scheme.
Working regionally as myWorld Italia Srl and Lyconet Italia Srl, the AGCM has fined Lyoness one different €3 million euros.