Legality
In the meantime, Austrian authorities have started investigations of the Lyoness business model and the related allegations that the company is running an illegal pyramid scheme.
[35] Criminal investigations in Austria have been concluded by the Austrian Economic and Corruption Prosecutor ("WKStA"), who maintains that Lyoness operates an illegal
pyramid scheme.
[56][80] Lyoness expects to be cleared of all charges.
[58]
Outside of its homecountries, Lyoness has also been confronted with scrutiny from authorities. Reportedly, similar investigations were started in Hungary;
[68] Norway;
[81] Poland;
[65][82][83][84] Lithuania;
[69] Sweden;
[63][64]Australia;
[59][60] and Greece.
[70][71]
In Hungary, Lyoness was fined by the authorities for illegal advertising.
[68] In Lithuania, the authorities decided not to pursue Lyoness.
[69] In December 2013, Norwegian authorities announced a full investigation of Lyoness on the suspicion of operating an illegal pyramid scheme.
[81][85] Lyoness received 3 weeks to respond to the announcement.
[86] Following an investigation of several months, the Norwegian Gaming Board concluded that Lyoness IS NOT operating an illegal pyramid scheme in Norway in 2012 and 2013. After the investigation had been announced, in 2014, less than the legal barrier of 50% (43%) of Lyoness's revenue in Norway derived from recruiting, making them eligible to continue operation under Norwegian law. In Poland, the OCCP called Lyoness a pyramid scheme, but the current status of the investigation is unknown.
[65][66] In Sweden, the responsible authority concluded that Lyoness is a pyramid scheme and reported Lyoness to the Stockholm police.
[63] While initially halted, an appeal by the Gaming Board led to a continuation of the investigation by the Stockholm Police.
[64]
In Australia, The Competition and Consumer Commission (
ACCC), after researching Lyoness for a while, instituted proceedings against Lyoness International AG, Lyoness Asia Limited, Lyoness UK Limited and Lyoness Australia Pty Limited (together ‘Lyoness’) for operating a pyramid selling scheme and engaging in referral selling.
[59][59][60] The ACCC alleges that Lyoness has operated the scheme in Australia from mid-2011 and that it continues to operate the scheme. The scheme offers ‘cash back’ rebates to members who shop through a Lyoness portal, use Lyoness vouchers or present their Lyoness card at certain retailers. Whilst cash back offers themselves are not prohibited by the Australian Consumer Law, the ACCC alleges that the Lyoness scheme also offers commissions to members who recruit new members who make a down payment on future shopping. The ACCC is seeking declarations, pecuniary penalties, injunctions, an order requiring the Lyoness website to link to the case report and costs. As Lyoness International AG, Lyoness Asia Limited and Lyoness UK Limited are located overseas, the ACCC will be making arrangements for service on those entities. The case is before Justice Flick of the Federal Court in Sydney.
[87] Lyoness have submitted their defence in October 2014, and the next hearing will be in February 2015.
[60] Australian victims claim to have lost thousands of dollars each to Lyoness.
[88] The trial has ended and the judgment was reserved.
[61][62] In Greece, an arrest warrant was issued in August 2015 against the Austrian directors of Lyoness Greece. On the 10th of August 2015 the Prosecutor of Thessaloniki Court of First Instance issued an arrest warrant against Herbert Teissel and his wife Anna Teissel, alleged directors of Lyoness Greece, for attempted fraud.
[70][71] Lyoness vehemently denies all allegations.
Television[edit]
On November 30, 2011,
Dragons’ Den Canada aired an
episode featuring the
pitch of a Lyoness ‘Premium Member’ from
Ontario,
Canada in which he asked the ‘Dragons’ to jointly invest 175,000
Canadian Dollars to acquire Lyoness ‘business packages’ through him.
[89] None of the Dragons were willing to invest. Instead, they ridiculed him and his business idea, suggesting that it's 'distasteful', and 'a pyramid scheme’. They also advised the Lyoness member, who
borrowed against his house to acquire Lyoness positions, not to invest any more
money in the Lyoness system.
[89]
Another
television show that has reported on Lyoness is the Austrian
public television program
ORF Report. This programme aired episodes under the names ‘Lyoness - The money machine’ (November 13, 2012),
[90] 'Shopping Community Lyoness' (November27th, 2013)
[91] and ‘The man behind Lyoness’ (April 24, 2013),
[92] interviewing
experts and former participants, which both say that Lyoness operates a
pyramid scheme behind the
façade of a ‘
shopping community’
[93] .
[94] The latter
episode also features
hidden camera footage of Hubert Freidl telling his followers that spreading ‘Cashback Cards’ is irrelevant – ‘it is all about the positions, positions, positions, positions’.
[94]
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