Is Lyoness a scam?

[Dave A]

Did you read the information I offered - all 20 odd pages?

I thought it gave a very good and balanced view of what the business is about!

Actually, I did take the time today. And had a look at the official Lyoness website too.
Thought it was about time after watching this particular conversation.

Do you have the facts?

And after all that reading, I have to say - no!

That website is just another Lyoness shill site list at the address of know scammers and fraud hosting service.

I confess I did chuckle a bit when I got to this part on MLM's -

MLM FEEDER SITES
Many MLM companies have 'feeder' sites. Sites that claim to be authorities on the MLM industry or small business but that actually act as a place to collect data and prospects. Shortly after Lyoness came out these sites were awash with 'so called reviews'.
Designed to sow seeds of doubt in the minds of any team member who was thinking of jumping ship, or potential new prospect who was weighing up their options, they had the effect of creating a sub culture of misinformation. Part of the reason I am taking the time to write all this down for you.

Well, maybe this one isn't there to collect data and prospects, but it certainly is full of the official company line and quite clearly there to influence prospects and try to discredit critics!

Which brings me to the question the following raised (which is why I decided to start digging) and that I couldn't seem to find an answer for. Perhaps you can help fill me in.

The numbers speak for themselves. A board position costs R500. at 1% that means you need R50,000 of shopping for 1 position.
But wait, you can skip that and pay R20k and buy up all the R500 positions on the board. You can then get your mates to do the same and you can earn huge sums of money doing it.
Forget the shopping - it is ruse to...

Actually, the numbers don't speak for themselves, and I'm as confused as all heck.

I found mention of a $3000 pre-payment deal, both on the shill site and the official site, but that also was as clear as mud as to why you should want to do that.

Help!
What exactly is the reward structure of Lyoness?
What is the progression system?
And where and how does this pre-payment stuff fit in?

[OnePilot]

Hi Dave - quite honestly I didn't expect you or anyone else that is new to the company to have all the facts at first glance, and so I could rest my case with most of the commentators here too.

Suffice to say that the vast majority of the company members - over 90% world wide - are simply "shoppers and referrers" which we obviously welcome because that is the backbone of the system

However to give a bit more insight

There are currently 12 income streams and the down payment (what you refer to as pre-payment deal) is a fast track option to open a number of these income streams up as a premium member, if, as with any company, you are prepared to work the business.

As you said "the numbers ........... speak for themselves" made mention by mvubu, make no sense, because what has been quoted is out of context and the numbers are nonsense

To fully understand the complex reward structure does take a while, certainly for me it did.

That being said it is not because it is hidden, it is in plain site - just needs to be understood! and there is plenty training provided to empower one to do just that

As with most referral marketing companies they don't paste it on their front page - although Lyoness seems to have more than most as you may have noticed!

Once registered as a member (for free, with no obligation, autoship etc) - your back-office has a lot more information which I believe is standard practice!

[Dave A]

Ian, my interest at this point is solely to get to terms with Mvubu's allegation.

To fully understand the complex reward structure does take a while, certainly for me it did.

That being said it is not because it is hidden, it is in plain site

It seems I must have missed it then. Please point me in the right direction. First prize would be a document that sets out the rules of the reward structure.

So far I've managed to patch together some basics, but that doesn't explain the aspect that Mvubu refers to and I've quoted above (which I note you have not repudiated so far).

[rom828]

Ian

In response to your comments "One thing that is great about Google is that it WILL find what you are asking it to find"....well that works both ways to whichever side of the fence you sit.

I have been to the Business Information Session and even signed up as a member (because it's free, at that stage PnPay, Woolies were still part of the 'system') although I haven't used it for one purchase. Like I said before it's the "fast track option to open a number of these income streams up as a premium member" that is the problem and pyramid scheme part....and unless you 'invest' the R20 000 and get fast tracked it's going to be years before you really make any money through your rewards, it's that simple.

Also if you will read the General Terms and Conditions 3.4, you are not allowed to recruit through any forum or media format, so in actual fact your membership should be suspended and that includes the 5 levels of introducer's in your line. That is clearly mentioned in the Business Information Session and I have it recorded.

[OnePilot]

@ Dave

The GT&C's has the rules of the rewards structure. which I can email you !

@ rom828
"In response to your comments "One thing that is great about Google is that it WILL find what you are asking it to find"....well that works both ways to whichever side of the fence you sit."
I agree with you 100% unfortunately most people tend to take on the negative and ignore anything else they are happily programmed to do that.

"I have been to the Business Information Session and even signed up as a member (because it's free, at that stage PnPay, Woolies were still part of the 'system') although I haven't used it for one purchase. Like I said before it's the "fast track option to open a number of these income streams up as a premium member" that is the problem and pyramid scheme part....and unless you 'invest' the R20 000 and get fast tracked it's going to be years before you really make any money through your rewards, it's that simple."

If one takes any Networking program - they all maintain that 5 to 7 years is the time frame one should be looking at to "make" your money if you are working the business, and I don't believe that this program is any different in that regard!
How much time does it take to build up some decent money in the PnP Smart Shopper rewards program? or Clicks or Dischem?

Why is fast tracking a pyramid scheme?

"invest" as you are well aware is NOT what you are doing with your R 20k it IS a down payment for future purchases - just like a lay-bye, and I think the internet article I quoted earlier sets it out very well

[mvubu]

Dave - you will not find ANY of the "business opp" literature online as all the sign ups include serious Non-Disclosures. You will also not find any counter argument to the basic facts that you can bypass ALL the "shopping" points (because at 1% it would take you 10 lifetimes) and purchase large numbers of board positions (accounting units) in a binary matrix (pyramid turned on its side)

The website they post as an independent review is just marketing spin and full of logical holes at all points. It is hard to keep reading through heaps of pure manure. Lets just touch a few things:
1. Troy Dooley video - he does not do a 180'. He says (and you can check his own site) that that the shopping MIGHT be legit, but the compensation plan is convoluted and MOST LIKELY in breach of the SEC rules. "Their lawyers in the US are working on it"
2. Comparing Google & Microsoft to scams??? Really??
3. Powerful alliances: It seems to be a mehtod they use (like "partnering with great retailers") They take offices in the most expensive office space they can find. They have offices at CliffDekker in Sandton to make them look flash. They have space in the Empire state Building. It proves they like to look important, not that they are legit.
4. Pyramid Scheme: The income disclosure of the business proves that there is nearly NO shopping. In the US last year - 99.6% of lyoness members averaged $0.38 in income. 38 CENTS!!! The next 0.4% made a little and the top .01% made heaps.
If shopping drove the revenue it would look very different. The money is made from "accounting units" created when people "make down payments on future purchases" (Read INVEST). Once that happens, the numbers start rolling up the chain.
5. High corporate profile: You mean like Fedentia, Enron and many many others. The ability to "give away" money is not proof of a legitimate business. The biggest gangsters are always great benefactors to the poor in their own neighborhoods... it helps people tolerate the crime they commit.
6. Certification : NONE of those certifications have ANYTHING to do with the business & money flow in the "premium member" side of things.
7. "Free cashback card" - as I said, that is the cover. Having sold the concept to small businesses, it needs to generate revenue. The

8. And Lastly... the proof that you can bypass all the shopping is laid out clearly at step 8
In other words, if you had shopped properly through the system for 4 years, and spent around $100,000 on gas or groceries etc you would have generated around 40 shopping units with a potential payout value of $27,000 in profit share.
So Lyoness say, "We know you are going to need to buy food and fuel for the next 4 years, so rather than having to wait that long to benefit from the Lyoness model, why not pay a 'deposit' (down-payment) on those future purchase. That way you can get the LEVERAGE TODAY of years worth of shopping.

How can they do this?

Well remember the $3000 represents the CASH-BACK the merchants would have given Lyoness to distribute if you had actually spent around $100,000 (at a 3% merchant)
So to the Lyoness accounting program it is EXACTLY THE SAME as if you had actually spent the $100,000.


What mattered most to me was that THE MONEY WAS REAL and genuinely represented shopping.



Having called the main people at both Woolies and PnP, I can assure you that NONE of the BS explanations that have been said here are true.
Woolworths were pissed off that there gift cards where effectively being resold at a profit AND that Lyoness referred multiple times in their sales and marketing literature as having being "vetted" by Woolies. The reality is that without this perceived OK from big names, Lyoness would have zero credibility.
PnP gave me an almost identical answer.
And in case you are wondering about how hard it is to by bulk gift cards - http://www.picknpay.co.za/picknpay/c...Detail&pid=699
>R20k = 2.5%
>R50k = 5%
PnP had NO idea who is getting these cards once they leave HQ and had not vetted anything.

Walmart in the USA - GONE, for the same reason.




SARS - they do not vetted business practices, they collect taxes. In fact they will tax criminal activity of they can... just look at the case history of crime lords not declaring income.
Treasury - Proof please.
SARB - they will eventually be the ones who shut this down, when they wake up to the fact. Unfortunately they tend arrive too late to pick up the pieces when the numbers get out of hand. I would like to see the "approval" they gave this scheme.


Let me make myself clear again - the shopping is the ruse... it is NOT where the money is made. OnePilot knows that, as does every other salesman of this scam.
The money is made when you fill you board, have people below fill their board and people below them fill their board. Once that happens, the money flows up that chain and that my friends is a pure basic, garden variety PYRAMID SCHEME.
Sure 5% of the members actually do it, but from Lyoness's own numbers reported in the Sunday Times, if 5% of the 30,000 claimed members paid in, that has generated R30,000,000 in "downpayments for future purchases" on which revenue has been earned.
The law has already been broken here.








Here is the best explanation, in easy to follow steps,
Read the comments section too as you will find well reasoned explanations.

1. http://behindmlm.com/companies/lyone...tment-returns/
2. http://behindmlm.com/companies/lyone...ment-analysis/


And here you have the Austrian press going at them with the head corruption investigator calling them directly "an illegal pyramid scheme"

http://behindmlm.com/companies/lyoness-2012-income-disclosure-statement-analysis/

No whilst this guy is a bit muddled, the Dragons in Canada can cut through the BS in one quick step:

http://www.youtube.com/watch?v=BrwwC6KuS7Y

[Dave A]

Fortunately I have known Dave - to whom the invitation was addressed - for a number of years ...

To get this sideshow out of the way and for the record

If it's going to be an issue and you need a hand getting that invite part of your post out of the forum area, Ian, you know where to find me.

Here is the best explanation, in easy to follow steps,
Read the comments section too as you will find well reasoned explanations.

1. http://behindmlm.com/companies/lyone...tment-returns/

Thanks Mvubu. That particular link really helped get a better idea of the structure.

It looks like when it comes to down payments and the consequences, we might be in that murky area of plausible deniability then.

Strange ol' world we live in. I'm pretty sure I've mentioned this somewhere on TFSA years ago, but back in the days when I was "doing" MLM, I was surprised to discover just how many people would have knowingly jumped on board a pyramid scheme compared to the number of people who were prepared to build a genuine MLM business.

[mvubu]

To get this sideshow out of the way and for the record

If it's going to be an issue and you need a hand getting that invite part of your post out of the forum area, Ian, you know where to find me.


Thanks Mvubu. That particular link really helped get a better idea of the structure.

It looks like when it comes to down payments and the consequences, we might be in that murky area of plausible deniability then.

Strange ol' world we live in. I'm pretty sure I've mentioned this somewhere on TFSA years ago, but back in the days when I was "doing" MLM, I was surprised to discover just how many people would have knowingly jumped on board a pyramid scheme compared to the number of people who were prepared to build a genuine MLM business.

There is a major difference between "direct selling" and MLM. I have NO issue with direct selling and believe more people should do it. This promotes real entrepreneurship and builds genuine RETAIL customer base.

There is another difference between a genuine MLM, with an actual product/ service that has margin built in to pay distributors and a company that is clearly taking hard cash to buy positions in a pyramid. You can give it fancy names all you like, the core facts remain unchanged. There is no gray area here.
Most MLMs sell overpriced goods to unsuspecting new entrants + charging crazy money for seminars etc. The best expose and explanation of recent times was Ackmans excellent presentation on Herbalife, which can be applied to almost every MLM that I have ever seen. The market is beating him on the head for it, but his points remain.
The takeaway from it for me however that at least Herbalife has a product, regardless of how overpriced it is. That they fall foul of FTC regulations is about to be tested.
The first hour is worth watching http://www.visualwebcaster.com/Pershing/91149/event.asp


If Lyoness was a genuine rewards company, they would completely abandon their "binary matrix", downpayment system or at least make the contract and payment structure CLEAR on their own website. But they cannot, because new money needs to pay old money, and they now shuffle it across multiple countries, using multiple corporate veils. The South African contract is signed with a Swiss company. The Swiss members sign with an Austrian company... weird eh?

[mvubu]

Dave - I meant to add this link which is the best at cutting into the numbers

http://behindmlm.com/companies/lyoness/lyoness-corporate-webinar-spells-out-ponzi-scheme/

[OnePilot]

Thanx for the debate guys

I now have a clearer picture of your concerns -

I must admit that I'm still not convinced on your interpretation of the "scam" part

I guess that is what makes the world such an interesting place - we all have different perspectives

I will be back when I have progressed further

Have an awesome day further

[mvubu]

Strange ol' world we live in. I'm pretty sure I've mentioned this somewhere on TFSA years ago, but back in the days when I was "doing" MLM, I was surprised to discover just how many people would have knowingly jumped on board a pyramid scheme compared to the number of people who were prepared to build a genuine MLM business.

Never underestimate the ability to put their ethics on hold when there is an opportunity to make a quick buck, more so when there is a mob mentality and the slightest excuse provided by a 3rd party.
There is basic human psychology at play.

[mvubu]

Excuse all the typos, - I cannot seem to find an edit function to correct. Brain works faster than my fingers.

EDIT - new member status attained... will go back and tidy up.

[mvubu]

Thanx for the debate guys
I must admit that I'm still not convinced on your interpretation of the "scam" part

It is rare to have someone who has been sold on this programme who will actually listen to reason.

Do yourself a favour and just work out where your first revenue as a "premium" member comes from.
If it comes from signing up other people below you as "premium" members, then you are involved in a pyramid scheme. There is no shades of gray here... the test is simple.

And here is the answer to your great scam review site:

http://kschang.hubpages.com/hub/The-Fake-Social-Proof-When-Scams-Review-Scams-and-Declare-them-NOT-Scams

[Sally]

I was also approached but I'm big on research which I did before committing, and since the last post in this thread, the following has transpired.

The Australian Competition and Consumer Commission (ACCC) has taken Lyoness to court for operating a ponzi scheme and the proceedings have been adjourned until February of next year (google: lyoness australia accc).

Lyoness was ripped to shreds on The Dragon's Den Canada (search youtube: lyoness dragons den canada). What I especially enjoyed was the "entrepreneur" vehemently denying that it was a pyramid scheme and one of the Dragons pushing the issue until he realised what she was doing (to which he was agreeing, mind you) was... well, you'll have to watch the vid to get the full gist of it. The poor man was squirming.

I'm not a rocket scientist but can clearly see this for what it is. I asked a ton of questions at a "closed meeting" which were met with either "uuuum" and then much straw grabbing or an outright "I'm not sure, I'll need to find out for you".

Once of those conversations went something like:

Q: "So, in order to use my Lyoness debit card I will need to transfer funds from my bank account into the Lyoness debit card, right?"
A: "Yes."
Q: "When I deposit my money - which bank account does it go into?"
A: "I'm not quite sure."
Q: "Lyoness' account maybe?"
A "I'll need to find out for you."

After a day and a half of my friend trying to find an answer I eventually got this sms: Hi Sally, according to **** my upline, the Lyoness mastercard works with a 3rd party financial institution which is not a public bank (Std, ABSA, etc.)

And that was it. No name for the 3rd party financial institution, where its based - nothing. Not acceptable.

Apart from all the other unanswerable questions that I asked, the bottom line for me is that I'm being asked to put MY money into a bank account that no-one either has any clue about or is not prepared to divulge unless you're a premium member (at R20k a pop). Apparently there are some 60,000 current members in South Africa who are already members. All that money going into one account - the interest alone must be a sizeable enough egg nest for someone, somewhere.

To those of you who have invested, I don't know you therefore I don't judge you.

As for me? I have my own pyramid and it works very well for me. It goes something like this:

I am a boss (so I'm at the top).
I have several employees (who are under me),
We are all sub-contractors (therefore the clients are beneath myself and my employees).

Can you see the pyramid? But let me tell you how MY pyramid works - my employees get the lion's share of the hourly rate and I keep a small portion for myself - this is taking the MLM mind-set of leveraging other people's time but using it positively and for the good of ALL involved.

Lyoness - No sir, no thanks, not for me...