Lyoness International AG was a multi-level marketing company established in Austria in 2003. According to Lyoness, the company was active in more than 40 countries, spread over six continents, and their shopping community consisted of more than five million members as of 2016. “Lyoness Official Corporate Website”, June 8, 2013 In several countries Lyoness is suspected as being, or ruled as being, a pyramid scheme.
In 2023, Lyoness International AG and Lyoness Europe AG, which served as umbrella companies for the Lyoness business model, filed for insolvency. The company was succeeded by MyWorld International AG. The Lyoness name continues to be used in legal, financial, and structural contexts in several markets.Schneeballsystem: Lyoness rutscht in die Pleite – Puls24, October 2023 (in German)Lyoness International AG e Lyoness Europe AG – ANSA, October 2023 (in Italian)Insolvency Proceedings Initiated for Lyoness International AG and Lyoness Europe AG – Pressat, October 2023
Business model Lyoness was founded in Switzerland in 2003 as a shopping community that offered a loyalty program combining cashback rewards with member-based participation."Lyoness: Das Geschäft mit dem Einkaufen" – Beobachter , March 2010. Members could receive benefits from purchases made at participating partner merchants. The model also included referral-based incentives, where members could introduce others to the platform and potentially earn commissions tied to their network's activity.Warum der VKI vor Lyoness warnt – Kleine Zeitung (in German), February 2012.
The company later expanded its services to include various marketing tools for partner businesses, aiming to increase consumer engagement and retention. This included features such as loyalty cards, promotional campaigns, and access to a global shopping community. Businesses participating in the program were typically charged fees based on the performance or volume of transactions generated through the platform."Lyoness-unter-Beschuss.html Lyoness unter Beschuss" – Wiener Zeitung , March 2013.
Previous corporate structure In 2004, the CEO of Lyoness, Hubert Freidl, was hired as the company's director.Excerpt from the St. Gallen (Switzerland) Chamber of Commerce, April 30, 2013 Lyoness comprises at least seven corporations registered in Switzerland,“Moneyhouse: Lyoness” , “Moneyhouse Company Register: Lyoness”, June 7, 2013 nine corporations registered in Austria“Monetas: Lyoness” , “Monetas Company Register: Lyoness”, June 7, 2013 and approximately 42 additional national and regional corporations all around the globe. “Lyoness Official Corporate Website”, June 7, 2013 The name "Lyoness" was derived from the Celtic mythological kingdom "Lyonesse".Business People Top1000 2009, page 66
Continental and country organisation The continental organisations are subsidiaries of Lyoness International AG and are registered as stock corporations. These are: Lyoness Europe AG (founded in 2003), "Lyoness IMEA S.A." (2009), Lyoness North America Ltd., "Lyoness South America S.A.", "Lyoness Asia Ltd." (2011).
The country offices are subsidiaries of the continental stock corporations and are registered as privately owned, limited-liability companies.
Social involvement According to Lyoness, every purchase made by its members at its partner companies benefits the Child and Family Foundation (a charity organisation)“General questions regarding Lyoness” “Lyoness Official Website”, June 8, 2013 and the Greenfinity Foundation (an organisation promoting sustainability).“Lyoness Greenfinity Foundation” “Lyoness Greenfinity Foundation Official Website”, June 8, 2013
In 2012, Lyoness announced that it and its affiliated Greenfinity foundation would be the title sponsors of the Austrian Open golf tournament for three seasons, through to 2014. Lyoness also sponsored the ‘European Juniors League’, a European football competition for youth teams,“Lyoness European Juniors League” “European Juniors League Website”, June 8, 2013 as well as Austrian club SK Rapid Wien.“Wirtschaftsblatt” “Wirtschaftsblatt”, June 22, 2015 Lyoness announced that it would pay 9 million euros over 5 soccer seasons but would not be the main sponsor of Rapid Wien.“Format” “Format”, June 23, 2015
Legality and alleged deceptive practices
One year after Lyoness was founded, in 2004, the Austrian criminal police (Kriminalpolizei) published an articleGier nach Geld – Schneeballsysteme und getarnte Pyramidenspiele erleben einen neuen Aufschwung, Kriminalpolizei, December, 2004 in the December issue of its organisation’s magazine, in which it warned of the resurfacing of Ponzi schemes and pyramid schemes in Austria. Lyoness was explicitly mentioned in this article. The company contested the allegations publicly.Gegendarstellung Kriminalpolizei, Kripo Online, January 2005 In 2005, Austrian Parliament member, Johann Maier (SPÖ) asked the then-incumbent Austrian Minister of Justice (Karin Miklautsch, BZÖ) parliamentary questions about the reports filed against alleged pyramid schemes in Austria in 2004.“Anfragebeantwortung”, “Austrian Parliamentary Materials”, August 3, 2005 Lyoness was one of the organisations complaints were filed against.
In 2008, the Austrian Chamber of Labour (‘Arbeiterkammer’) of Steiermark issued a warning against Lyoness, listing its alleged privacy violations, misleading advertising, deceptive information and unrealistic and negligible benefits as red flags for doing business with Lyoness.“AK: Vorsicht bei Einkaufsgemeinschaft Lyoness”, “ORF”, November 11, 2008
In March 2010, the Swiss magazine Beobachter published an article “Lyoness: Haende weg!”, “Beobachter”, March, 2010 by Pascale Hofmeier entitled "Lyoness: Hands off". In the article, Sara Stalder of the Swiss Consumer Union and Manuel Richard of the Swiss Gambling Commission warn consumers not to do business with Lyoness. In early 2012, Kleine Zeitung published an article“Lyoness Verhandlung Klagenfurt”, “Kleine Zeitung”, January, 2012 suggesting that Lyoness deceived the masses by operating an irrelevant shopping community. L'Hebdo, a Swiss magazine, reproduced a story about how Lyoness members are told that an investment of 3,000 CHF will eventually lead to 25,000 CHF in return, if enough new, down-paying members are recruited.“Lyoness ou l’argent facile” , “L’Hebdo”, Februari, 2012
In February 2012, the Beobachter published an article“Lyoness: Drohen mit Millionenforderung”, “Beobachter”, February, 2012 stating that, based on review of internal Lyoness communication, members are offered ‘bounties’ up to 45,000 CHF to provide ‘relevant information’ on Lyoness’ critics. A critic from Zürich was reported to have been sued for over 1 million CHF for ‘defamation’ after he contacted Lyoness’ partner companies in Switzerland in an attempt to explain the business model of Lyoness to them. The article also reported that the Lyoness business model seems to revolve around recruiting activities instead of discounts and that Lyoness is internationally charged with forgery, fraud and hosting a pyramid scheme.
Der Standard reported in July 2012 that the Austrian Economic and Corruption Prosecutor (‘WKStA’) has been granted jurisdiction to investigate and prosecute Lyoness in Austria.“Lyoness ist Fall für Korruptions-Ankläger”, “Der Standard”, July 2012 The Swiss Handelszeitung mentioned a court case Lyoness lost, which revolved around the question as to whether the company should have issued a financial prospectus before asking investors to finance their advertising campaigns in foreign markets.“Urteil gegen umstrittene Schweizer firma Lyoness”, “Handelszeitung”, June, 2012 In September 2012, the same newspaper reported“Lyoness: Prominente Partner Springen Ab” , “Handelszeitung”, September 2012 that major, alleged Lyoness partners in Switzerland (Microsoft and Kuoni Travel) were deciding not to continue the partnerships, if there were any to begin with. The Wiener Zeitung reported“Auf Lyoness rollt Klagelawine zu”, “Wiener Zeitung”, March 2013 about a pending lawsuit initiated by the Austrian Consumer Organisation ‘VKI’ in March 2013. The VKI contested 61 clauses of Lyoness’ ‘General Terms and Conditions’, which it called opaque, uncertain, and/or meaningless.“Bei Lyoness tobt der Krieg der Gutachter” , “Kleine Zeitung”, April 19, 2013“Verbandsklage zielt auf das Rückgrat von Lyoness ab”, “Wirtschaftsblatt”, April 23, 2013 Eric Breiteneder, hired as a legal representative by the organisation, also referred to the concepts used to distinguish various parts of – and benefits within the Lyoness business model as vague and/or undefined elsewhere.“ Causa Lyoness – VKI leitet Verbandsklage ein”, “Format”, April 23, 2013“Causa Lyoness – VKI leitet Verbandsklage ein”, “Der Standard”, April 23, 2013
The Handelszeitung reported about suspicions that high-level Lyoness members were earlier involved in (other) pyramid schemes, like the ‘Spirit of Independence’.“Lyoness: Top-Kader sahnten mit illegalem Schenkkreis ab” , “Handelszeitung”, April 3, 2013 It also mentioned a system called ‘GTS’ (Global Trade System), operated by Erin Trade SA, as a former organisation tied to Hubert Freidl. Like Lyoness, this company has been called a pyramid scheme in the public debate. The Kleine Zeitung reported that various experts were looking at the investment schemes for advertising campaigns organised by Lyoness, and whether a prospectus was required before attracting capital from investors. Lyoness-hired “Lyoness rüstet sich mit Gutachten gegen Klagen”, “Der Standard”, April 5, 2013 professor Susanne Kalls concluded that no capital market regulations were violated by not issuing a prospectus; attorney Karl Hengstberger came to the opposite conclusion but agreed with Kalls that the Lyoness business package does not constitute an investment. In the same article, Lyoness spokesman Mathias Vorbach admits that the company may have had some trouble before, but that those days are behind it – Lyoness has learned from its mistakes. He asserts that legal problems have only appeared in Austria (a contested claim) and that 95% of the Lyoness members just shop and do not participate in the earning models offered by Lyoness. However, the Beobachter, after reportedly considering internal Lyoness documents, published an article “Der Goldesel”, “Beobachter”, April, 2013 suggesting that 99.7% of the Lyoness turnover derives from down-payments on future purchases, not from actual shopping or (saved up) discounts.
In September 2009, Lyoness hired criminal law expert Peter Lewisch to assess whether the company's business model violated the Austrian law concerning illegal pyramid schemes.“Gutachten über Lyoness: Kein Pyramidenspiel” The study, conducted by Lewisch in September 2013, argued that Lyoness is not a pyramid scheme under Austrian legislation.