One year after Lyoness was founded, in 2004, the Austrian criminal police (
Kriminalpolizei) published an article 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. 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. Lyoness was one of the organisations complaints were filed against. In March 2010, the Swiss magazine
Beobachter published an article 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 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. In February 2012, the
Beobachter published an article 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. 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. In September 2012, the same newspaper reported 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 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. 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. The
Handelszeitung reported about suspicions that high-level Lyoness members were earlier involved in (other) pyramid schemes, like the ‘Spirit of Independence’. It also mentioned a system called ‘GTS’ (Global Trade System), operated by Erin Trade SA, as a former organisation tied to Hubert Freidl. professor Susanne Kalls concluded that no capital market regulations were violated by not issuing a prospectus; attorney Karl Hengstberger came to the opposite conclusion 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. The study, conducted by Lewisch in September 2013, argued that Lyoness is not a pyramid scheme under Austrian legislation. Austria, however concluded that the business model of Lyoness is so "Ponzi-Scheme-like", that contracts between the company and its business partners are not valid. Lyoness has been declared a pyramid scheme by at least four independent civil courts in Austria. Further civil proceedings have been combined into a class-action lawsuit worth millions of euros, initiated by process financier Advofin, and supported and recommended by the Austrian Consumers Union (VKI). The lawsuit will be filed in
Amsterdam. Lyoness is suspected to be a
pyramid scheme in several of the countries it operates in. In its homeland Austria, Lyoness has been declared a pyramid scheme by four independent civil courts. Criminal investigations have also been concluded by the Austrian Economic and Corruption Prosecutor ("WKStA"), who maintains that Lyoness operates an illegal pyramid scheme. Lyoness expects to be cleared of all charges. In Australia, Lyoness was under prosecution by the
Australian Competition & Consumer Commission (ACCC) for operating an illegal pyramid scheme. The trial has ended and the judgment was reserved. In Sweden, the responsible authority concluded that Lyoness is a pyramid scheme and reported Lyoness to the Stockholm police. While initially halted, an appeal by the Gaming Board led to a continuation of the investigation by the Stockholm Police. In Poland, France, Hungary and Lithuania, similar investigations have been conducted or are ongoing. In Greece, the Austrian Lyoness directors have been accused of various types of fraud by the local authorities. Lyoness vehemently denies all allegations. In October 2015, the
Federal Court of Australia found that the loyalty program was not a pyramid scheme as the ACCC had originally claimed. The latest decision in Austria also declared that Lyoness is not classified as fraud or any illegal pyramid scheme by the Austrian Economic and Corruption Prosecutor ("WKStA"). In April 2016, the Vienna Regional Court stated that Lyoness is not a pyramid scheme. This decision is legally binding and can no longer be subject to appeal. In Australia, The 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. Lyoness have submitted their defence in October 2014, and the next hearing will be in February 2015. The trial has ended and the judgment was reserved. ==Television==