Lyoness Plans To Appeal Against Swiss Pyramid Decision

Hubert Freidl, CEO, Lyoness


According to an article in an magazine in Austria, Lyoness has stated it plans to appeal the decision from the Swiss Court that the company compensation plan is a Pyramid – Snowballl system.

The google translation, partly edited:

Against Lyoness, main sponsor of the Austrian football club Rapid Wien, is an other civil law judgment. This time, the Swiss Obergericht Zug has described Lyoness as a snowball system. Members would only receive money when they recruited other members. Moreover, the business model is intransparent. The judgment is not final.

Lyoness had resisted a corresponding judgment of the lower court and has now cut off with the complaint. A judgment of the Supreme Court of the Canton of Zug (APA), dated February 28, is entitled to appeal if a legal question is of fundamental importance.

Lyoness wants to do this. The ruling, which is exclusive to Lyoness Suisse GmbH, is not final.

Lyoness will lodge an appeal against this decision,

a company spokeswoman said at the APA's request. Since it is a current procedure, it can not issue a further opinion.

The Obergericht Zug is in detail on Lyconet, the sales channel of Lyoness. The case was a member who paid almost 4,500 Swiss francs (currently about 4,200 Euro) from October 2014 to September 2015 to Lyoness. Among other things, he has purchased so-called discount vouchers. When he wanted his money back, Lyoness refused. In court, he was right in two instances.

For the Supreme Court Lyconet as a whole violates the law against unfair competition (UWG). The advantage for the members is mainly from the recruitment of other persons. Whoever purchases at Lyoness partner companies and collects discounts has only marginal advantages, the court said.

Remuneration is only interesting when it comes to recruiting new members and their financial contributions. The higher the number of new members the individual member of the complainant can and the more members participate in the system as a whole, the verdict states.

A further indication for the existence of an unfair snowballs system is that the participants get a financial advantage for the mere recruitment of new persons, the court states.

Finally, there is also a lack of transparency regarding the Lyoness structure and the calculation of commissions. As a result of the General Terms and Conditions (GTC) 2014 and the Lyconet agreement,

it is not clear and incomprehensible what the promised benefits are exactly how they are calculated and the extent to which they are ultimately granted to each member. Payments, shopping points or friendships .

The court lists more than 30 such terms.

Furthermore, the court found that Lyoness was redistributing funds from the pyramid base towards the top of the pyramid. This is another indication of the fact that this is a snowball system.

The Obergericht Zug is not the first to qualify the Lyoness system as inadmissible. The current judgment states:

For the sake of completeness, it should be noted that even Austrian courts have qualified the system operated by the complainant as a snowboard system.

The District Court of Vöcklabruck has another such judgment. On 9 March, the Court stated in a judgment that the business model operated by the defendant is to be qualified as a snowboard system.

According to the relevant provision in the UWG, the introduction, operation or promotion of a snowball system for the promotion of sales, In which the consumer has the possibility to achieve remuneration which is to be achieved mainly by the introduction of new consumers into such a system and less by the sale or consumption of products, misleading commercial practice.

Lyoness considered the judgment on the APA request to be a single case decision in which only the voucher payment system, which had existed since 2014, was assessed. Lyoness is also assuming that even this product, which is no longer offered, represents or represents a 'snowballs system', not least because of different decisions, said a spokeswoman in a written statement.

Lyoness also emphasized that the company had already initiated an internal change process in 2012, in order to separate the purchasing / discount track and the sales area more closely. In the course of this process, which was completed in 2014, Lyoness divided its business segments into three brands, thus further defining the company's structure. The Group now has a brand for shoppers (cashback card).

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